Reports of retail disruption abound. Seismic shifts in consumer behavior, technology, competition, and economics have shaken the industry, enabling digital upstarts to upend some longtime leaders.
It’s not all doom and gloom, however. In fact, retail revenues have outperformed GDP, rising every year since 2009. In 2017, 44% of surveyed consumers reported spending more on retail than they did in 2016. Meanwhile, brick and mortar sales are predicted to grow by $36 billion through 2022, and ecommerce is predicted to grow by $50 billion over the same period.
While it’s true that some brands are struggling to find their way forward, changing marketplace dynamics also create new opportunities for them to grow and deepen their relationships with consumers. The continued evolution of technology—particularly in the areas of AI, machine learning, and augmented and virtual reality—offers openings for consumer brands to revolutionize consumer experiences and transform internal operations.
Today, we find ourselves in the midst of a retail renaissance, not a retail apocalypse. Forward-looking brands that rethink the consumer experience—and how to invest in it—may uncover new tactics to not only survive but thrive.
Deloitte and Salesforce recently surveyed more than 500 traditional retail, pure-play, consumer goods, and branded manufacturing leaders around the globe to learn about the challenges of delivering effective and personalized consumer experiences. The research reveals how elite performers synchronize consumer data, technology strategies, and experience to deliver relevant and personal engagement.
The Disconnected Consumer Experience
The vast majority of brands will assert that consumer experience—the sum of all the interactions consumers have with a company’s products, services, and brand across touch points—is the singular competitive differentiator today. Despite its strategic priority, relevant consumer experience generally remains overpromised and underdelivered.
That’s not surprising, given the disconnected state of consumer data in the B2C enterprise. Survey respondents say they maintain an average of 39 disparate front-end systems to manage consumer engagement. These include technologies for point-of-sale, mobile, call center, ecommerce, email marketing, loyalty, social media, and content management.
As a result, the consumer experience—particularly at the top of the marketing and sales funnel—is extremely disjointed, according to the survey. Brand leaders rate their biggest consumer experience challenge as engagement and discovery (32%), followed, at 24%, by awareness and acquisition.
Despite the need for improvement, there’s little consensus on who owns the consumer experience. Just over one-third of respondents (34%) say the CEO is in charge of consumer experience, while 12% say the customer service department, and another 12% say the marketing department.
Data is the Bedrock
There may be a solution to consumer experience woes, one that remains locked away in siloed systems in underperforming organizations. For some B2C brands, especially branded manufacturers, data access can be a barrier to success. Nearly two-thirds (65%) of branded manufacturers can access only a moderate amount of consumer data via indirect channels (such as marketplaces or wholesale channels), if any at all.
Data is key to thriving in the retail renaissance. The survey reveals that elite performers focus on data at nearly twice the rate of underperformers, who are defined as survey respondents whose total revenue stayed the same or decreased during the past fiscal year. Seven out of 10 elite performers are agile enough to quickly respond to consumer demands and insights—versus 37% of underperformers. In addition, 72% of elite performers continually gather information on consumer expectations, trends, and feedback, versus 54% of underperformers.
In fact, underperformers lag in all key areas of consumer data management. More than two-thirds (68%) lack clearly defined roles and governance for managing consumer data, 63% are unable to respond to consumer demands and insights in an agile manner, and more than half (54%) lack adequate compliance and security processes to monitor and protect consumer data.
Unified Commerce Expands to Unified Engagement
Unified commerce platforms have risen in importance over the past few years, given the disparate nature of the technology ecosystem. Unified commerce is an important part of the journey to unified consumer engagement. Moving forward, leaders will likely focus on unifying engagement across the entire consumer journey. While unified commerce focuses on inventory and transactions, unified engagement has higher aims for consumer experiences and interactions, based on not only commerce data, but also on the full picture of consumer data.
An overwhelming majority of brands (99%) say they are moving toward a unified consumer engagement platform to better orchestrate and manage marketing, commerce, and service capabilities. Two-thirds of survey respondents currently have an active and funded unified platform initiative in play, with 32% creating a unified platform strategy, 23% executing this strategy, and 11% already realizing benefits from their strategy.
More than half (52%) of C-level executives say they plan to replace existing systems of record with a single platform immediately, compared to 30% of senior vice presidents and vice presidents, 20% of senior directors and directors, and 21% of senior managers and managers. Consumer-focused professionals not yet thinking about the expansion to a unified engagement platform would do well to follow their bosses’ lead.
The Biggest AI Bets
In the emerging unified technical environment, AI will play an important role in assisting retail brands to put actionable consumer data to work, helping enable companies to know shoppers in the moment, and expanding companies’ consumer intelligence with each interaction. AI is key to linking product, customer, and transactional data in meaningful ways.
While the potential business impact of AI is massive, adoption rates are still low. On average, just over one-third of brand leaders have adopted any given AI use case. Among those, the most popular uses are: tailoring prices and promotions in real time, providing relevant search results, and personalizing content across channels.
Adopting AI can be a major effort, especially when the underlying data is messy. Over the next three years, the consumer brands surveyed plan to employ nearly 50% more data scientists to help in these efforts. While companies’ practices will need to mature if these newly hired data scientists are to succeed, strategic and well-supported investments in AI have the potential to pay significant dividends in the future.
Following the Brand Leaders
Indirect data sources are increasingly critical to building complete shopper profiles and informing a holistic consumer journey, and the number of data intermediaries is only growing. To compete in this new world, where competition is fragmented among thousands of options that consumers can locate with the tap of a phone, brands can focus on accessing first-, second-, and third-party data—the more granular, the better—to find relevant opportunities for action. This not only requires the right technology, but the right people and approach.
The elite performers surveyed offer a blueprint for other companies seeking to improve their consumer experience technologies, strategies, and people for the retail renaissance. They are embedding consumer data and experience into organizational principles, turning data into intelligence and action, and quickly embracing unified engagement platforms. Elite performers are about three times as likely as underperformers to be currently executing a strategy for a unified consumer engagement platform.
The promises of AI, data science, and machine learning loom large. But data alone won’t save the day. Teams across marketing, commerce, and customer service must collaborate to build a unified consumer experience, eschewing disparate systems and departmental silos to rally around the consumer’s context and demands. Then, by adopting a unified engagement platform, brands can have relevant conversations that are directly positioned to deliver what matters most within the consumer experience, thereby moving toward the best practices of the elite performers.
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