School is back in session — and it isn’t just students who should be ready to learn. For retailers, the back-to-school shopping season has become increasingly important each year as both a growing revenue opportunity and often as an indicator of peak holiday performance. What lessons can they take away from this year in order to stand out from the competition and meet consumers’ ever-growing expectations?
That's the question Monetate sought to answer when it recently surveyed more than 500 U.S. consumers on their back-to-school shopping habits. The answers provide insights into how retailers need to optimize their future engagement strategies.
Brick-and-Mortar Rules, But Underscores Need for Omnichannel
Although many retailers are working diligently to build best-in-class digital shopping experiences, most back-to-school purchases still happen in physical stores. On average, respondents planned to do 56 percent of shopping in brick-and-mortar locations, considerably higher than those using retailers’ websites (20 percent) or apps (7 percent). That said, even if buying in-store, 67 percent of respondents still browse online or on mobile applications first.
Retailers need to prepare for a continued omnichannel customer experience — one where consumers not only seamlessly flow from online to in-store, but also where they expect retailers to understand and interact with them appropriately across the two. This requires relating information and actions across channels and in real time to link customers’ online behavior to in-store experience. For example, a retailer could notify local stores when a particular user browsed specific items online through its clienteling app, which allows retailers to share customer purchases or preferences.
Recommendations Welcome … When Done Right
It comes as little surprise that nearly all consumers (96 percent) have their children with them when shopping for school supplies, and among those, more than 90 percent say their kids influence what they purchase. But it’s not just children who can persuade their parents to purchase specific products. The use of product recommendations is very effective. More than three-quarters of respondents said they're open to receiving product recommendations from the retailers they shop with.
With consumer demand for more personalized experiences continuing to grow, product recommendation tools have become mission-critical for retailers to maintain their competitive advantage. However, some tools are much more advanced than others, and it’s imperative that marketers are equipped with the right capabilities that will allow them to leverage every data point possible to provide each customer with a truly individualized experience. If a retailer’s recommendation tool only supports limited data feeds, relies on an incomplete set of algorithms that fail to consider everything known about a customer, or has difficulty pushing recommendations across all customer touchpoints, it likely won’t deliver competitive advantage. By back-to-school 2019, the winning retailers will be those using tools that deliver personalized product recommendations that match each customer’s need in the moment and use more context to drive increased relevance.
Personalization = Long-Term Profitability
Beyond product recommendations, deep discounts and free shipping have become staples for many retailers’ back-to-school strategies. And while these offers are effective in attracting customers, they must be implemented alongside a personalization program or they could risk negatively impacting profitability and do little to cement long-term loyalty.
However, leveraging personalization with discounts can solve for both profitability and loyalty. Nearly 60 percent of respondents want more personalized offers when doing back-to-school shopping. Better yet, personalization has the power to yield greater sales, with those spending $1,000-plus on back-to-school shopping more interested in receiving personalized offers (78 percent) than those spending $200-$299 (50 percent) or less.
To be able to take full advantage, retailers will need to deploy personalization as a long-term strategy, not merely another tactic. This requires breaking down data silos, ensuring the quality of data, developing new workflows, and doing it all at scale. This is no small feat, but one that's achievable with the right mix of technology and team members.
With billions in potential revenue on the line, these are lessons retailers can’t afford to skip.
Brian O'Neill is the chief technology officer at Monetate, a customer experience optimization and personalization platform.