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In the third episode of Marketing Futures, that we’re producing in partnership with SAP, we got to the heart of today’s retail trends and discovered the shopping experiences of the future.
For the basis of the discussion, we referenced two reports that Econsultancy, the leading Thought Leadership Publisher, has produced for SAP: The Retail Trends Playbook and Retail Experiences of the Future.
Graham Barrett was joined online by Jim Clark, Commercial Research Director at Econsultancy, Michela Cocco, Global Customer Experience and Innovation Manager, Nestlé Nespresso and Anand Narang, VP Marketing and Customer Experience, Bata India and Sunny Neely, Global Solution Director, Consumer Products at SAP.
Jim began by explaining that ‘The Future of Retail’ report was based on nine industry thought leaders, Anand was one and other brand speakers included the likes of Asda, Alibaba, Boots, Bata and Currys. He said it gives them an opportunity with this research to gain a consensus of what’s best practice and importantly, how this can be translated into actions for retailers considering their 2022 e-commerce strategies. Jim explained it’s looking at what retailers think works, what’s worked for them, particularly over the holiday shopping season and the trends that are on the horizon that will give retailers the opportunity to shift the needle on sales. He said they call the first report a ‘playbook’ and in the most recent report, they organise things into a very structured, easy to consume way. So, five key trends that retailers really need to know with four pillars of best practice that they should have in mind as they attack 2022.
Key takeaways from the reports
Sunny said throughout the reports, there was the theme of consumer data and how that’s got to be the foundation for everything they’re doing in terms of increased consumer engagement in this industry. He explained that he’s been in FMCG for years and there’s this data deficit which is becoming an engagement deficit. He said he thinks it’s critical that data is driving what marketers do moving forward. Sunny said in another recent report from Boston Consulting Group on digital transformation, it said when you have consumer target information using identified consumers, it can drive a 40 percent increase in your spend efficiency for digital, and that’s the type of impact that brand managers just can’t walk away from.
Sunny explained that the MarTech landscape is wildly varied and cluttered with 8,000 different solutions out there and brand managers are going to need a simple solution for solving those two different deficit problems by bringing the data deficit and the engagement deficit data foundation together with capabilities that can drive omnichannel personalisation.
How Bata has evolved its omni channel offering
Anand explained that Bata has transitioned from being single channel to multichannel to omni channel. He said that Bata are a footwear and accessories retailer across 70 markets with more than 5000 stores. Anand added that they used to be exclusive business outlet stores, and that’s how the journey started. About four or five years ago, they launched their own B2C portal, which was bata.in, e products would be slightly different on both channels, there would be separate inventories for different brands. About three to four years back they started selling on marketplaces like Flipkart and Amazon, each channel would have slightly different audiences to cater to. He said sometimes there would be price variations and the customer experience varied. So, they started connecting inventory across all these channels, so the same product can be seen across all. He said during the pandemic consumers were stuck at home, so they created an experience where customers can scan their feet at home to know their shoe size and order from there and this lowered the cost of servicing because returns dropped by five to six percent. As well as this, Anand explained that during the pandemic, they started embedding QR codes during customer’s journey, so when they scan it, the information will be received on a WhatsApp message, they also launched a home delivery service and gave consumer’s more flexibility in payment options.
Nespresso’s Omni Channel
Michela explained that at Nespresso, they are on a journey but there are two main starting points that were very important to start this journey. She said the first thing you need to understand is what the ideal experience you want to deliver to your customers is. Once you identify that, you have a big foundation and that will drive you throughout the journey. Secondly, you need to define a channel strategy. She explained that for Nespresso, boutiques are a more experiential point of sales, they can deliver an experience that is not possible on other channels. She said you need to be flexible in providing and letting customers do what they want on the channel that they wish, and they have a range of customers, so you really need to personalise each experience, which is where the data comes in. Michela explained by putting together the data, strategy and a vision that will guide you, they are able to deliver a similar experience on the different channels for the different customers. She said a key point that they care about is to maintain consistency across the brand. Michela added that it’s very important to always put the customer at the centre and keep your promise within the journey and in all channels.
Michela said that their boutiques are a key touchpoint and there is this human experience that you cannot find on other channels. The sales assistants guide customers through the coffee journey and bring the human experience that you can find in the boutique onto their online channels and vice versa. If you enter Nespresso through their website, you would be able to experience a personalised storytelling video. She added that they put the digital customer in touch with the coffee specialist in the boutique through video chats, so from home, you can have a boutique experience, they are trying really to combine the two channels. Michela said they need to bring added value and engage with their customers through different content than before.
How brands are developing their physical stores
Jim explained that the report’s full of innovative examples like that such as Freshippo, established in China. He said it’s credited with boosting the popularity of online grocery shopping in the region, 60% of sales are online, but it’s in-store that’s particularly digital. Jim added that it has a lot of things you might expect to get in your local weekly shop, but lots you wouldn’t. So, for example, in the fresh seafood section, if a customer was buying lobsters, they can scan the barcode and the app provides you with a rundown of where it was sourced, a digital certificate that it was organically farmed, how to cook it, which wine to drink with it or if it you want to have it cooked in the in-store restaurant. He explained that live streaming is something that they talk a lot about in both reports. It’s a collision between retail and entertainment and the commentators they spoke to talked about how this represents a significant move away from the more efficient shopping experiences that we might observe in the West. In terms of livestreaming and live commerce, China is leading the way. Their Alibaba commentator, David Lloyd, told them that it makes up 10% of all key e-commerce in their territory. Jim said the third and final example is Currys shop life, where you can have a real one to one conversation with a shop assistant, customer satisfaction has gone through the roof.
Sunny added that at SAP they’ve been working with Adidas, who have this amazing collection of fitness apps called Runtastic for running and training which is an amazing community. About 182 million are signed up for these accounts and you can find out over 200 different data points that they pull together and they’re able to deliver an amazingly personalized message to these consumers and guide them through from the freemium level to the subscriptions.
Anand explained that retailers have a slight advantage compared to CPG brands when it comes to the amount of information they have, because they have first party data. He said as they were transitioning to omnichannel solutions, they saw that the penetration of multichannel usage was less among certain key customer segments. So, they described them very simply into three cohorts:
Younger target audiences typically 20–25-year-olds. They are familiar with online shopping; they use social media extensively and discover trends over Instagram or Snapchat.
They have limited online experience, people in their 40s or 50s and they would need some recommendations. They have all the digital instruments to shop online, but handholding is required.
These customers typically don’t have a credit card, relies more on the cash economy and would prefer to speak to a store manager before deciding.
Anand explained that they realised for the digital natives, they needed to have a presence rolled up on bata.in, their B2C website, as well as marketplaces like Amazon and Flipkart. These consumers shop twenty-four seven and don’t want to visit a store. He added that they’ve created the solution for a live chat, a conversational commerce on WhatsApp called Bata Chat Shop. He explained that the consumer typically uploads their location on a WhatsApp, they find the three nearest stores and they can start chatting with a store manager. This was set up in about 8 weeks during Covid and then, improved it and scaled it up in about 70 plus cities.
For the digital novice, Anand explained that they launched something called a Bata store on wheels, like a digital kiosk. Out of the 5,000 styles that they retail, about 200 styles would be displayed in this small kiosk that would pop up in their condominiums. Along with that, store managers or staff would have digital tablets so if they didn’t like something from the limited collection, they could place an order and they would hyperlocally deliver within the same day or next day. Pre-pandemic their digital sales contribution would be about 3% to 4% out of their overall retail sales, post-pandemic, it reached 15% to 16% of the overall. They recognised that it’s not a one solution fits all.
Michela explained that at Nespresso, firstly they tried to understand what the most important moments of a customer’s journey are with Nespresso, the key is to focus on those peaks and to really be engaged with the brand. They then had to understand, who these customers are, so, they worked on archetypes and tried to understand what these people are driven by and their values. She added that once they understood the general picture, they translated it into Nespresso. Michela said they made a big step in terms in terms of personalisation, for example, they personalise their communication based on coffee preferences. She explained that when it comes to coffee specialists, it’s more about training them on the behaviours and flexibility they need to have instead of giving them a script that suits everyone.
Sunny said there’s trends and keys to success emerging. He said they’re working with Puma right now, doing a lot with their CRM omnichannel across Europe, about 27 different countries. So, a lot of different tastes and consumer segments within these broad markets but what they’re doing with Puma is exciting because they’re able to personalise all the way throughout the funnel, from consumer acquisition to frequency and loyalty. He said on the consumer acquisition side, a lot of that’s happening, is when you see a consumer come onto the website who’s new and unknown, providing them with a small incentive to join the mailing list, just by doing that small level of personalisation, Puma has been able to see their database increase by 50%. Sunny said when you get further down into the funnel, it’s about the data you have on consumers, you’ve been tracking and understanding much more detail about them. That’s where you can really think about getting the message to the right person, maybe ignoring some consumers that are obviously low involvement. When you think about the message, Puma wants to think about providing product recommendations that are relevant based on things that they know they’ve been viewing before and then also at the right time. He explained that some shoppers are up on their morning commute, others are late night shoppers, send it at a relevant time, to communicate on their terms. Sunny said it was exciting to see Puma have this success, both on the acquisition and through to frequency and loyalty, the real win is they’ve seen their click through rates increase by about 10%.
Anand explained that you don’t want to disrupt the consumer, you want to make the customer journey as seamless as possible. He said wherever the consumer is, let them discover and have a consistent experience while engaging with the brand. Anand said when you go out shopping with family or friends, it can be very social. However, during the pandemic they were shopping on their own. He said there are these new network-based business models, which are digital platform business models that allow you as a retailer or omnichannel retailer to connect into a bunch of users or sectors. For example, at Bata they offer the service where you can scan your feet for sizing, if you give this functionality to a patient, the doctor has the capability to scan this and place an order for a certain shoe, whilst you’re at the doctors, so you can actually embed your shop, which they call an ‘embedded commerce’.
Michela said communicating around sustainability is very important, but at Nespresso, they say doing is everything because they try to embed sustainability into every touchpoint under different forms. When it comes to coffee production, they care a lot about their farmers, they pay fair prices and help the communities they live in; they have some pension funds; help kids to go to school. She added that when it comes to the materials that they use in their boutiques, you can find counters made of recycled materials. Michela explained that sometimes they take regions where coffee is not produced anymore and revitalise these regions, starting with the agronomists, to grow coffee again. So, it’s more than just communicating, it’s trying to embed sustainability in every touchpoint. She said that consistency, especially for these topics, is important, you cannot claim you are a sustainable company unless customers see this reflected in everything that they interact with. For example, they use recycled material for their capsules, and they help customers recycle their capsule in a seamless way. For example, in Switzerland, as a customer, you put your empty capsules in a bag, put it in your letterbox and when the postman comes, they take your capsules to the recycling centre.
Jim said they do a lot of research into retail and generally the executives they interview, or survey are the most aware of the need to change and evolve, to keep up in what is an incredibly competitive and evolving sector. He said it’s very easy to get left behind, one of the things that came out very strongly in the interviews was the importance of connected commerce. He said shopping has always been a social experience, and recent trends certainly have opened up consumers to the idea of sharing experiences across geographies and virtual worlds. One of the things they draw out is Taobao being a great case in point and Meta is in the news quite a lot, especially with Facebook which is a successful example of a virtual world where you can personalise your avatar and buy virtual branded goods online and socialise with your friends. Jim added the importance of data getting that 360-degree view of the customer to be able to create experiences wherever they are, whether it’s online or offline and shopping habits will evolve as customers demand ever more personalised experiences. Jim said the role of the store will remain important but it’s going to be more embedded into the customer journey to stay relevant and that’s where data comes into play, the ability to get that unified customer journey to deliver automated experiences. Jim added that from the report he liked Nike’s Rise concept stores in Asia, it’s like a lifestyle hub, you can socialise, get your shoes fixed, enlist in community events, see your running stats on the board, it’s a great example of the future and an indication of how shopping habits will continue to evolve. Sunny finished by saying they’ve had an incredible discussion with a lot of very sophisticated brands and a lot of digital omnichannel maturity. He said it should be a bit of a wakeup call to some of those categories that aren’t as data rich or digitally mature. He said there’s an urgency to gather data and to close that engagement gap. In 2022 there’s a lot of uncertainty, so we’ve got to be agile and be able to respond. He said they’ve talked a lot about the way they can respond on the front end but bringing the back end together, fulfilment is critical if you’re going to be doing this type of business. Sunny said it’s exciting, the MarTech landscape is really complicated so it’s important to simplify that so you can simplify your ability to deliver, strategic partners are going to be key to that in the future.