There are numerous trends that are shaping the future of the retail industry, but perhaps the most significant of these is personalisation.
In essence, the concept of personalisation in retail lies in delivering highly relevant communications and offers to the right people, at the right time. From the newsletter emails we receive in our inboxes to the offers we receive in-store, consumers now crave a shopping experience that puts them, as an individual, front and centre through the intelligent use of data.
However, with the General Data Protection Regulation (GDPR) now in enforcement, the way that retailers go about implementing and achieving personalisation is set to change for good. But before we get in to how this new regulation will shake up the industry, it would be beneficial to dive into the perception of personalisation within the retail sector today.
Personalisation through loyalty
We’ve already briefly touched on a couple of ways in which retail consumers can receive personalised communications, but one area that has significant potential is the trusted loyalty scheme. These are designed and delivered to reward customers, understand their behaviour and ultimately improve the overall customer experience, and so in many ways this goes hand in hand with personalisation.
Indeed, recent research from Ecrebo found that retailers are aware of this connection, with 44 per cent of senior retail decision makers saying they see loyalty as a way to deliver personalised offers to their customers. Additionally, separate Ecrebo research found that almost three quarters (74 per cent) of shoppers are more likely to remain loyal if they receive personalised offers – a clear indicator of the shift in consumer shopping habits and expectations.
Focusing on data
Personalisation can take many different forces, but at the end of the day, its effectiveness will always be governed by the data available, and the effectiveness by which that data is deployed. This is essentially the driving force behind any personalisation effort that allows retailers to understand the needs and behaviours of their shoppers and offer them targeted and relevant promotions, communications and rewards. But it’s not enough to rely on any data: the higher quality the data, the more accurate and insightful these personalised communications can be.
The opportunities that are available through personalisation are clear, but at this current point in time it is not something that’s being actively pursued by all retailers. Ecrebo’s research found that 56 per cent of online retailers surveyed didn’t have the right technology in place to deliver on their personalisation plans, while 17 per cent didn’t have access to the right data. This is compared to in-store retailers, of which 34 per cent didn’t have the technology in place and 38 per cent didn’t have the relevant data available.
Personalisation in action
While there might be challenges ahead when it comes to delivering personalisation, implemented effectively it can drive significant benefits for the retailer and the customer. For example, if an individual visits their local supermarket once a week and regularly buys a similar basket of products, this is likely to inform the types of offers and promotions that will be most relevant for that customer; this will be very different from the offers that may be more relevant for an infrequent, big basket shopper. Similarly, the channels of delivery for offers and promotions will vary in effectiveness based on shopper preference.
The impact of GDPR
Just as retailers have gotten used to delivering a personalised experience, the enforcement of the GDPR threatens to turn the landscape upside down. The regulation essentially forces all businesses that serve customers in the European Union to place stricter rules on how they store personally identifiable customer data, which will force a dramatic shift in approach to all aspects of business.
Retailers are set to be affected more than most. Many of these businesses rely heavily on the likes of newsletters and loyalty schemes to both attract new customers and retain existing ones, but the GDPR means that a new strategy will be required; one that is compliant with the new regulation while remaining accurate and effective.
A lack of preparation
Despite the severity of the GDPR issue, Ecrebo’s research found a worrying lack of preparation among retailers. At the time of being surveyed, only 41 per cent of respondents said they were ready to meet the compliance deadline, while a further 44 per cent said they were still working on it. Additionally, 13 per cent simply said they didn’t understand how the regulation will impact them.
This could have wide ranging implications for the loyalty scheme, which relies so heavily upon customer data. One of the reasons that the GDPR has been enforced is because consumers have historically felt a sense of unease around sharing their personal data with brands, and so the regulation naturally sets out to restrict the accessibility and availability of this data.
Ensure compliance post-GDPR
With the GDPR now in place, it is still possible for retailers to deliver a personalised experience across their marketing and loyalty scheme efforts, but it essentially all comes down to consent. Retailers must clearly confirm with their customers that they are happy to receive these communications. If they are, retailers can continue using their data for personalisation purposes (providing they are doing so in line with the guidelines). If individuals refuse to clearly give consent, their data must be removed from company databases immediately.
Retailers also need to place more effort into educating the customers themselves around how their data will be used, and clearly stating what the benefits of sharing that data will actually be. Only through this kind of education will customer confidence around sharing their data begin to increase.
With the GDPR only recently being enforced, we are operating in a largely unknown territory. Although retailers know what they can and cannot do, it’s hard to tell at this stage how they will begin to work in compliance with the regulation to maintain effective personalisation.
Whatever the case, it’s essential that this is front-of-mind for all retailers, particularly as personalisation is now such a vital part of success – both online and in-store. While the GDPR might present new challenges, it is not an insurmountable obstacle. Retailers simply need to think twice about how they are acquiring and using data for business purposes.
David Buckingham, CEO of Ecrebo
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