Rethinking retail

As consumers become increasingly empowered by new technology and social media, the traditional concept of customer loyalty programmes should be turned on its head.

This is according to the latest IBM Institute for Business Value's annual global Consumer Research Study. The study included a survey of over 28 000 consumers from 15 different countries (including both growth and mature markets).

A total of 1 800 South Africans were included in the survey, across income, generation and product categories. Retail industry solutions lead for IBM SA, Gerard Dumont, says the balance of power has shifted in the retail space.

“It's now less about the retailer and more about the consumer. Retailers shouldn't ask how are customers loyal to me? But rather, how are we loyal to our customers? Retailers have to earn trust, because trust builds advocacy, and advocacy leads to spend.”

The study found that 80% of South African respondents said they want to use technology when it comes to making purchasing decisions. At the same time, 95% still wanted to go into the physical store to actually make a purchase.

Despite the consumer's willingness to embrace technology, Dumont notes that local retailers are not yet making full use of the opportunity to use technology to provide personalised deals for their customers. According to IBM, South African retailers are generally three to four years behind the curve when it comes to technology adoption.

“Not because they don't understand analytics, but rather that their priorities are still fixed on store expansion typical in a developing market. In addition to this, most retailers need to shift their focus to earning and retaining consumer trust ahead of deploying any technology.”

A key finding of the survey was that as consumers share more personal information online via social networks, they are also increasingly willing to share information with retailers - as long as there is a value pay-off.

“South Africans were actually more willing than respondents from mature markets to provide retailers with personal information,” says Dumont. “If asked outright if they would share information, the majority would say no. However, if they were asked if they would share information in exchange for something relevant to them, then most people would say yes - with the exception of financial information.”

In SA, despite the growing number of loyalty card programmes on offer, major retailers are yet to really start using the wealth of information they collect from their consumers. “It's clear that consumers are willing to share information in exchange for something of value. SA retailers are simply not doing that at this point,” says Dumont, adding that he believes South African consumers may start seeing more personalised, one-to-one advertising and in-store communications within the next 12 months.

Dumont says social media offers retailers unprecedented access to information about what consumers honestly think about their brand - provided they are willing to listen to it. Dumont, however, adds that retailers must realise that social networks should be used for serving, rather than selling. “The social media platforms offer a wealth of information on what your brand is known for, what's working for you, what isn't and also what the perception of the competition is.”

According to the survey, convenience is of the utmost importance for South Africans. Forty-five percent of respondents said they believed visiting a retailer's Web site would save them time and be convenient, while a considerable 92% of respondents said the same of social networks.

Meanwhile, 70% of respondents said they are not concerned with making a purchase via their mobile phone. However, 80% said they would like to be able to use their phone to check-out in store.

Dumont says given the low number of South Africans actually wanting to make purchases via their phones, the question must be asked of how many retailers actually provide the opportunity for anyone to do so in the first place.

“While e-commerce is starting to see critical mass as the digital participation curve kicks in, consumers in SA simply aren't being given the same opportunities when it comes to m-commerce.”

Dumont uses the example of Tesco, in South Korea, which has introduced QR-code-based “stores” in subway stations. Customers can scan the code with their mobile phones in order to make a purchase for a specific product, which is then delivered directly to their homes.

“I can see that kind of thing possibly being implemented in a city like Cape Town where public transport is starting to become more sophisticated. Retailers need those empty spaces like train stations and bus terminals where they can inject mobile campaigns,” says Dumont.

“Once we start to see that kind of innovation in mobile commerce, I believe we will start to see those mobile stats leap-frog e-commerce.”