The New Rules of Retail Marketing in 2020

Two conflicting sentiments — hope and trepidation — are the driving force behind many U.S. retailers’ marketing plans for this year.

U.S. retail sales rose 3.4 percent during the 2019 holiday season. The online sales for apparel, jewelry, and department stores all saw year-over-year increases. In 2020, retailers hope for growth rests on their ability to drive both online and in-store sales, as well as their willingness to digitally augment their physical advantages and embrace in-store digital interactions.

Online shopping is expected to continue to grow, but the prospects for increased in-store sales will depend on how retailers can enhance the customer experience to keep their brick-and-mortar stores current. Sixty percent of consumers aged 24-27 will go out of their way for a superior shopping experience in-store, according to PwC's 2019 Holiday Outlook report. Data from a new Eagle Eye report, The Connected Customer, supports this consumer shift as well; 90 percent of all sales (including click-and-collect purchases) in the U.S., U.K., Australia and Canada are completed in a physical store.

Retailers’ trepidation comes from the realization that consumers go back and forth between online and in-store, whenever it’s convenient for them, and there’s no turning back. Consumers’ channel choice is no longer one or the other, it’s all. Acknowledging this fundamental shift paves the way for a new decade in which retailers pivot their digital marketing strategies to accommodate the new rules of retail marketing that are taking shape.

1. Conduct a mobile makeover to boost sales in physical stores.

Physical stores still — and will continue to — play a significant role in consumers’ shopping experiences. However, the smarter use of mobile technology in-store is where the concept of a “mobile makeover” comes in. I recently co-authored Omnichannel Retail: How to Build Winning Stores in a Digital World with Tim Mason, CEO of Eagle Eye, in which we describe how retailers go about giving their stores a “mobile makeover.”

The concept entails putting mobile at the core of customer engagement. Retailers should make it easy for consumers visiting a store to find the same level of choices, relevance and convenience available online by engaging them through their smartphones and mobile app. Remove friction points in-store through interactive signage or shelf-labels and by providing product and service information or recommendations through geolocation, in-app messaging and push notifications.

Greggs, a leading bakery chain in the U.K. with 1,800 shops, greatly increased customer convenience with a makeover that integrated payment with its loyalty program using a mobile app. Customers can redeem rewards and pay with a single scan. They can tap into their rewards balance to pay securely in-store with their smartphone. Greggs boasts 1.1 million downloads of its mobile app to date.

2. Increase customer convenience by providing a click-and-collect service.

Offering a click-and-collect service combines the benefits of both online and offline shopping. Customers save money on shipping costs and time spent waiting in queues while reaping the instant gratification and fulfillment of buying in-store. In many cases, shoppers can pick up products almost instantly or within a convenient window of time.

Eagle Eye’s Connected Customer report found that 19 percent of Canadians surveyed bought or reserved items online for collection in-store or at a locker. Out of this click-and-collect consumer segment, 26 percent belong to the 18-24 age bracket. Most consumers carry out product research on their mobile device or online before making a purchase, so retailers must support the entire shopping journey for every consumer through seamless digital connections long before they enter the store.

3. Build customer connections with the help of an omnichannel rewards program or promotions.

Rewards or loyalty programs and promotions present a ripe opportunity for retailers with physical stores to compete with online rivals by offering more convenient ways to earn and redeem rewards or access promotions, either in-store or through digital channels such as mobile apps. Research shows this is a priority for business leaders in the coming year; a new Harvard Business Review study of 400 executives found 53 percent believe loyalty programs must be digital and omnichannel.

In the U.S., one of the best examples of this is Starbucks. The coffee chain giant is famous for its mobile app, which serves as a digital loyalty stamp card, marketing channel and online ordering platform. The program now counts more than 16.3 million people as active members (up 14 percent from the first quarter a year earlier), who account for about 40 percent of Starbucks’ total transactions. The most successful loyalty programs build customer connection for the long haul through relevant offers and personalized engagement. Linking these enhancements through to payment provides end-to-end customer service and sales insight in the most seamless way possible.

A new retail era has already started, bringing with it new rules of marketing and customer engagement. By necessity, the rules and best practices will evolve as fast and as often as consumer behaviors and expectations change. In all of this, one thing is certain: digital connections will play a critical role in improving customer experience, removing friction from the shopping journey, and propelling retailers on to the next level of growth.

Miya Knights is head of industry insight at Eagle Eye, a leading SaaS technology company that enables businesses to create real-time connections with their customers through digital and mobile promotion solutions.