It’s no secret that digital technology and media have profoundly disrupted the retail industry. It’s estimated that more than 7,000 retail stores have already closed in 2019, including significant numbers from traditional powerhouse retail brands like Avenue, Gap, Kmart, Sears, Party City -- the list goes on. Even the big and mighty ones are not immune to the forces of disruption, led by Amazon.
So, there’s no small irony in noting the emergence of a new digital media platform that promises to once again transform the retail industry: the actual brick-and-mortar retail stores themselves. As retailers have begun to evolve from a showroom/warehouse paradigm to an experiential one, parallel developments in data-driven messaging and personalization have a new outlet that both enhances the experiential factor in-store and can extend and potentially compress the consumer funnel into the physical store all the way to the cash register -- and beyond.
Like brand-building, creating worthwhile, value-added retail experiences is a function of the sum of numerous components, from product selection and merchandising to the role played by salespeople and other staff to how transactions are handled (see Amazon Stores), communications and in-store media.
Until recently, methods of communicating with consumers in-store have been pretty rudimentary (e.g., static signage and one-size-fits-all audio or video programming). Consumers look to signage for direction or may see promotional messaging. Audio/video channels have mostly been a bust and are viewed as background noise at best or annoying intrusions by customers and staff.
Moreover, most retailers don’t have the ability to even attempt to execute a coherent, integrated cross-platform in-store messaging strategy that can reinforce the brand, signal new product availability and sampling and offer incentives to purchase. But they should not only be doing that; they should also be personalizing the messaging based on who the consumer is, what is known about them (from multiple sources, including online browsing behaviors prior to the visit), where they are in the store and any number of other data streams, from weather to the inventory pipeline. All of this should be done in real time.
This vision brings the lessons brands have learned through digital into the traditional brick-and-mortar retail environment -- the new media platform. But it’s more than that. It’s actually blending the two environments because what happens online (behaviors and transactions) should inform what happens in-store and vice versa. Fully realized, we can begin to approach a true integrated marketing (remember that?) vision, where there is a full consumer funnel, from brand-building to purchase (either online or offline) to retention, repeat visits and purchasing, etc. The consumer experience is holistic, and marketing activities should be, too.
Personalization of messaging is critical at the point of sale. One company that has been aggressively testing personalization strategies is McDonalds. Through its purchase of Dynamic Yield, it not only changes its drive-thru menu based on the time of day, weather, etc., but it is also toying with technology that can read license plates and make recommendations based on previous purchases. Walmart is also experimenting with new retail formats and experiences with its Store No. 8 incubator, as are other major chains. As part of this, they should rethink the store itself as an integrated, personalized communications platform.
The definition of personalization is changing. It’s no longer about retargeting a consumer and following them online with the one product they looked at online months ago. It’s not about sending form emails and customizing the consumer’s name. Personalization may have gained momentum online, but if brands aren’t applying this in real life, they are only creating a fraction of the connections they can and should be.