By Tim Mason, CEO, Eagle Eye
Retail marketing centres on devising innovative strategies to engage customers and enhance offerings and interactions to shape desired behaviours and outcomes. And now, with the rapid rise of AI and machine learning, retailers can do what was previously impossible – achieve true one-to-one personalisation and do it cost-effectively and at scale. However, retailers eager to leverage these advancements must be prepared to reevaluate their strategies, integrate new technologies and adopt new approaches.
As we enter 2024, AI’s pivotal role in retail marketing becomes increasingly apparent, positioning it as a key focus area this year. Despite its origins in the 1960s, 2023 marked a historic milestone where the practical applications of generative AI became widespread in everyday scenarios. Its impact extends across various industries, moving far beyond the realms of ChatGPT-powered chatbots. According to one study, 82% of grocers say that adopting AI will be necessary to compete in the future.
But the effective utilization of AI in retail transcends adoption; it’s about strategic application, too. And so this key question emerges: How will retailers harness AI and other emerging technologies to meet shoppers’ needs while enhancing their profitability? This article explores several possible answers to that critical question.
Context also matters going into 2024. We’re living in a high-inflation environment, and consumers are reacting accordingly. Eagle Eye’s Grocery’s Great Loyalty Opportunity report reveals that 40% of UK shoppers are utilising more coupons, with 31% reducing overall spending.
Yet, the demand for value from today’s consumers goes beyond expectations of price cuts through loyalty programmes, coupons, or discounts. The overall retail experience holds significant weight. Illustrating this, a PWC study found that 43% of customers would pay a premium for greater convenience, regardless of ongoing economic concerns.
Considering these factors, what are the top three trends driving the UK retail sector forward in 2024?
Enter the era of AI-powered-hyper-personalisation
According to another study, AI solutions have attracted tremendous interest throughout the retail sector, with 90% of retailers already investing in AI.
A prime example of AI’s application in retail is enhancing personalised shopping experiences. The ability to scale personalisation and deliver uniquely tailored and individualised customer experiences will become increasingly crucial in delivering value to shoppers in today’s market.
Our research shows that personalised recommendations are also welcomed and expected by shoppers. Nearly 84% of consumers we surveyed for Grocery’s Great Loyalty Opportunity believe that targeted recommendations would help them save at the tills. Another 71% of shoppers said they would consider buying a product if they received a promotion or offer while shopping in a brick-and-mortar store.
Even in an era of heightened budget-consciousness, individualised retail interactions have been shown to effectively encourage increased spending. A study by Think With Google highlights this trend, revealing that 40% of shoppers tend to spend more when their shopping experiences are personalised to their preferences.”
Personalisation in retail isn’t a novel concept; it’s been a part of the industry for many years. However, the emergence of AI has supercharged this strategy. Now, retailers can access AI-driven solutions capable of transforming a handful of distinct offers into millions of personalised options. This is achieved by leveraging personal, contextual, real-time, and historical shopping data, allowing for unprecedented customisation in retail offerings.
Interestingly, dynamic personalisation delivered in an omnichannel environment also contributes to another core key prediction for the retail landscape in 2024.
Mobile makeover, “phone out” shopping in 2024
In the traditional shopping mode, mobile phones often remain a passive, pocketed presence. But as part of the march towards authentic omnichannel shopping experiences, retailers are shifting this practice, incentivising customers to make shopping a ‘phone-out’ experience.
What does this mean in practice?
This approach transforms the consumer’s mobile phone into a personalised shopping companion. The goal isn’t to replace human interaction but to augment and streamline the shopping process, making it more efficient and tailored to individual needs.
This trend aligns with current global shopping behaviours; a study by Profitero reveals that 8 out of ten U.S. shoppers are digitally influenced during their shopping journeys, a trend consistently mirrored in other regions.
The idea that the in-store shopping experience is becoming obsolete is greatly exaggerated – and our research highlights this. In 2021, 82% of UK shoppers made an online purchase, indicating a strong inclination towards e-commerce. Yet, these online transactions accounted for only 30% of the total retail spending, and only 3% of shoppers have abandoned brick-and-mortar stores altogether, underscoring the enduring relevance of the in-store experience, even in a leading e-commerce market like the UK. Recognising that online and offline retail channels are not separate entities is crucial. So, where does that leave retailers? They must unify online and offline experiences to align with current consumer shopping behaviours, and several forward-thinking brands have already stepped into the future of ‘phone-out’ shopping.
Clothing retailer H&M is working with Snap to incorporate a virtual try-on service for its products in the retailer’s and Snap’s app. Another example is The Very Group, which uses its ModiFace technology to allow customers to try on cosmetic products virtually. Similarly, Nike offers several types of customer self-service via their app that specifically apply to the in-store experience. These include digital try-ons using augmented reality technology and the ability to summon shoes in the user’s size to try on in the store.
However, most retailers utilising phone-out features in their physical stores are not offering practical value. Instead, they fall into the “entertaining at best” category, meaning retailers still have a massive opportunity for mobile improvement. Creating more intelligent and connected retail spaces means giving stores a true ‘mobile makeover’ whereby shoppers receive personalised recommendations, offers, and other value-added information on their phones as part of the in-store experience.
Channels? What are those?
Using individualised channels for sales and marketing is a practice most retailers have become accustomed to. However, this approach is set to fall by the wayside as authentic omnichannel retail comes to the fore.
Data-fuelled holistic customer views empower retailers to give shoppers what they want when they want, thereby improving the shopping experience. But the “data-fuelled” aspect is critical; only through data integration can retailers realise the potential of the previous two trends.
This requires breaking down data silos to learn more about shoppers. In other words, distinct sales and marketing channels must be unified. Doing so will enable retailers to gain more accurate customer insights, which they can then act upon.
Unfortunately, this is one area where retailers are lagging. Good examples are hard to come by, but one I noted in the new edition of Omnichannel Retail is the coffee chain Pret a Manger. Its Pret Perks loyalty program and Club Pret subscription service are fully integrated, ensuring information flows between them to gain more accurate insights into their customers.
In 2024, expect businesses to work on data integration that enables end-to-end customer views, which can then be leveraged to deliver content that creates an experience like individualised social media feeds. In other words, every interaction will become unique, and retailers that master these capabilities will enjoy a competitive edge.
2024 stands to be a defining year for UK retail
It’s fair to say that most retail experiences today are largely generic. Even high levels of segmentation still result in strikingly similar experiences for thousands of customers. This will soon become a thing of the past, primarily due to technologies like AI making it possible for the first time.
Retailers already have the data, but the ability to leverage it to its full potential, particularly in real-time, is a recent phenomenon. With a chance to deliver more dynamic and engaging shopping experiences, this is a generational opportunity to transform retail and be on the cutting edge of a brand-new era of shopping.
However, it will take a willingness to redefine the retail experience, invest in technology, and bring new methodologies to harness mass amounts of customer data in real time successfully.
What will you be doing to capitalise on these opportunities in 2024?
ABOUT THE AUTHOR
Tim Mason, Chief Executive Officer, Eagle Eye
A retail industry veteran, author and keynote speaker, Tim Mason’s career spans over 30 years and includes experience as the CMO and deputy CEO of Tesco, the largest multinational grocery and general merchandise retailer in the UK. Mason led the launch of Tesco Clubcard in 1995, creating the world’s first major grocery loyalty program. A new edition of his popular business book, Omnichannel Retail – How to Build Winning Stores in a Digital World, was released in September 2023, inspired by the many changes that have impacted the retail sector since its first release in 2019. Tim is also the CEO of Eagle Eye, a leading SaaS technology company empowering personalised marketing and loyalty solutions used by retailers worldwide.
