Originally posted on Exchange4Media
It is well known that India’s retail sector is undergoing rapid transformation. Rising household incomes and easy credit are combining to drive a shift to consumerism. Today, the retail industry accounts for more than 10 per cent of India’s GDP and about 8 per cent of the country’s employment.
By 2020, the retail sector is expected to double in value to US$1.3 trillion, up from the current US$672 billion. E-commerce forms a significant part of this growth - the business-to-business (B2B) e-commerce market has been forecast to reach US$700bn by 2020, with business-to-consumer (B2C) e-commerce reaching US$102bn.
What digital brings to the table for retailers
Digital platforms are fundamentally changing the way many businesses work, as they offer the capability of using data to break through traditional boundaries of function and organisation.
For retailers, digital enables opportunities to acquire new customers, increase footfall, add value through better engagement with their existing customers, reduce operational costs and improve employee motivation. Taken together, these benefits are delivering a positive impact on revenues and margins.
Digital technology is driving the re-imagination of the store of the future. Price and quality are no longer strong enough attractors – the rise of online shopping means retailers must work harder to persuade customers to visit their physical stores, and hold their interest once they’re there.
Digital investment is the recipe for retail success
Rapid advances in digital technology are enabling the creation of memorable and personalised in-store experiences for customers at scale. Consumers unquestionably desire such experiences, and businesses are responding by explicitly designing and promoting them. Digital technologies are helping retailers understand consumer needs, provide greater choice (through visual merchandising for example), and help shoppers decide, via innovations like Virtual Trial Rooms.
In India today, one third of all buyers research online before making a purchase. This behaviour is known as ROPO – research online, purchase offline. Smartphones have ignited internet adoption in our country in all areas of life, including evaluating and researching possible purchases. This makes it all the more important for retailers to invest in the digital medium and engage with customers throughout their purchase journey.
At the same time, digital helps retailers reduce costs, increase loyalty and enhance customer service.
In confirmation of these trends in customer expectations and sector competition, a recent forecast says global spending on retail sector technology will grow 3.6 per cent to reach almost $203.6bn in 2019, with similar growth rates for the next two years.
Programmatic for a better retail experience
Today’s customers expect their shopping experiences to mirror their personal online world. Data defines their online experience, and they expect personalisation in the communications, products, and services they consume. Thus data, and the technology to exploit it, is crucial in attracting customers through personalising purchase journeys.
The most effective way to leverage the vast quantity of data on consumer behaviour, now available to the retailer, is programmatic advertising.
Programmatic is, after all, about handling massive amounts of data and then using that data to drive real results. That meshes perfectly with Artificial Intelligence (AI), which is about the intelligent handling of these mountains of data to ever-greater effect. AI is particularly well-suited to help programmatic advertising fulfill its promise and drive real outcomes for brands.
By combining retail data with the existing data sets on online behaviour, programmatic will have access to a much more complete picture of who the consumers are and how they behave online. One key thing it will let us do is know more precisely when a consumer has actually become a customer, or has completed a purchase. It then becomes possible to stop placing ads for the original offer and instead switch to up-sell and cross-sell opportunities. Also with the advent of third-party deterministic data sets like telecom use, TV viewership, purchase habits, insurance and classifieds, programmatic is advancing. By using AI it is able to predict the customer’s purchase cycle – when the next purchase will be made.
Path to purchase In the new world of retail, the complexity of a path to purchase becomes increasingly evident. According to a June 2018 report, a quarter of India’s population were digital shoppers last year - a number forecast to rise to 41.6 per cent by 2022 - and when they visit a physical store, they’re using their smartphones to look up product reviews, compare prices, and find coupons. Theirs is a cross-channel, multi-platform journey built around retail, e-commerce, and mobile-commerce omni-channel experience. And it is programmatic marketing that allows retailers to reach audiences across all these channels with precision. Categories such as automotive, consumer durables, jewellery, electronics and real estate have to map their consumers’ journey across channels, since most buyers are following the ROPO pattern – so omni-channel engagement is essential, throughout the purchase journey.
Retailers also now have the power to engage with consumers using interactive banners and videos as part of an integrated marketing campaign, through targeted location-based advertising on mobile devices and Digital Out Of Home (DOOH) screens – and measure the impact of such a campaign on store visits. Xaxis Places is a solution for Indian retailers that closes the loop between digital activity and physical store visits.
Retailers must learn how to navigate this non-linear, twisting and turning path. The reward for mastering this challenge is access to a consumer who is ready to become a customer, and a customer who is conditioned to become a loyal store and brand supporter, with enhanced lifetime value.