This article first appeared in the
Winter 2017 issue of The Record.
Gone are the days where customers visiting US-based home improvement store Lowe’s had to flick through multiple swatches of paints and materials, or wander round the store looking at appliances. Now, they simply populate their Pinterest boards with images of their ideal kitchens, send it to Lowe’s and the retailer uses analytics and machine learning technologies to find relevant products in its inventory to produce relevant kitchen concepts. When they get to the store, customers use a Microsoft HoloLens headset to finalise a holographic representation of their newly designed kitchen in real scale by switching between different colours and finishes and moving appliances.
While Lowe’s is somewhat of a pioneer, this is just the start of what’s likely to become the standard for retail customer experiences, predicts Pinar Salk, Microsoft’s industry solutions director for retail.
“Successful retailers are no longer the ones who sell the best products; they’re the companies that can identify and engage their customers as individuals, provide them with relevant product recommendations and personalised promotional discounts, and offer a unified and continuous shopping journey across all channels,” she says.
However, most retailers are yet to deliver this interactive and frictionless shopping experience, largely because they have no way to connect the customers in their stores to the customers using their online and mobile channels.
“Ideally, customers should be able to search for products online, create a wish list, come into a physical store and be personally greeted by an associate who will take them directly to those products,” Salk comments. “However, most retailers have separate siloed systems for capturing operational, online and transactional data, and they often have no way of collecting data from their physical stores. This means they can’t create a 360-degree overview of every individual and their preferences, so they can’t provide a consistent service when customers switch between channels, or identify potential sales and marketing opportunities that would drive sales and customer loyalty.”
To provide a friction-free and personalised shopping experience, retailers must first find a way to capture and analyse data from every online and offline customer touchpoint. Next, they must identify how to use technology to capitalise on these insights to meet customers’ needs and expectations at each stage of the shopping journey.
Bluetooth beacons, smart cameras and sensors that connect with customer-facing mobile apps provide an easy way for retailers to capture data about the customers visiting their physical stores. US-based outlet store Nordstrom Rack, for example, has implemented Microsoft cloud-based beacon technology from Footmarks so in-store customers can use a mobile app to quickly locate products, scan barcodes to find variations of the items at different outlets, and place online orders. Not only do the beacons make the customer experience seamless, but they also allow Nordstrom Rack to capture data about how customers behave in stores so it can learn what products they like and deliver timely personalised offers via the mobile app.
“Nordstrom Rack can use advanced analytics and machine learning to combine this with data from customers’ past purchases, their online searches and wish lists, social media posts and other sources to provide individuals with relevant product recommendations or customised discounts,” comments Salk.
This capability is already helping Nordstrom Rack to identify new opportunities to boost customer loyalty and drive revenue. Salk cites an example of a woman who visited a Nordstrom Rack store and bought a watch.
“Previously, Nordstrom Rack would only have seen the transaction data and assumed that the woman specifically came to the store for the watch and categorised her as an accessories buyer,” she says. “However, data from the new beacons showed that the woman spent 30 minutes browsing the designer shoes and just three minutes in the watch section, suggesting that she was actually a shoe lover who couldn’t find what she wanted. Armed with this insight, Nordstrom Rack can now send her personalised recommendations or promotional discounts for shoes she may like – a sales opportunity that would have been completely missed before.”
Having access to both online and offline analytics also empowers retailers to develop targeted marketing campaigns that encourage customers to spend by making them feel valued as individuals. Cosmetics retailer Sephora, for example, has worked with marketing consultancy SapientRazorfish to implement a cloud solution so it can notify customers when their favourite products are in stock or on sale via e-mail, direct mail, SMS and mobile push notifications.
“The platform uses Adobe Analytics, Microsoft Azure and PowerBI to provide a 360-degree overview of a customer’s purchase history and combines it with contextual data about factors such as the climate and time of year,” Salk comments. “This allows Sephora to understand how and when to engage with different customers, so it’s much more effective at converting leads into sales than simply emailing a generic offer to everyone. Microsoft is working with Adobe to bring its Experience Manager to more retailers like Sephora so they can use contextual information to create and deliver personalised customer experiences from a single platform across all channels.”
Salk predicts that as new technologies become more powerful, intelligent and cost-effective to install, it will only become easier for retailers to deliver the experiences customers expect.
“Virtual agents and chatbots are already being used by retailers like US department store Macy’s to quickly answer customer questions, smart cameras and Microsoft HoloLens are powering interactive in-store experiences, and artificial intelligence (AI) technology has the potential to create personal in-store stylist applications – it’s an exciting time for retailers,” she concludes. “Microsoft is committed to working with our partners to bring the most advanced analytics, machine learning, AI and other technologies to our powerful cloud platform so we can help retailers worldwide to digitally transform their customer journeys.”
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