Helping shoppers find the goods they want across seamlessly linked sales channels is no small challenge but it's one that retailers are achieving, with the help of technology, writes Chloe Rigby
The art of merchandising is fast becoming a scientific discipline as retailers respond to the variety of ways in which customers can now browse ranges of goods.
Data-driven technology is providing new answers to problems that merchandisers once relied on intuition and experience to solve. That use of big data is fast becoming necessary when shoppers now expect to research their potential purchases through the most convenient channel, and at any time of the day or night.
A discipline that started by working out the best ways to lay out a store, before moving online to discover the most likely approaches to setting out wares on a website, is coming full circle, with the movement of digital merchandising into the store. The first generation of online merchandisers found ways to display the breadth of the range that the shop could offer within the confines of a screen that got smaller as mobile commerce emerged. Currently emerging are new ways to display, within the confines of a shop, the wide online ranges that burst the boundaries of traditional warehouses. The challenge now remaining for today’s merchandisers is to give customers their own personal view of the range, no matter which device they choose to view it through.
“Retailers,” says Michael Ross , chief scientist at eCommera , “must recognise that demand is driven by different factors, and materialises in different locations.”
Meanwhile, Roger Doddy, director at product recommendation specialists Peerius, points to the need to show visitors the items that are relevant to them as individuals, and also fit the context in which customers find themselves.INDIVIDUAL VIEWS FOR INDIVIDUAL CUSTOMERS
The need to enable the seamless crosschannel retail that is omnichannel has developed in response to customers who choose to research and buy in varied ways. Customers may search a site from a smartphone, a tablet computer, or a laptop or desktop for a particular item. Or a customer may simply browse in search of retail inspiration, shifting from one device to another through the day.
Whether customers are searching or browsing, retailers can now respond across channels by showing consumers search results or recommendations, in a way that fits both individual profile and current context, whether that’s geographical location of the type of device the customer is using. Each type of system relies on the single view of the customer that multichannel retailers have been developing in recent years. Add automated or triggered search and recommendations, and the vast resources offered by big data, and results become evermore targeted.
That’s important, says Roger Brown, chief executive of Peerius, when consumers are moving between devices both during the course of the day and during the course of a purchase. “ Each channel has a part to p lay,” he says. “ That’s why it’ s so important to have a single view of the customer to understand the different channels, to understand what context you ’re working on in that particular channel. “Particularly on the mobile channel you're really just wanting to make a transaction, you're not really interested in browsing and exploring, discovering. You've done your research and just want to commit and purchase something, whereas on your desktop or iPad you can be slightly more explanatory, more in discovery mode at that stage, not with such a clear intention to buy. It's important to understand the behaviours around each of the channels as part of that single view of the customer."MERCHANDISING THE WEBSITE
Figures cited by IBM suggest that 90 per cent of the world's data was amassed in the last two years, with a further 2.5 quintillion bytes created every day. Retailers are amassing their fair share of that data through systems that now hold vast quantities of structured and unstructured information, not only on their product range and ordering system but also on individual customers, their previous purchase histories and the way they behave on site. Add to that personal information data about external factors, such as the time of day, the season and the customer's geolocation, and retailers can gather the kind of data that goes beyond segmenting, and towards identifying what is relevant to the individual.
The latest technology means that customers can see entire marketing campaigns that are personally relevant to them, whether that's offers on items that are seasonal in their part of the world or those that chime with previous purchases. Davina Erasmus, product manager at search and merchandising software specialist SDL Fredhopper, says dates such as summer holidays can be particularly useful when setting up triggered campaigns that be shown to specific groups of customers, starting and ending at pre-determined times.PERSONALISATION IN-STORE...
Take that kind of merchandising beyond the desktop PC, and more opportunities emerge. In the store, more shop assistants equipped with tablet computers are using them to make personal recommendations to customers, based on what those customers have already bought and their behaviour in store. Additionally, in-store kiosks are showing customers the wider range. Offers can be targeted when shoppers are signed in using, for example, a loyalty card. (See the case study for how Boots uses its Advantage Card to drive in-store personalisation across channels.)
Matt Curry, head of ecommerce at Lovehoney, which has already built its own point-of-sale system for its Coco de Mer shop, suggests a scenario in which sales staff could use iPads to build the customer's profile as they serve them and then generate recommendations.
In future, suggests, Robert Doddy of Peerius, which specialises in ecommerce product recommendations, fashion retailers might offer personalised product recommendations in changing rooms. Shoppers might go to the changing room with the item they want to try on and then scan its barcode with a changing room scanner to see suggested items that complete the look or are related to the product they're trying on, whether that's stock in store, online or other stores. Peerius is currently in the early stages of working with retailers on doing this. "I think it's the sense of that whole joined-up approach to serving another shopper's needs that we're seeing time and again," Doddy says. "The whole personalisation piece these days is about putting suggestions in front of people that are as relevant to them as individuals as possible - that's absolutely key."…AND ON THE MOVE
We're increasingly shopping through mobile devices. House of Fraser , indeed, recently announced it was to prioritise design of its mobile site over its desktop site in the light of the news that more than half of its site visits come from such devices, while Lovehoney's Curry says that close to 30 per cent of its site visits are from mobile devices. That presents a new challenge: that of showing customers the most relevant part of their range over a tiny screen. Curry believes that while retailers can effectively merchandise their sites in the same way as they do their desktop site, no-one has yet mastered merchandising on smartphone.
Rather, mobile may currently lend itself more to optimising search in order to ensure the most relevant goods to come up in response to the customer’s quest.
SDL Fredhopper’s Davina Erasmus points to ways to show search results in a more personalised manner over a mobile phone. “You want to know that when a mobile device is being used you have specific products showing up in that first results page. You ensure that you have the right set that shows up at the front, at the top, based on the fact that this is a mobile device, maybe based on previous purchases and previous sessions when they have looked at specific products a number of times, so you can build up that interest.”
Those using mobile phones are also likely to be on the move. Because technology can pick up on the fact that a specific shopper is in a specific location, it can also point out the stores that have the item they want to buy in stock. But this depends, points out SDL Fredhopper’s Erasmus, on how much information the customer or visitor is willing to allow retailers to use. “I think as time goes on people are finding that the convenience is really enough that they are willing to say: ‘Do remember me across devices, and do remember things like I usually go to this store. Then when I’m looking at something maybe bring me back results first for that store.’”DECIDE WHAT TO SHOW – AND NOT TO SHOW
The other side of showing relevant items is to block those items that are not relevant. “If the customer has already bought certain products, you could take those away from the results,” says Erasmus. On the other hand, when customers are looking at certain items, retailers might then want to show other related items.
For sex toys retailer Lovehoney, showing the wrong items can be positively damaging, says Curry. “With our type of product we have to be very sensitive about what we are merchandising to people,” he says. “If you’re in fashion and show someone the wrong style of dress they’re not going to freak out, but in our business if you show them something they have no interest in they are going to freak out.
Your rules need to be much more intelligent, much more based on the categories they have browsed and the items they have purchased.” But getting it right can be very profitable. Lovehoney has said that personalised recommendations from Peerius helped it to boost average order values by 74 per cent.
Curry adds: “We have different merchandising strategies depending on the sort of page you’re looking at. We can show you alternatives, push the price up slightly by showing slightly more expensive items, as well as accessories and related items.”
Lovehoney is also currently using Peerius’ new Smartmedia product to place relevant products next to social media comment on its busy forums. “If you have reviews from other customers it means a lot more than if we said it,” says Curry. “Show them forum posts related to that category. Eventually it will give the customer a much more informed decision, get something they actually like and they will become a loyal customer, much more than if we said buy this thing.” Speaking from Experience
"The trick is cross device - we're slowly becoming nearly 30 per cent mobile. It's a general problem for merchandisers and analytics: how do you get a decent lifetime customer figure when people are accessing through all these different devices? All you have to do to tie everything back up is consider at what point they log in. Then once they have, they're this customer."Matthew Curry , head of ecommerce, Lovehoney
"You want to know that when a mobile device is being used you have specific products showing up in that first results page. Responsive design enables you to scroll more if you want to, but you ensure that you have the right set that shows up at the top, based on the fact that this is a mobile device."Davina Erasmus, product manager, SDL Fredhopper
A CHALLENGING ENVIRONMENT SPEAKING FROM EXPERIENCE
"I think the whole volume of data these days and the speed at which things happen - someone clicks, response, walks into a shop - trying to capture all these interactions and make sense of them in a split second is a tremendous challenge but I think it's an exciting one."Roger Doddy, director, Peerius What's Changed
Merchandisers are now starting to deliver personalised experiences that are proving capable of boosting sales significantly. This level of personalisation is only possible as retailers start to harness and use the big data that they're now collecting from their businesses. That in turn builds on the single view of the customer that many have now mastered. Added together, these are all signs that British retailers are reaching new levels of maturity and sophistication in their digital commerce businesses. Investment made some time ago is now starting to deliver rewards, and that’s boosting profits in a market that might otherwise be flat.How Boots Personalises the In-store Journey
Stores play an important part in Boots’ multichannel business. With 88 per cent of the UK population within 10 minutes of a store, and 45 per cent of those who order online collecting in-store, the company set about personalising the customer journey into the store. By showing relevant offers to its loyal customers, many of whom are members of its Advantage Card scheme, it aimed to boost repeat visits to the stores.
The Boots Advantage Card scheme has 17.9 million active users – including twothirds of the UK’s adult female population – and 60 per cent of Boots’ retail transactions are made by cardholders. Cardholders spend, on average, more than 60 per cent more per transaction than other Boots customers. Fiona Brown, senior loyalty marketing manager, Boots UK and Paul Ravenscroft, senior loyalty analysis manager, Boots UK, speaking at the IBM Smarter Commerce Global Summit 2013, explained how the company has used the Advantage Card to build the same kind of personal relationship with its now more mobile customer base that it might have had when the company first started back in 1870.
That, said Ravenscroft, “always starts with insight, understanding our customers and building a strategy based on what the customer is telling us”. The understanding of the customer comes from the data that its Advantage Card gives, which includes insights into buying histories as well as stated preferences and demographic information. All of this informs the highly targeted offers that they receive, generated through the IBM Unica customer targeting hub, fed with customer master data from an SAP system. “We create models and estimate how good an offer that is for the customer, and how likely they are to respond to it,” said Ravenscroft. “Any given customer may qualify for 25 to 30 offers. Which is the best is where optimisation comes in.”
Today, the company aims to show the most relevant products to each customer across its sales channels. While direct mail offers that are delivered to shoppers at home are designed to bring them into the store, in-store kiosks then use customer insight to deliver offers that encourage customers to buy more on their current trip. A different kind of interaction takes place at the point of sale, where sales assistants are trained to flag up offers designed to bring consumers back to the store in the future. It’s critical, however, that the offers are relevant, said Brown, because: “We want them to value the interaction and feel good about the conversation they have had.” While the company could not share specific results, the two said the exercise had been “very worthwhile” in terms of return on investment.