Anthony Bruce, retail expert and chief executive officer of Applied Predictive Technologies, a Mastercard company, said retailers and brands have made strides this past year in regard to meeting new consumer demands, which require, at the least, improved omnichannel capabilities.
But Bruce told WWD, companies still need to do better — especially as many might be learning some painful lessons this holiday shopping season. As a result, he has identified three key strategies that retailers can deploy in 2018 based on what’s occurring in the market now.
First, Bruce said retailers need to “avoid the painful, holiday bleed.” As reported by analysts earlier this month, markdowns are occurring earlier and later in the shopping season, “but that may not translate to increased sales — only lower margins.” The solution, Bruce noted, is to refining promotions, and “be selective with which items to promote, when, and at what promotion threshold, for maximum profit.”
Secondly, Bruce said it is important to “create and cultivate loyalists.” He said holiday promotions attract new customers, but many are “one-time buyers” attracted to the deal. “It’s critical that retailers think about driving long-term customer value,” Bruce said. “One instrumental strategy is offering an effective loyalty program incentivizing new customers to come back.” He said over half of retailers have introduced loyalty programs, “and nearly 24 percent plan to do so in the next 2 to 3 years.”
The third key tactic is to better blend online and off-line capabilities. Bruce said 75 percent of traditional retailers are investing in e-commerce, but the in-store experience should be equally compelling. “Retailers should focus on a true cross-channel strategy,” Bruce said. “We’re already seeing an increase in product selection, cutting of in-store prices, adding in-store demos, click-and-collect services and in-store online orders, as well as increasing staff training to create better experiences and boost sales.”
“We’re in the age of the experiential consumer,” Bruce explained. “It’s all about the experience. From spending on experiences like travel, per Mastercard SpendingPulse, to prioritizing unique shopping experiences, consumers are looking for something special. That can mean high-tech like smart mirrors or high-touch like boutique salesmanship, but it means that the status quo of discount-mania won’t yield the experience that truly matters to consumers.”
As companies deploy these strategies, Bruce said there needs to be ongoing alignment between acquiring new customers and converting them into loyal ones while also creating a seamless — and exceptional — online and offline shopping experience. And that includes having the right product, too. Bruce said it comes down to being relevant to the consumer.
Bruce also noted that from a bottom-line perspective, retailers may struggle with the challenges of investing in e-commerce technologies while also creating better in-store experiences. Testing, though, can be used to gauge ROI.
“Business experimentation is one way to measure the impact of specific strategies before broader rollout, saving significant investment dollars,” Bruce said. “This entails putting strategies into place in a limited number of stores or markets and not others, and measuring their performance against similar stores or markets that did not receive the program. That way they can make the right choices that will yield the results they’re looking for and scrap the ones that don’t.”