IRI: Personalization to Be Crux of Future Retail Success
CHICAGO — Consumers' grocery-shopping patterns are evolving as just-in-time shopping becomes the norm. As there are more places to shop and more products to choose from than ever before, retailers can find true organic growth by maximizing the value of their current shoppers, according to a new IRI report, The Omnichannel Journey: Translating Big Data Into a Prescription for Growth.
Quick trips, or the "I need it now" grocery excursion, account for two-thirds of shopping visits and one-third of grocery expenditures. These trips are also not limited to one store, or even one channel. In fact, there is a major shift in how consumers are approaching grocery shopping because they are spreading their money across more channels and formats as they shop to fulfill their needs, IRI found.
"Retailers are grappling to not only understand consumers' varied shopping patterns, but also capture shares of their increasingly fragmented shopping trips," said Susan Viamari, vice president of thought leadership for IRI. "Retailers really need a clear 360-degree view of shopper spending to grow. This perspective will help them know what their key and target shoppers are looking for, so they can engage the shopper where, when and how it matters most to them. Those retailers that can personalize the shopping experience move their customers up the loyalty ladder, increasing the lifetime value of those customers and supporting growth along the way."
According to estimates by industry experts, it costs anywhere from five times to 25 times more to acquire a new customer than it does to retain an old one, making it key to retail success to get the most out of current customers rather than focusing solely on attracting new ones.
IRI detailed four big-picture steps retailers should follow to maximize the value of their customers and capture share:
- Reward current customers;
- Grow current customers;
- Reactivate customers that have lapsed; and
- Activate new shoppers.
Retailers need to shift from a category management perspective to a customer management perspective, according to the report. Loyalty programs provide a great deal of information about members that is essential to developing programs that target and resonate with a retailer's best customers, such as category and brand preferences as well as price and promotion sensitivity.
Personalization will be key to future retail success, IRI stated. However, retailers should not abandon mass-marketing programs. Instead, mass efforts should be supplemented by targeted programs aimed at deepening a customer's relationship with a retailer. To succeed at this, retailers must know their customers inside-out in order to offer the right marketing programs, products and assortments with the right prices, and marketing messages aimed at positively influencing customer loyalty and driving activation.
"The path to purchase has become a maze of twists and turns, with thousands of points of interaction along the way," Viamari explained. "Retailers need to harness the vast sea of big data around shopper attitudes and behaviors and bring it together in integrated and real-time fashion. Only then will they understand what is moving the needle today, and predict and prepare for what tomorrow will bring so that they can consistently serve their customers in a highly personalized and engaging fashion."
The full IRI report, The Omnichannel Journey: Translating Big Data Into a Prescription for Growth, is available for download here.