Opinion

Guest post: Retail judgement day is coming – and it will be driven by buying intelligence

In this guest posting, Steve Tindall, director of retail at media agency Maxus, warns that the biggest revolution in the history of FMCG marketing is upon us

Judgment Day is coming in 2017. Not the apocalyptic version as foreseen by movie director James Cameron, but the beginning of the end of the ‘sales push, mass communication’, second tier retailing experience we currently enjoy(?).  

terminator-judgement-daySupposedly in eight years, Kevin Rudd’s fibre to the home, 100 mega bits per second, broadband network will be completed and a velvet revolution will be underway. To put this in perspective if every other country stands still (they won’t) Australia will have the fastest broadband network in the world.

Human behaviour tends to be fairly constant as it’s limited by the world surrounding us, but that world’s constraints are going to recede. Fanciful, optimistic imaginings or a very likely outcome, either way, retailing needs to evolve with the ever changing consumer, however the ever changing consumer is well aware of the kind of experience they want to enjoy with their product and service suppliers. Kevin Rudd’s new informed, interactive Australia will make provision of this experience a requirement to trade rather than a luxury.

Imagine having the world at your fingertips instantaneously rather than having an hour glass burnt into your irises every time you want to research or actually buy something. Imagine shopping in a physical village where every store supplies a personal service because they know what you want and what you’d like. Imagine the deli being able to print off recipe ideas and provide all the necessary ingredients for your perfect dinner party. Imagine going into the children’s clothes store and they’ve already got a range of school clothes to show you, as your first born needs to look the part in their first venture into freedom. Imagine if all the stores in the village combined to give you a complete service – e.g. a home delivery of all your shopping from your village. And then just to round it off, because you’ve spent so much money in the village they’ve sent you some money off vouchers for shopping and as you enjoy a nice Shiraz, a free ‘bottle on us’ (brand specific of course). This village already exists, it’s just that technological limitations stop us living there – but not for much longer.

Apart from the technology, however, there is one vital fuel to this utopian service engine – intelligence. This intelligence capability has to be built from as granular level as possible, ideally from personal information. Added to this would be buying habits across many categories from multiple grocery, apparel, IT requirements, travel and others as it grows. Add in financial information and geographic environment data and you now have the ability to understand behaviour at an individual level or at least develop multi dimensional clusters that allow the retailer to be much more precise in developing bespoke product offerings and services.

Even better news for the retailer is that it can fund this by reducing its spend of the variable marketing funds gleaned from their suppliers but because of the improved targeting, deliver better results. The consumer is happy because for once they are not being badgered into buying products that are totally irrelevant – far from it, they are being offered things they probably want or need and then being rewarded again.

Think this is unlikely? In the absence of Amazon Australia, how many of us already use their US or UK hubs and appreciate their ‘up sell’ targeting based on historical purchases and searches? Amazon though is restricted in completing the circle as it employs only one channel. The new retailers employ these principles in every channel (bricks, clicks, mail etc.).

Clearly the big Australian retailers think this is likely as Wesfarmers already has a framework in place (FlyBuys), and Woolworths is well on the way to completing theirs.

The key is to integrate the technology into an integrated bricks and clicks strategy as the web cannot and will not replace the physical shopping experience.

The consumer will embrace the retailer that can use all the touch points the consumer has with it to the consumer’s individual benefit. The consumer’s patronage will then be returned and depending on how good the retailer is at sustaining and growing this relationship, with even more devotion. The consumer will then compare the service they get from these ‘personal’ retailers to the shrinking dinosaurs forced to shout louder and louder to try and stay alive, creating further alienation.

Unlike Cameron’s vision of a possible future, this one is already under way, but it isn’t the machines that decide the fate of the retailers that cling onto the past: ultimately, it’s us.

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