Retailers must become data businesses
As people, we make roughly 35 000 decisions each day. All of which are led by emotion. “As a retailer, if you’re able to make your customers feel the right emotions, this will lead to business.”
This was one of the statements made by Nicolas Diacono, technological trends expert at Echangeuar. He was speaking at the third annual RCS Retail Summit 2019, recently held in Cape Town.
Diacono decoded some of the key technological innovations of 2018 and 2019, and showcased how each can be applied to retail businesses. From chatbots and artificial intelligence (AI) to machine learning, virtual reality (VR) and the Internet of Things (IoT), there are so many opportunities for creative retailers to dazzle their customers and keep them coming back for more.
How do modern retailers get this right? By changing up the status quo, says Diacondo.
Take a trust-based concept store that opened up in Manhattan last year. Offering customers the option to pay when they like, anyone can walk in, grab a drink – that costs $10 or around R140 – and leave. The store is run by a start-up called Dirty Lemon, which typically sells its beverages online. The honesty concept ties into its online offering. When purchasing Dirty Lemon’s drinks for home delivery, customers send the company a text message and are then prompted to enter their credit card details via a text message reply. Buying a beverage at the Dirty Lemon concept store works in the same way – customers simply text the company to say that they’ve picked up a drink and immediately get a reply explaining how they can go about paying for it.
This trust relationship may seem risky, but it actually builds customer loyalty, explained Diacono, noting that only 5% of customers don’t pay for their drinks. “This would never work in a city like Paris. I’d say 99% of people in Paris wouldn’t pay. I’d probably be one of the first to steal a bottle,” he quipped. When it comes to innovation, the success of one thing or another depends on the culture of the market you’re trying to target.
This makes it critical to understand your customer.
Targeting the right people
According to Diacono, as part of any conversation around new innovations affecting retail, a business needs to consider who it is trying to sell to and find out as much as it can about its target customers. And the new big players in the retail market are the Generation Z. These customers, Diacono noted, want to have a positive impact on the world, they’re more prone to loneliness and depression, they use social networks very differently to the rest of us, and when they walk into a store, it’s less about actually buying something and more about the experience they have.
Here’s an example that Diacono shared.
Amid what some have described as the ‘retail apocalypse’, one type of store is booming thanks to social media. While department stores are closing down across the globe, we’re seeing an increase in the popularity of standalone beauty retailers, he said. These retailers are being boosted by consumers who want to recreate the make-up looks they’ve seen on platforms like Instagram. And many of these stores have taken the ‘beauty counter’ concept a step further by creating spaces where customers can show off the make-up looks they’ve created while spending time in the store. So they’re not only attracting more customers by offering a novel experience, they’re also getting free advertising as these customers promote their brand.
Retailers need to become data businesses, using all of the insights they have to really deliver what their customers want, he concluded. “For marketers, there is a real opportunity to give customers something different. Modern customers have positive experiences when you have unique and creative interactions with them.”