The C-Suite is Missing the Mark on Their Digital Merchandising Strategies
Retail leaders experienced a wake-up call in 2020. While most had started considering increasing digital experiences, such as a zero-cookie approach to e-commerce and consumer personalization, the majority of retailers still considered it as “nice to have,” widening the gap between digital leaders and digital laggards.
Customers today are omnichannel and there's no sign of a return anytime soon. In the next five years, Forrester Research forecasts online retail sales to grow 10 percent annually over the next five years to a total of 30 percent of the retail market by 2027. The pandemic accelerated customer expectations for digital experiences, and the brand loyalty forged in pandemic years will stay. Those companies that were behind have had to quickly regroup and catch up with digital leaders to win back disappointed consumers. Delightful online shopping experiences are essential — they’re what the market demands — and as a result retailers must have a strategy in place for their digital merchandising.
What Retailers Are Missing
As they move away from legacy software, today’s e-commerce companies struggle with technology that’s not built for them. This software doesn’t enable agility or adapt to changing customer needs as quickly as the market requires, and it's costing retailers millions in revenue by not allowing them to optimize the on-site customer experience. Consumers expect and now demand shopping experiences that are easy, convenient and helpful — in any and every channel they choose to buy. "Good enough" just isn't good enough anymore for demanding customers, and not finding what they're looking for quickly is one of the biggest reasons consumers turn to other brands. That’s why product search and discovery tools are so important. Done right, digital merchandising can add personalization to make sure that retailers are catering to shoppers' individual preferences, just as they would in-store.
Digital merchandising strategies are critical for excellent shopping experiences online, but too often digital retail leaders are in denial about how overloaded their merchandising teams are. While one in two merchandising employees feels overwhelmed in their role, three-quarters of e-commerce leaders still believe that their team has an appropriate workload. Freeing merchandisers from menial, manual tasks with artificial intelligence-driven product discovery offerings will enable them to strategically contribute as subject matter experts and directly impact business outcomes, like increasing revenue, conversion rates and customer retention. Creating healthy and enjoyable work environments is critical to retain and attract merchandising talent in a weak labor market.
Adopt a Technology Strategy That Drives Both Speed and Agility
It's critical for retailers to adopt a technology strategy that drives both speed and agility to continuously optimize the digital shopping experience and retain control over that strategy to achieve tangible, measurable and repeatable business outcomes.
On one hand, that means gradually adopting composable commerce paradigms, like those advocated by the MACH Alliance. And on the other hand, it means freeing up subject matter experts by leveraging the latest technologies, supported by AI and machine learning, so they can contribute to great customer experiences. Companies have been collecting massive amounts of customer data for years. It’s time they put it to use sustainably and wisely to improve the customer experience and build brand loyalty.
With rising inflation, interest rates and geopolitical impact on supply chains, retailers must ensure that they have the ability to pivot faster than the competition, no matter what the future holds.
Search and Discovery Strategies Increase Revenue
It’s an exciting time for companies that are looking to think outside the product grid. Post-pandemic, online retail is again competing with the in-store experience. Therefore, retailers need to find ways to make site visits engaging, relevant and easy. The possibility of economic downturn makes on-site product discovery imperative in a time when ad budgets are tightening. How can retailers make the most of the traffic that’s already visiting their site?
It’s here where technology can really be an advantage. Small teams report struggling with the effectiveness of product search. Only 40 percent of employees on small teams feel that it’s easy for their customers to find what they’re looking for via search, compared to 87 percent of employees on large teams that are investing more deeply in product discovery. Technology frees up digital teams to go that extra mile for truly outstanding retail experiences. As these experiences improve, we can expect to see new forms of digital merchandising enter the market. Guided selling online, for example, offers ways to help customers purchase more complex products or solve common shopping problems like not knowing what running shoe is right for their needs. There's a lot of potential right now for businesses that are leaning into new ways to reach their customers.
Sonja Keerl is the vice president of product marketing at Constructor, the company building revenue-driving on-site search and discovery solutions for digital merchandisers.
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Sonja Keerl brings to Constructor a deep understanding of the ecommerce and retail landscape. Keerl co-founded the MACH Alliance in June 2020 and served as President until July 2022. The MACH Alliance helps enterprise organizations navigate the changing modern technology landscape. The alliance guides businesses to explore the advantages of open tech ecosystems that are microservices based, API-first, cloud-native SaaS, and headless. Constructor is a part of the MACH Alliance and Keerl remains a member of its advisory board.