Report: More retailers move toward a customer-centric model
- As demand for online shopping and a compelling in-store experience grows, retailers are making their business models more customer-centric. A new report by Boston Retail Partners (BRP) says to make this happen, grocers will need to integrate planning processes across channels, adopt new omni-channel demand planning systems and incorporate real-time customer feedback into their seasonal planning.
- BRP’s 2017 Merchandise Planning Survey finds that almost half (47%) of retailers say that customer centricity is a key strategic initiative within their organizations. While nearly two-thirds (64%) of retailers have integrated their business planning processes across channels, just a third (33%) have implemented new omnichannel demand planning systems within the past two years. Only 42% of retailers incorporate real-time customer feedback into their in-season planning, according to the survey results.
- “Customers use technology daily to enable and control their shopping journey,” Gene Bornac, senior vice president at BRP said in the report. “Now it is up to retailers to play catch up with their organization, processes and technology to deliver the right products for the right price in the right place.”
Today’s path to purchase takes many twists and turns as consumers conduct pre-purchase research online, browse and ultimately buy. In fact, a new Deloitte study found that more than half of grocery sales — 51% — are now digitally influenced. Consequently, it's becoming harder for retailers to pinpoint exactly where and when the shopper journey actually begins.
Consumers are channel agnostic these days, having already integrated both physical and digital merchandising into their routine shopping activities. Surprisingly, though, a third of retailers have not yet integrated their business planning processes across channels, according to BRP’s latest survey. Clearly there’s some catching up to do.
Grocers increasingly are deploying tools like advanced merchandise planning systems, retail analytics and robust reporting capabilities to better understand who their customers are, their needs and preferences and shopping patterns in order to deepen customer relationships and drive increased trips and bigger baskets. Applying consumer insights based on data-driven analytics enables retailers to engage with customers in a way that resonates with them, as well as to deliver personalized and relevant content, communications and promotions.
Kroger’s best-in-class loyalty program, which incorporates its application of shopper analytics and personalized pricing, is often lauded as the industry standard and an envy of many retailers. By teaming with its 84.51° analytics arm (formerly part of dunnhumby), the grocer applies predictive behavior modeling to segment shoppers and creates individualized experiences — including personalized promotions and tailored pricing — for its Plus Card members.
It’s this kind of customized user experience that has contributed to growth in Kroger’s digital customer base and interactions with shoppers. Kroger executives say technology, though expensive, is necessary for the company to maintain its competitiveness in an increasingly tough retail environment. “Data is the new battleground,” Stuart Aitken, chief executive of 84.51˚ recently told The Wall Street Journal.
As some analysts have noted in the past, more grocers are catching up to Kroger’s data-focused retailing model. A growing roster of grocers — among them Albertsons, Giant Eagle, Hy-Vee, Sprouts, Topco and Wegmans — are deploying customer-centric retail insights and solutions provided by third-party vendors, such as 1010data, dunnhumby, Infosys, Nielsen and Symphony EYC.
Amazon's recent push into brick-and-mortar retail with the purchase of Whole Foods further elevates the importance of grocery store analytics. Prior to its acquisition by Amazon, Whole Foods was focusing on its most loyal customers, with data-rich category management allowing it to reveal what those consumers wanted. It allowed Whole Foods to better leverage its product offerings and tailor targeted promotions, which was seen as enhancing efficiency. Some have even speculated the real reason behind Amazon’s acquisition was data.
While online grocery is still in its early days, creating an omnichannel retailing experience that seamlessly ties together in-store efforts with digital programs is key for grocers' future growth. Kroger’s consistently solid performance and the many retailers following in its path are testaments that building a customer-centric model is becoming the new standard in grocery retail.
- Boston Retail Partners Customer-centricity is the Top Strategic Initiative for 47% of Retailers
- Convenience Store Decisions Almost Half of Retailers Moving Toward Customer-Centric Model
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