How can retail brands innovate to improve consumer engagement?

By Scott Underwood, Head of Solutions Consulting, Niu Solutions.

This article is brought to you by Retail Technology Review: How can retail brands innovate to improve consumer engagement?.

The digital age is changing social trends, which in turn is directly affecting consumer behaviour and expectations. Although these changes can be hard to understand, today's retailers need to recognise that this shift is occurring and work towards adapting their customer service accordingly – or risk falling behind their competitors.

Today's consumers expect more than just good quality products. For modern day shoppers, it is the delivery and quality of the customer experience that determines their loyalty to a brand. For example, many shoppers are routinely frustrated by slow service when they're out shopping. It is during these times that we, as consumers, are more likely to reject a brand if a competitor can offer the same products at the same price, but without the hassle.

As such, customer service is clearly a competitive differentiator, but how can retailers adapt their services to improve customer engagement? It's an important question that modern retailers need to address. Many retailers are fearful of the fast-paced changes that are impacting this sector – but these businesses will need to take action and remain agile in order to compete effectively.

Consumers are ready to embrace technology

Thanks to the digital revolution, customers now have an ever-increasing depth of information at their fingertips, which means that their knowledge of products and expectations of service continues to grow. As such, it is becoming more important for retailers to differentiate on the overall consumer experience and create a stronger brand relationship to generate growth and profitability.

First, retailers must recognise that consumer expectations have evolved and price no longer equates to brand loyalty. Being task-rich and time-poor, today's shoppers are putting more value in brands that are able to provide them with a quick and convenient service that fits into their busy day-to-day lives. A good example is the introduction of self-service checkouts and contactless "tap and go" payments.

Evolving to suit the changing retail environment

In the grocery sector, self-service check-outs have been in use for over twenty years, and a notable success for time-poor shoppers. Recognising the consumer's growing need for speed, Zara, one of Europe's biggest fashion retailers, has taken note of this innovation and is paving the way for a new commerce experience for retail shoppers. It recently announced that it is transforming its sales model and trialling new automated checkouts in Spain and in the U.S.
If the self-service checkouts are introduced in the UK, Zara will become the first fashion retailer in the country to adopt the technology.

It is this innovation that will allow retailers to enhance the customer experience and deliver the convenient service that they want. Fashion retailers in particular must recognise new trends, and understand that customers are ready for a new and improved shopping experience, and new technology is at the heart of achieving this.

Connecting the digital and physical shopping experience

Today's digital-savvy consumers are also channel agnostic, seeking the same service and level of engagement from the same company across all platforms; whether it's online or in-store, a seamless service must therefore be delivered. Recognising this need, a recent study by RetailMeNot, the operator of VoucherCodes.co.uk, found that almost three-quarters (73%) of retailers in the UK are planning to increase their digital investment in the next 24 months as a way to branch out from the traditional bricks-and-mortar customer experience and leverage new technologies to drive in-store sales.

For retailers, however, this adoption is often much easier said than done. In fact, three-fifths of retailers say that they are challenged by connecting the digital and physical shopping experience. As such, retailers will need to look to their IT providers to help them with this integration and collaborate to create a strong IT infrastructure.

Is technology the answer?

By collaborating with technology experts, retailers can ensure that they are using the right tools and systems to operate most efficiently. A good example is when collecting and analysing customer data after a transaction.

According to data from the Link ATM network, 2015 marked the first year in which consumers began to turn away from notes and coins for everyday purchases, while the use of contactless payments grew threefold in a year, with more than a billion pounds spent using contactless cards and mobile payment services like Apply Pay.

This rise in digital transactions is valuable for retailers, as the more customers are encouraged to use electronic payment, the more opportunity retailers will have to collect valuable data. However, simply obtaining customer data is not enough.

Retailers need to work closely with their IT solutions and digital providers to make sure they have access to the tools and systems they need to analyse the customer data collected from every possible touch-point. The insights that can be gained from this data are invaluable, as they can enable retailers to understand their customers' rapidly changing wants and needs much more effectively.

This data-led approach can also help to combat 'basket cannibalisation', which occurs when retailers are unable to track in-store purchases unless a loyalty card is used. In this case, a retailer's analysis of customer behaviour is based solely on data obtained from other sales channels, which means that vouchers are often sent for products that the customer have already purchased, or intend to purchase.

Innovation: The importance in recognising its value

By collating customer information and sharing the results of the data with the team at the right place and at the right time, retailers can overcome problems like these and gain a much more comprehensive view of their customers spending habits. By determining when the customer is most likely to part with their cash, retailers can offer them an incentive which is likely to increase sales customer satisfaction, and loyalty.

Driven by changing customer demands and expectations, the need to stay ahead of the latest retail innovations and technologies has never been more important. As such, retailers must implement a long-term strategy which not only addresses the needs of their customers, but which is also beneficial for the business.

The standard operational models that UK retailers have employed to date are not enough to satisfy today's tech-savvy consumers. As such, in an age where digital disruption is a big concern and customer experience is a key differentiator, it is vital that traditional retailers are employing new disruptive technologies to stay one step ahead of the competition.