Big Data, Analytics and Cloud Computing Needed to Meet Consumer Demand for Personalization – — A new IBM (NYSE: IBM) study of more than 30,000 global consumers released today at the 2014 National Retail Federation convention (#NRF14) found consumers are willing to share their personal information with retailers, particularly if they get good value in exchange.
The percentage of consumers willing to share their current location via GPS with retailers nearly doubled year-over-year to 36 percent. Thirty-eight percent of consumers would provide their mobile number for the purpose of receiving text messages and 32 percent would share their social handles with retailers.
“Today’s consumer has been conditioned by multiple industries — from healthcare to travel — to expect personalized interactions across different channels,” said Jill Puleri, IBM Retail Global Industry Leader. “IBM’s study shows consumers are willing to share details about themselves, particularly if they receive a personalized experience in return. It’s imperative that retailers enact a Big Data and analytics strategy that ensures they use consumer information wisely, gaining their customers’ trust and loyalty by providing value in exchange.”
What Consumers Really Want
While omnichannel retailing — the practice of providing consumers a connected, personalized experience across online, mobile and in-store channels — is the stated goal of nearly every retailer, consumers aren’t asking for it per se. They simply expect to be able to use their technology in all aspects of their life, including how they shop. IBM’s study found that the five most important omnichannel capabilities to consumers are, in order:
- Price consistency across shopping channels;
- Ability to ship items that are out of stock in the store directly to their home;
- Option to track the status of an order;
- Consistent product assortment across channels; and
- Ability to return online purchases in the store.
The IBM study found that consumers fall into four distinct groups differentiated by their interest in and use of social, location and mobile technologies while shopping. Nineteen percent of consumers surveyed lag behind the majority of the population when it came to using technology to shop. Another 40 percent of shoppers use social, location and mobile technologies for information gathering, but are not likely to use them to purchase products. Twenty-nine percent use social, location and mobile much more extensively, for everything from researching products to ordering goods. Twelve percent of consumers surveyed are classified as “Trailblazers,” those who use these technologies across channels and base their choice of retailer on whether they make that possible.
Trailblazers, although a small group today, are particularly interesting as they are paving the path most consumers will walk tomorrow. The IBM study anticipates that most consumers currently using technology to research and shop will only increase their usage. Trailblazers also represent a desirable demographic. They have a higher income level, are more optimistic about the future, plan to spend more in 2014 and are very socially engaged. IBM recommends retailers serve Trailblazers to stay competitive.
Showrooming No Longer a Top Threat
Consumers are increasingly shopping online. In 2013, 84 percent of shoppers surveyed by IBM chose the store to make their last non-grocery purchase. This year, that figure dropped to 72 percent. Surprisingly, “showrooming” — the practice of browsing goods at a store, but ultimately buying them online — is not behind this online growth. While more respondents showroomed this year (eight percent vs. six percent last year), only about 30 percent of all online purchases actually resulted from showrooming — a drop from nearly 50 percent last year. Seventy percent of online purchases were made by shoppers that went directly to the web.
Strategies for Success
Omnichannel retailing is not just a challenge of data volume — Big Data — but really a challenge of broad data. Omnichannel requires retailers to combine all customer interaction data — be it from the store, online or a mobile device — with external data from social media, video and sensors. The problem for many retailers is not only combining all this information together to form a consolidated view of a customer, but also reacting to it in a timely manner. Consumers are expecting retailers to learn from their interaction so recommendations and offers are personalized. Retailers should look to cloud computing to support their omnichannel strategy as it provides retailers the fastest, most efficient way to bring broad sets of data together in a single, secure platform.
For more information about the consumer study and IBM retail, visit:
IBM Smarter Planet blog
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