Today, it's becoming harder for retailers to engage with consumers and build long-term loyalty. Not only are brick-and-mortar stores having to compete with each other, they're now also faced with the rising threat of omnichannel and pure-play online competitors that are expanding rapidly.
Technological advancements, coupled with the proliferation of mobile devices, have enhanced the shopping experience for consumers globally. From online review sites to social media platforms, consumers now have a plethora of options and touchpoints along the purchase journey that can influence their purchasing decisions and alter routine shopping behaviors.
Pure-Plays in the Lead
Edge by Ascential’s recent Shopper Engagement and Retention Winning Strategy Report found that pure-play retailers excel in customer engagement and retention. The report analysed 25 of the top omnichannel and pure-play retailers around the world, scoring them out of 100 based on their efforts and success to cultivate shopper engagement and retention, all on the basis of a proprietary methodology informed by rigorous analysis of retailer strategies. The top five included three pure-play online retailers: Amazon, which ranked first, as well as leading Chinese e-commerce giants JD.com and Alibaba.
In terms of loyalty generation, pure-play retailers have a significant advantage over omnichannel grocery retailers, with their vast online ecosystems enabling customer engagement across a variety of platforms. They also sit on a huge amount of data that can be used to develop stronger, more personalized relationships with consumers.
Naturally, Amazon is a pioneer in its sophisticated execution of engaging shoppers in the digital retail landscape. As well as having an outstanding proposition in product discovery and convenient delivery services — which helps to engage the shopper by making the entire experience hassle-free — its Prime membership allows shoppers access to a wealth of exclusive services and entertainment, enhancing the overall appeal of staying within Amazon’s extensive ecosystem and driving up the cost of switching.
Omnichannel Recipe for Success
With 80 percent of the selected retailers currently running a loyalty or membership-based scheme, loyalty programs are a core element to encourage customers to return. The use of shopping data has played a huge role in helping retailers to better tailor rewards to customer needs. However, in order to achieve long-term loyalty in the future, retailers must go beyond the standard loyalty program offering and excel in the four key characteristics of shopper engagement and retention that we've identified.
- The first is a retailer’s ability to differentiate its tangible products and services from its competitors. Retailers must keep up-to-date on consumer trends and use this insight to inform own-label and brand partnerships that are exciting and relevant to consumers.
- Secondly, retailers must invest in convenient solutions — from automated replenishment to subscription-based delivery schemes — that drive a simple and efficient path to purchase.
- Thirdly, retailers must engage with consumers on an emotional level, offering experiential services and personalized rewards that build genuine shopper connection.
- The final characteristic that retailers must adopt is interactive, leveraging customer relationships via platforms such as social media, and collaborating with shoppers on product development.
While pure-play retailers are currently excelling in shopper engagement, tapping into the busy lifestyles of digital-savvy consumers by providing a convenient and sophisticated online shopping experience, what sets omnichannel retailers apart from digital natives is their physical store presence. Therefore, by enhancing all retail services across online and in-store, and leveraging stores as spaces of engagement, omnichannel retailers will be in a strong position to engage shoppers and build loyalty going forward.
Related story: An Inside Look at DSW's Relaunched Loyalty Program