As retailers gear up for the year ahead, we look at the key changes in digital that will set the agenda for multichannel and pure-play operators this year
Up close and personal
Personalisation has already been a buzzword for 2015 but for many retailers it has remained a lofty aspiration. Those that have pursued it, however, have reaped the rewards. Shop Direct revealed a fully personalised Very.co.uk homepage in March and believes this will add £20m in sales for the year, while Missguided secured at least £4m in additional revenue last year following website personalisation that included a countdown clock telling customers how long they have left to get a special offer on products they are viewing. This year more retailers are expected to join the personalisation bandwagon.
Shop Direct’s ecommerce director Jonathan Wall, says: “With the rise of personalisation, customers expect a shopping experience that caters for them, particularly on a mobile device. Shop Direct is now personalising the order of products displayed to the customer via mobile, curating a gallery of products based on the customer’s purchase and browsing history.”
Mike Harris, vice-president of EMEA at personalisation provider Monetate, believes up to 20% of retailers personalised in some form in 2015, but this will rise to more than 40% by the end of this year. He says the key for 2016 is trying to tie together shoppers’ cookies across different devices to follow customers’ entire journey and provide a holistic personalised experience. Some of Monetate’s fashion clients are trialling this, but the company could not reveal names.
James Abbott, director of digital strategy and optimisation at independent A Hume, which trades from two stores in the Scottish borders, adds: “As retailers we need to embrace and accept that people use devices differently, at different times to accomplish different tasks. As mobile tends to be more research and discovery focused, we need to work to facilitate this and provide tools that enable the user to come back at later dates, on different devices to complete transactions.”
Harris adds that this year retailers are expected to get more explicit about their personalisation, following the model set by sportswear brand Fabletics, which asks shoppers a series of questions when they check out to better personalise future experiences.
“Why wait for them to tell you gradually when you could ask them up front? It benefits both shopper and retailer,” he says.
Taking a step on from website personalisation, some of the more advanced retailers are starting to use predictive data to identify how best to target shoppers. Cassie Lancellotti-Young, executive vice president of customer success at personalisation tech firm Sailthru, explains that this enables retailers to use their deep online data to offer a personalised experience based on shoppers’ future predicted actions, rather than just their historic purchases or browsing track record.
By building predicted shopper profiles retailers can better target incentives – for example, by rewarding customers who spend 110% of what the predictions say they will, but offering nothing to customers that have a 95% likelihood of purchasing anyway that day. This tactic breeds shopper loyalty: the data can predict when an individual might be close to opting out of emails, so the volume of communications can be dialled down.
Lancellotti-Young adds that a focus on retention will dominate this year, as retailers grapple to balance profitability with growth: “Marketers have remained very focused on acquisition the past several years, but all the data continues to reiterate that it is significantly more cost-effective to retain an existing customer than to acquire a new one.”
Using predictive data has led US outdoors retailer the Clymb to a 71% uptick in email revenue compared with previous marketing strategies. Fellow US retailer Country Outfitters also reported a 72% rise in revenue and a 24% increase in purchase per clicks last year following predictive data.
In-store insights from e-receipts
E-receipts are expected to come into their own this year, as another aspect of personalisation. Debenhams engaged the technology for Christmas, joining Sunspel, French Connection, Fred Perry and Brora, which have been trialling it in an attempt to gain greater insight into their shoppers’ habits and preferences.
Taking this on for 2016, Andrew Carroll, founder and CEO of provider eReceipts, explains the purchasing data received is now being looked at by retailers to personalise marketing and help prioritise in-store stock allocation to suit VIP shoppers and big spenders.
In combination with other technology, digital receipts are also expected to bring online experiences in store this year – for example, purchasing data from receipts can be used alongside RFID (radio-frequency identification) tags from data on clothing taken into changing rooms to reveal basket abandonment in store.
Returns will also benefit. Two fashion retailers will this year trial the use of e-receipts to notify store staff of intended returns and the reason for this, enabling staff to prepare relevant alternative items to offer the shopper when they arrive.
Engaging generation Z
Social media is booming and attracting ever-younger users. The conversion of these platforms to shoppable channels – such as Twitter, Facebook and Instagram – combined with the rise of mobile payment technology, is expected to attract a new “generation Z” of shoppers.
Matt Mayes, manager of data intelligence and insights at tech firm Demandware, explains: “Generation Z, adolescents aged 12 to 17, will become a retail force. This is in part a result of the integration between ecommerce and social media.
”And the ease of payment with Touch ID fingerprint recognition gives these young people access to their parents’ account, and eliminates the need for their own physical credit card.”
Demandware head of industry insights Jamie Merrick adds: “Retailers need to earn relationships with generation Z. This particular audience is seeking to shop with businesses that are flexible enough to listen and adapt to their needs.
“For example, in-store kiosks, interactive displays and magic mirrors allow customers to scan products, make purchases and read reviews for a whole catalogue of products beyond what’s on the shelf.
”Dynamic websites that integrate features such as shoppable content and virtual store tours help deliver a unique experience for each customer.”
James Doyan, managing director of consultancy Athito, adds: “Retailers who truly engage with social media and talk to its customers – and encourage customers to talk to other customers – will benefit from a happier and more loyal customer base.”
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Innovators across the industry, and particularly etailers, have already been making waves with visual search but 2016 is expected to see the technology go mainstream and get adopted by multichannel retailers in-store. Cortexica, which powers visual search technology for Zalando, Shop Direct and Macy’s, has seen a 400% increase in searches made between July 2014 and the end of 2015.
Alastair Harvey, Cortexica’s global sales and client services director, says: “It’s now not just in-app shopping but making it part of the solution when combining online and in-store commerce, helping to engage the shopper for longer.”
This includes shoppers using photos to search stores’ inventory of similar items in stock, to save the frustration of their size or specific item not being available. This can also be used by staff with ipads in changing rooms to offer alternatives.
Visual search is also moving onto social channels, but as with Net-a-Porter’s NetSet app, this can currently only be done in an enclosed social environment where photos can be fed directly into the retailer to match specific inventories. Work is ongoing to take it onto wider social platforms, but for 2016 more retailers are expected to follow Net-a-Porter’s suit.
Retailers are also expected to start using the tech for back-end operations to search product databases for marketing and editorial content, working up campaigns, visual merchandising and finding the best suppliers for certain products.
Harvey adds demand for visual search is rising in Asia and particularly among UK and US retailers seeking to tap into this market, since it jumps language barriers and removes the requirement for detailed product descriptions.
Rama Ramakrishnan, chief data scientist at Demandware, believes: “2016 will be the year machine learning will go beyond personalisation to positively impact merchants and marketers in the form of a Siri-like intelligence assistant that pops up with timely recommendations and intelligent insights.”
These insights could include when retailers should run a buy-one-get-one-free Sale to clear excess inventory and the best time of day to run that promotion. This he says, could also be extended to target shoppers more directly and personally online in the future.
Video and photography online is king
With many retailers following in Asos.com’s footsteps and using catwalk videos of individual products to improve conversion and reduce returns, video will continue to be a key trend for 2016, but will move on to offer a more “free-form” style.
Sjors Bos, managing director of visual agency I Heart Studios, says: “Traditional walk on/off and catwalk videos will become less relevant and we see a trend for more free-form video development. Freeform will have a texture of user-generated content, but managed and created by specialists with the purpose of consumer engagement and education.”
He adds photography online will become more creative and lifestyle-orientated this year, ”blurring of lines between ecommerce and creative digital content with a strong connection to brand marketing initiatives and brand extension through transactional content”.
Internationalisation bites back
While UK etailers and retailers have been expanding overseas for a number of years now and extolling the virtues of localised websites to offer an experience that’s more personalised to the local market, 2016 is expected to be the year when international retailers bite back.
Nupur Manchanda, chief operating officer at ecommerce consultancy Practicology, predicts: “It’s a trend that will also start to work both ways much more, and we are supporting several international brands who want to better localise their UK websites to make them more appealing for consumers here. Online competition for UK customers is only going to get fiercer.”
Fit becomes critical
With retailers across fashion and footwear desperate to lower returns, critical fit tools are expected to be a big trend for 2016. Athito’s Doyan expects that there will be “some very snazzy technology coming through that will enable shoppers to match their shape with the style and design of product. Maybe we can imagine a world of lower returns?”
Examples include Tel Aviv tech firm Fitfully, which enables shoppers to take a scan of their foot using their smartphones, which once uploaded is digitally inserted into shoes to show which size will provide the best fit. The firm is rolling out this technology with Adidas and shoe manufacturers to build a database of 3D lasts that can be used across multiple brands.