How to successfully bridge the data gap between physical and digital world and gain a holistic view of retail customers, by implementing the most innovative solutions.
A lot has changed for the retail industry in the last 10-15 years. Digitalization has been a major driver of the transformation process, but the impact on the individual sales channels has been very different in terms of scope and dynamics. As a result, retailers operate in two somewhat separate worlds that struggle to be merged and communicate smoothly with each other.
Even though some technical innovations took place in physical stores, the primary focus has clearly been on the e-commerce business.
Online shops are set up quickly and cost-efficiently, while physical stores are deployed over 20 years, often without major changes.
Data from online shops is processed automatically and therefore always up to date, while data updates in the physical world only happen once per day and often overnight – sometimes even accompanied by a complete loss of data.
Technology behind online shops is easy to update and maintain, while physical stores typically operate on old legacy systems.
In addition, retailers often have two separate pipelines for deploying different solutions - one for their physical stores and one for their online shops, using different technologies and following different plans.
Testing and implementing a globally available online shop can be done on short notice, whereas in the physical stores, tests are done in a single store first, and if the solution works, it can be rolled out to all stores – not a problem with 10 stores, but with hundreds or thousands, the plan becomes very complex and difficult to execute.
So much regarding the internal and “homegrown” aspects. Beyond that, retailers also must face and respond to an external pull arising from digitalization, not only during the pandemic: increasingly heterogeneous customer preferences and purchasing patterns.
Customers interact with retailers more or less on a daily basis, some even more frequently. However, the clientele shows very different shopping behavior: many young people prefer to buy purely online, while elderly customers often have a lower digital profile and still tend to purchase locally – and the majority use both sales channels, online as well as on-site. And there’s greater demand for seamless and flexible omnichannel experiences by the day.
Nearly half (48%) of customers want retailers to remember their preferences and purchase history to provide a more personalized browsing experience. This is according to the latest Adyen Retail Report, which evaluated the preferences of 36,000 consumers from 26 countries in 2023. Still, 50% of consumers in Spain, for example, believe it is more difficult to classify customers by behavior and needs, as each one of us wants a personalized experience. However, consumer trust has reached a point where every detail and care in the purchasing process is of utmost importance.
As a result, retailers are looking for innovative ways to stay in tune with the dynamic of their consumers’ sentiments and behavior. Investment in personalization is proving essential, with data being the way forward. Up to 52% of the 12,000 businesses from 24 countries surveyed for the Adyen Report struggle to categorize shoppers by their needs. Only 27% of them use a customer relationship management (CRM) system to create more personalized journeys. And only 23% of retailers have central databases that map sales from all channels – leaving three-quarters of them being unable to connect transaction data from online and in-store.