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IRUK Top500 The Customer Report: 2018

IRUK Top500 The Customer Report: 2018

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A digital art - The Merchandising Report 2015

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Merchandising is increasingly being driven by digital technologies, and the pace of change here is speeding up. Paul Skeldon charts a retail landscape of cross-device, omnichannel personalisation.

Merchandising for retailers is the science and art of providing the most relevant and engaging products to shoppers. Historically, it was just an art, as retailers used buyer intuition and experience to identify what performed best.

In the traditional world of bricks-and-mortar stores, it essentially revolved around how best to display wares. Make things look good, and consumers will be compelled to come in, browse and buy. The online world is the same, but in many ways offers a wealth of opportunities to make that initial hook even more enticing. It is also a business imperative in such a cutthroat market: merchandising is what differentiates a retailer’s website from the thousands of others that compete with it.

The biggest strategic imperative for retailers around merchandising today is cross-device, omnichannel personalisation. Delivering the ultimate in merchandising now orbits around chasing the idea of putting in front of the consumers exactly what they want – whether they know it or not.

In a fragmented ecommerce landscape, it has become increasingly difficult for brands to keep up with ever-changing customer trends, habits and desires, as emerging technologies transform the way people shop. The need for brands to treat consumers as individuals, not as a collective, has never been more important as consumers demand a ‘personal shopper’ experience in every channel.

Of course, this doesn’t just mean bolting on a predictive upselling engine à la Amazon’s ‘People who bought this also liked this’. To deliver true cross-device, omnichannel personalisation is the culmination of a vast process of tracking, data gathering, CRM, ERP, device management and marketing efforts.

It also involves all the other aspects of merchandising, from good web design through to rich content, which have always been the key to making products attractive – but on steroids.

Today, these techniques have to work in conjunction with data and data processes. Retailers need to understand he user’s location, device and the context in which they are looking for information. Simple this ain’t.

Getting personal

What is driving this move to personal merchandising is the fact that consumers have greater expectations of retailers, can shop around far more easily, and are much more fickle than they ever used to be.

At the same time, the data consumers generate means that retailers know more about them than ever before – and so are already starting to deliver a personalised service. Amazon started this and the ante is upped at an ever-increasing rate as more retailers follow suit.

‘The advent of omnichannel retailing is the key trend, [of the moment].” says Channie Mize, general manager for retail at Periscope, a McKinsey solution. “Consumers can shop for the best offers from the comfort of their living room, in a store, or via their mobile device. Retailers – more than ever before – need to recognise the importance of big data and analytics in understanding consumer behaviour across channels, in order to deliver the best customer service, choice and price.”

There is a move to automate personalisation, but, says Eric Fergusson, head of retail services at eCommera, “A mix of a move to automated personalisation – be it through platforms using sort algorithms, or more specific and customised third-party [algorithms] – in conjunction with editorial rich description and curation is always going to be essential.”

David Brussin, co-founder and chief product officer of Monetate agrees, but warns: “Customers aren’t devices or browsers. They’re people and they’re unique. They act differently across multiple devices and in different channels. Though brands have a lot of customer data, it’s often isolated in new systems, old systems, or in the cloud waiting to be used.”

Brussin adds: “In fact, it seems that many online outlets still do not understand their customers’ individual shopping behaviours and preferences. Now is the time for brands to understand customers’ digital DNA, and the best way to do this is through personalisation.”

Ecommerce experts need to use all the data available to be able to tailor an individual shopping experience, says Brussin. He believes that, by failing to do so, brands will fall behind those that have a deeper understanding of customers and can offer more targeted, relevant experiences.

These targeted, relevant experiences rely heavily on data gathering and are, to coin a phrase, big data services. Everyone has read about big data, well it is now a business imperative for retailers.

“Be intentional about online strategy,” advises Periscope’s Mize. “It’s not just data about products, positions, assortments, categories and margins, but data about customers, their purchases and even third-party sources, such as the weather. These sources must all be connected together, and this is where the real value is achieved: by forming relationships between these sources that allow the business to ask bigger questions of the data, measure customer behaviour over time, and most importantly predict it in the future.”

The upsell

While understanding customers in granular and personal detail is essential, what retailers then do with that is an even more vital part of merchandising. “[We’re talking about] tools such as upselling and cross-selling, promotion management, upgrades and downgrades, bundles span across the entire customer lifecycle,” explains Ed Chuang, vice president of marketing at Avangate, an ecommerce SaaS provider. “[Using these] will allow an opportunity to maximise revenues throughout all stages of engagement with customers and relevant monetisation moments.”

Chuang continues: “A trend we see is ‘serving’ merchandising options seamlessly, for example including a cross-selling option displayed in the ‘thank you’ page for an order that has just been placed. The effort of the buyer to add another product is minimal, there is no need for payment details to be entered twice, and this allows the customer to instantly buy through a one-click order.”

The idea of a seamless, cross-channel experience here also extends to brand identity and taking these offers across channels too, says Chuang. “Another trend is consistency across all channels, having a clear brand identity whilst offering promotions and discounts on multiple channels or referrers. There is also investment in these partners to increase marketing outreach. Users are expecting to enjoy the same type of experience across all interaction channel. It is vital to provide a seamless journey no matter the device, location or referral.”

Curation

While all of these elements are key to merchandising in the modern era, retailers really also have to look at what the data is telling them about what the customers wants from the retailer, and curate content accordingly.

“Retailers need to understand customer needs and patterns, for example, how they browse and want to browse,” says eCommera’s Fergusson. “Are they looking for inspiration and support? The answers to these questions will drive how retailers weight merchandising experience between automated and curated, and advisory.”

To do this, retailers also need to understand the data from CRM systems and react accordingly. “Online retailers need to fulfil customer tastes, hence they must ensure they gather individual preferences via sophisticated CRM systems and then propose products, which are relevant for that specific customer,” says Paolo Guida, co-founder of Taggalo. “Product mix is a function of who you want to be and which customers you are after. Pricing and margins are a consequence of those choices, and service levels you deem appropriate for the end consumer.”

Testing times

As with any ecommerce operation, getting it right is more art than science when it comes down to it, so testing is always going to have to be an integral part of a merchandising strategy.

“Test and experiment. See what works for your market, segment your customers and push merchandising options accordingly,” says Avangate’s Chuang. “Do not stop at the customer acquisition stage, merchandising can be done at all stages of the digital commerce lifecycle. A company can push discounts in customer portals areas when people want to unsubscribe from a service, or focus on specific segments of customers on improving frequent visitors to your website.”

Ecommera’s Fergusson agrees, and neatly sums up what retailers should be trying to achieve with a merchandising strategy. “Focus on [merchandising strategy] and measure it,” he says. “Merchandising helps you sell more stock at full price and reduces the amount of stock you have to sell at a discount later on. It is important to trial different opportunities, for example by using A/B and multivariate testing, to see which is most effective and which works best for you. What works for one retailer may not be the best solution for another.”




More than just shoppin’ the grid

How retailers display wares across sites – online and mobile, as well as in store – is a crucial element of making merchandising work. While personalisation and understanding customer needs and wants are key, once retailers get customers to a destination, the look and feel of a store front is often critical to whether they buy or not.

User experience is everything. According to an SDL survey of US retailers, 90% believed that user experience was the top priority for marketers in 2015. This is backed up by research by Adobe and eConsultancy that found 22% of digital marketers in general see user experience as the most exciting trend of the year.

‘Shopping the grid’ – where products come up in a user-defined grid – is no longer the way to entice consumers in. Yes, it is easy to produce and update, and it does work across all devices, but that’s science. What it lacks is that magic that caters to the art side of merchandising.

Instead, websites need to be designed to be rich, offering a sumptuous experience that is a visual delight and which pulls off the difficult task of not saying too much, but saying just enough.

Typically, this means images. A 2014 study by MIT found that people can identify images with just 13 milliseconds of exposure to them, and an oft-quoted 3M report suggests that humans process visual data 60,000 times faster than text.

Nevertheless, it also means the right text. This is where design and personalisation start to harmonise. Understanding whether customers are in browse, buy or help mode also helps determine the experience they get. All good sites show the products that are available and offer some text – usually then with the chance to see a whole lot more – but determining what text users see is all part of the personalised merchandising experience.

This is where adaptive-responsive web design meets big data, and where the two bang on the door of merchandising. While retailers need to understand who customers are, where they are, what device they are on and what they are looking at, retailers also need to match the design the look at feel of a site to these criteria. Getting this linked will lead to some ultimate merchandising experiences that will colour in the IRUK 500 research in 2016 and beyond.
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