Personne ne sera surpris d’apprendre que le secteur de la distribution est actuellement confronté à un changement radical. L’arrivée de nouveaux acteurs tels que Alibaba mais aussi le rachat de Wholefoods par Amazon bouleversent les tendances. La gamme des magasins Hema d’Alibaba de plus en plus vaste en Chine incarne ce nouveau concept avec « l’intégration de la logistique et des données en ligne/hors ligne au sein d’une seule et unique chaîne de valorisation ». La distribution connaît actuellement un changement drastique où il peut être difficile de rester compétitif, alors comment y parvenir ?

Les données transactionnelles physiques sont une mine d’or. Les distributeurs traditionnels disposent d’un énorme actif de données qui, s’il est exploité correctement, peut être utilisé comme avantage concurrentiel. Et ceux qui l’emporteront sont ceux adoptant une bonne utilisation des données clients, en remettant le client au centre des décisions.

Il n’est pas facile de rester compétitif, pour cela vous devez créer une culture gagnante, axée sur les données et vous assurer que votre entreprise dispose d’une stratégie solide. Après avoir travaillé avec des distributeurs du monde entier depuis plus de 28 ans, dunnhumby a une bonne idée de ce qu’il faut pour réussir dans le marketing basé sur les données.

Voici les 6 domaines auxquels il faut s’attaquer pour créer une culture gagnante, axée sur les données :

1. Amener le client au centre des décisions – les priorités de nombreux distributeurs sont davantage dictées par la structure de l’entreprise que par ce qui compte pour les clients. Comment organisez-vous et utilisez-vous vos données autour de ce qui est le mieux pour vos clients ? L’entreprise dispose-t-elle de la feuille de route technologique appropriée pour y parvenir ?
2. Transformer les décisions commerciales et les décisions en magasin – Comment assurez-vous que vos décisions prises pour vos magasins sont basées sur une bonne compréhension et utilisation de vos données ?  Comment assurez-vous une bonne circulation des données entre le bureau et le terrain.
3. Chaque interaction client doit être basée sur les données – toutes les actions et stratégies doivent être soutenues par les données client – y compris les prix, les promotions et les communications personnalisées. Comme cela a été prouvé à maintes reprises, cela entraîne un retour sur investissement plus élevé et une forte croissance des ventes LFL.
4. Développer votre propre écosystème générateur de revenus – Faire des données une entreprise en soi devrait être un élément clé de votre stratégie de données. Le modèle Amazon conduit de nombreuses personnes sur son site, ce qui crée des données qui leur permettent d’ouvrir différentes sources de revenus (telles que la publicité) qui n’ont rien à voir avec la distribution. Avec l’un de nos principaux distributeurs partenaires, nous avons construit un écosystème couvrant les chaînes numériques, le ciblage de la télévision, le partenariat avec Facebook et les médias en magasin. Combien de distributeurs traditionnels disposent d’un revenu manqué ?
5. Planifier la technologie de votre futur client – la technologie client arrive, êtes-vous prêt ? Les nouveaux canaux tels que la commande vocale et les chat-robots ne sont pas des gadgets. Pensez aux nouveaux ensembles de données qui pourraient être construits à partir de plates-formes d’interaction vocale, au-delà de la simple facilitation d’une transaction. Qu’est-ce que cela signifie pour votre entreprise et quelles nouvelles opportunités cela crée-t-il ?
6. Planifier votre future réglementation client – au-delà de la conformité, qu’est-ce que cela signifie en termes d’opportunités pour les distributeurs ? Une législation telle que RGPD facilite l’accès de différents acteurs comme vos clients par exemple à votre actif de données. Si elle est adoptée à plus grande échelle, elle deviendra un nouveau modèle économique qui va bouleverser la définition de la valeur des données. Qu’est-ce que cela signifie pour le marketing basé sur les données et l’échange de valeur avec les clients ?

Le rôle des données est donc essentiel pour les acteurs du marché afin de rester compétitif et de créer une culture gagnante avec l’arrivée de nouveaux acteurs sur le marché et l’évolution constante des besoins clients.

The application of customer data science (analysing customers’ purchase behaviour) is the backbone of modern retailing. Knowing more about your customers’ needs, wants and shopping habits helps deliver a better shopping experience, leading to an increase in loyalty, and growth in sales, through mechanics such as the right range in stores, meaningful and relevant communications, optimised pricing on product lines and promotional offers.

There is much debate about what is the ‘right type of science’ to identify the right customers. Which are the best methods for determining who will buy your product, who will respond to your promotional offer? Marketing budgets are being squeezed for retailers and for brands, so it’s more important than ever to get it right with your targeting, and at dunnhumby we’re constantly looking for new ways to help retailers and brands delight shoppers and improve their performance by putting the customer at the heart of decision making.

Current targeting methods rely heavily on a rich purchase history. Take a typical promotional coupon campaign: one way to select your audience would be to identify customers who have frequently made purchases relating to the category or product on offer. While patterns of past behaviour can be a good indicator of future likelihood to purchase, they do not account for potential new shoppers who might never have purchased that brand or category before but might be motivated to trial it.

As part of my PhD, I set out to investigate if network science could be successfully used as an alternative approach to targeting that might yield better results. Network science focuses on the interaction and relationship between things. Twitter is a good example of network analysis in practice, seeing for example who are the key users in spreading a viral news story.

Applying network modelling in a retail environment allows analysis of connections between customers and products where there was a purchase. Densely connected clusters or ‘communities’ that are detected algorithmically in these networks reveal customers with similar preferences and the products that they buy the most. ‘Missing links’ within these communities then form the basis of new product recommendations. This approach differs from supervised machine learning in that there is no requirement to define any features about customers, for example you don’t have to look at what they spend in various categories. It picks up the patterns in the data in a more hands-off way, without having to define the inputs into the model.

An example of a network showing how customers and products relate to each other in ‘communities’.

Networks use transaction data directly to infer loose connections between customers and products, and these connections are the key to a new approach to targeting.

To test how this network modelling method compares to traditional targeting, we applied the approach to a promotional campaign in the yoghurt category. The control was an existing coupon campaign which used a targeting approach based on a combination of previous engagement with the product on promotion and possible engagement with competitor products. Customers were then prioritised according to how much they spend in the yoghurts category overall.  We wanted to see if using a networks’ approach can better pinpoint those customers who were most likely to redeem the coupon.

The original campaign involved a promotional offer mailed to 100,000 customers. We used this data to compare two ways to rank customers in terms of how likely they are to participate in the promotion. If higher-ranked customers redeem coupons more often than lower-ranked customers, then the ranking has predictive power.

The results showed that the ranking based on the network model was more useful than category spend at picking out relevant customers to target, as it yielded a higher redemption rate. The gap between the two rankings was especially pronounced for ‘lapsed’ customers, whose purchasing of the promotional product declined in the time period leading up to the campaign. More testing is required, but the initial results are encouraging.

While there are pros and cons to using network science (one of the downsides is the amount of computing time/power required to find meaningful communities in networks of millions of customers and tens of thousands of products), developments in technology platforms are enabling data scientists to work with bigger and more varied data sets, so this may be less of an issue in the future.

In the race to understand customers’ needs, wants and purchase behaviours to create a better shopping experience, the scope for use of network science in retail presents the industry with some exciting possibilities.

Roxana Pamfil is a former PhD student at the University of Oxford, working in collaboration with dunnhumby as part of the EPSRC Centre for Doctoral Training in Industrially Focused Mathematical Modelling. In her research, she developed network algorithms for analysing consumer behaviour. She is currently a Knowledge Transfer Ambassador at dunnhumby, funded jointly by the University of Oxford and dunnhumby, implementing research findings within the business.

Before we look forward to 2019 trends impacting the retail industry, it’s worth looking back at 2018 and more specifically, what did we predict and how did we do?

At a high level, beyond our predictions, we saw many of the larger players go on a significant spending spree. Walmart focused on international expansion, acquiring 77% of Flipkart while increasing their stake in JD.com to 10%. Tesco made a move into the wholesale market with a successful takeover of cash-and-carry chain Booker in the UK. And Amazon decided to expand into new verticals, by acquiring Pillpack and continued to grow their in-home device portfolio, with the acquisition of Ring. 

They also made a big splash opening more Amazon Go stores. Meanwhile in Asia, we saw the Alibaba Hema Supermarket give a glimpse into what will surely be an innovative 2019.

But first let’s look back at some of the big predictions for 2018.

Grocery ecommerce in the U.S. reaches a tipping point

Here is what we said:

There have been two major contributors that make 2018 a year for explosive growth in this category:

Investment into the enabling technologies: According to CB Insights, an estimated $5B was invested across 315 supply chain and logistics startups in 2016. These investments have enabled major technological leaps in the efficiency of the last mile, which grocery specifically relies upon.

The results are in for early adopters: Many in the space have been taking a wait and see approach, letting a few early adopters establish best practices and validating the opportunity. After several years those efforts have proven fruitful and can no longer be ignored.

As predicted, these developments coupled with increasing consumer interest in buying groceries online were a likely catalyst for the flurry of acquisition and partnering activity that took place this year. Instacart acquired grocery ecommerce platform, Unata, Target acquired grocery ecommerce marketplace Shipt, and Kroger acquired a stake in UK online grocer, Ocado, with plans to leverage their ecommerce supply chain technology in the US market. 

We also saw many grocery retailers make strategic investments in their own ecommerce capabilities; Albertsons, which saw its ecommerce business grow over 100% over the last year partnered with Takeoff technologies to build out their fulfillment capabilities. Other more mature players such as Ahold Delhaize have begun to leverage their ecommerce offering as a major media platform, which I predict we will be seeing a lot more of in the coming year.

Chat as a sales channel

Here is what we said:

According to a study by the Baymard Institute, 1 in 4 shoppers abandoned their cart due to a “too long / complicated checkout process” and that the average U.S. checkout flow contains 23.48 form elements displayed to users by default.

What if, instead of presenting the user with a complicated form to complete their purchase, you took a page out of Drift’s playbook and started gathering the data you need via a conversation.

This is one area where I expect retailers to start exploring. One might even say that Alexa is doing just that.

Though chat looked promising as a new sales channel, I am not sure we saw the breakthrough we were hoping for. If you consider voice as a form of chat, the growth in this area was not particularly dynamic, with only 2% of Alexa users having used a device for shopping. While chat as a form of customer service continues to grow, its ability to help convert sales for retailers has yet to be maximized. We will keep an eye on how this unfolds and if this trend is a late bloomer.

Voice as a platform

Here is what we said:

Amazon knows that to win the voice platform wars, it needs to grow its Skills marketplace and will amplify that growth by untethering their reliance on their own hardware devices.

I look forward to asking my washing machine to order more detergent or my car to place my Starbucks order. Voice as a platform has the potential to change the way we interact with our everyday items and change the way we shop as a consumer.

While Amazon released a number of new, Alexa enabled, Amazon branded hardware devices (15 to be exact), they also expanded their integration capabilities with third party devices. P&G and Hamilton Beach are both early partners on this front.

Google has taken a slightly different approach leveraging its assistant technology and Android operating system to allow consumers to link together multiple devices across their home.

As more devices become internet enabled, I expect this ecosystem to continue to expand with both Amazon and Google battling it out to be the go-to Voice operating system.

Crypto Currencies

Here is what we said:

Almost every article I read treats Bitcoin as an investment vehicle rather than a better form of currency to buy things. For retailers to start to benefit from this incredible growth, they will need to begin to integrate crypto payment capabilities.

While crypto currencies such as Bitcoin have struggled over the last few months, their usage still remains mostly as an investment vehicle with a number of investment services, such as Robinhood, allowing consumers to buy and trade crypto assets as they would stocks.

However, towards the end of this year, we began to see signs that crypto assets may start to be used as a loyalty currency. A startup called Lolli, who rewards users with Bitcoin, when they shop at their partner retailers, recently raised capital from an impressive group of investors such as Bain Capital and Forerunner Ventures.

The next move, perhaps, is to redeem that currency in the form of new goods. Given their continued growth there is an emerging use case that cryptocurrencies could be an effective form of universal loyalty.

The Tech Enabled Store Associate 2.0

Here is what we said:

The competitive advantage brick and mortar holds over ecommerce is the personal interaction of the store employee and customer. Giving them the tools to amplify the experience will be vital to the stores’ success and a pathway to the omnichannel experience everyone has been waiting for.

We almost had this one right. What we should have said was the “Tech Enabled Consumer”. Although there was certainly significant investment in technology for store associates, with many having a tablet or mobile app that allows them to quickly assist your shopping experience, the biggest impact has actually been the investment in technologies that enable the consumer to do more in-store. 

For many of these experiences, they leverage the consumer to use the device in all of our pockets to complete orders more seamlessly and to make quicker and better purchase decisions.

Both the Hema Supermarkets and Amazon Go stores leverage the smart phone as a personal identifier. In many cases without ever having to remove it from your pocket. While other retailers such as Sam’s Club concept “Sam’s Club Now” only allows the use of their mobile Scan & Go app to complete your shopping journey.

One of our portfolio companies, GrocerKey, has also released their own mobile self-checkout technology with several retailers signing on for early 2019 release.

A future of no checkout lines could be closer than we think. The impact of store layout and experience could change dramatically as a result. This is one we will certainly be looking out for over the next year.

So while 2018 saw some impressive technology-enabled initiatives from retailers really pushing the boundaries to create new experiences for shoppers, there are still some trends which are yet to take hold, particularly at any meaningful scale. 

Stay tuned for our 2019 predictions – coming soon – where we’ll be digging deeper into some of the emerging trends that could impact future strategies for retailers and brands.  

Adopting a Customer-First approach has been proven to drive greater growth, yet fewer than 10% of retail organisations actually begin the process. David Ciancio, dunnhumby's Head of Grocery Retail talks about where to start...

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Adopting a Customer-First approach to business is not without complexity, but there are some quick and simple things retailers can do in stores to start the process. David Ciancio, dunnhumby's Head of Retail explains more...

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Adopting a Customer-First approach to business is not without complexity, but there are some quick and simple things retailers can do in stores to start the process. David Ciancio, dunnhumby's Head of Retail explains more...

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This article originally appeared in CIO Applications Europe

As an organisation who pioneered the practice of Customer Data Science, we’ve spent 30 years demonstrating that data analysis is the key tool for forecasting consumer behaviour. Partnering with retailers around the world has helped us drive innovation in the discipline. In truth, our clients were quick to acknowledge that the best predictor of customer behaviour wasn’t market research but was customer behaviour itself.

But it’s taken the best part of those 30 years for the technology that enables data analysis to be able to provide an almost real-time answer to the questions retailers ask us. And in the complex and competitive world of grocery retail, having information fast is becoming essential.

The growing demand for more sophisticated data analysis across retail is helping to energise the discipline. I suspect we’re still heading steadily upwards to a plateau in the data science industry, but as we make that journey there are challenges along the way.

We need more people…now

Scarcity of talent is a real issue facing the industry now and it’s not likely to go away in the short term. Data science roles are attracting more graduates and learning institutions are responding with more relevant courses, but there remains a significant skills gap. IBM predicts that demands for data scientists will soar by 28 percent by 2020[1]. We know that client companies running their own data science operations face high attrition rates and escalating wage bills. Anyone starting a data analysis business today will need a healthy cheque book, and a lot of patience, to secure the best talent.

At dunnhumby we recognised the threat posed by the lack of data scientists over a decade ago. This was one of the key factors in our decision to establish a data analysis centre of excellence in India. Today we have a significant number of data specialists working there. Our experience there has helped us build a strong foothold in the country and built our reputation as a good employer.

Automation will prove part of the solution

Data scientists everywhere are often doing work that they’re over-qualified for. In an environment where good people are at a premium, it’s perhaps ironic that so much time can be spent on mundane tasks such as cleaning and managing data. The ability to use talent more effectively gives rise to the major breakthroughs that push our industry forward. Seen in this way, automation will be a great solution to the labour challenge. Ideally, data scientists should be tasked with developing great ideas, and leverage automation to make their execution virtually effortless.

We need to grasp the full potential of machine learning

Faster and smarter technology has introduced a fundamentally different way to approach data problems. Previously, we would develop a hypothesis then go about testing it. Testing might take 40 hours and do nothing more than prove our various hypotheses wrong. Like looking through a haystack without the certainty that there was actually a needle in it.

Computing power today means we can analyse data at infinitely faster speeds — essential when you consider we work with nine terabytes of data that includes information about 44 billion buying transactions covering 320 billion items. This gives us the luxury of being able to analyse data without a particular hypothesis in mind. This can throw up multiple sets of results which can then be developed to form a more rigorous hypothesis. Instead of exploring ideas, we explore data to generate ideas.

GDPR and privacy remain key issues for data scientists

Loss of reputation and customer confidence is the biggest threat facing companies who fail to implement strict data security policies; GDPR introduced a new rigour in the ways we must think about data. So, while our analysts are interested in data, not personal information, developing a ‘secure data culture’ must be paramount.

At dunnhumby we’ve been moving towards open-source cloud computing over the past few years. This has helped us produce results faster but brings with it a whole range of other issues around access and security. Having strict policies around ensuring deletion of temporary data sets is one such example.

But the future remains bright

I’m convinced that the biggest data analysis breakthroughs in retail are still ahead of us. Technology has given us the tools, it’s up to us to develop the great ideas. To help us tap into tomorrow’s talent, and evolve our techniques, we’ve developed relationships with several universities and offer sponsorship for data science students. Other industries have shown how effective strong links with academia can be in accelerating breakthrough developments — life sciences is a classic example. It’s my hope that ours can do the same.

In dunnhumby’s second annual Retailer Preference Index (RPI) study, a comprehensive nationwide study, we re-examine the evolving US grocery landscape to help retailers navigate an increasingly fragmented market where shoppers are, on average, shopping at four grocery stores per month and regularly buying groceries from at least three other channels. The study focuses on the following questions:

• What drives preference?
• Who is winning and losing?
• Why are they winning or losing?
• What can grocery retailers do to improve preference and performance?

Existing retailer rankings by Consumer Reports or Market Force only use survey data to capture how shoppers feel about the various banners without linking the emotion to financial performance. Others, like Supermarket News, rank banners based on financial metrics but fail to capture how people feel.

Our study is different because it quantifies the preference driver importance based on a combination of a banner’s emotional connection and financial performance. The emotional connection was captured through a 15-minute online survey across 7,000 US households about how customers think and feel about 56 US grocery retailers.  

To learn more, download a free copy of the report. If your banner is in our report and you'd like your custom brief, contact us. 

The list of banners evaluated, in alphabetical order, include:

Retail media is growing in importance and will quickly become a core element of each retailer’s marketing strategy. Amazon’s first quarter of 2018 earnings report confirmed that its advertising business has driven its market dominance, as the area saw a 100% growth during that time. Data is fuelling this new media ecosystem and has become one of the most critical, and valuable, business assets for connecting online and in-store customer shopping experiences and behaviours, enabling organisations to drive sustainable growth.

Retail media presents an untapped opportunity to connect brands with consumers, create meaningful engagements and build longterm financial success. The Food Fresh Magazine highlights how we partner with retailers and brands, to drive value and profits through owned and paid media channels.

In this issue, you can also learn about other strategic dunnhumby capabilities – like Price & Promotions, for example – that have enabled many of the leading businesses to become champions for their customers. We hope you enjoy this issue.

The retail industry is going through a period of drastic change. Mass store closures by well-established companies such as Walgreens, Sears and Best Buy have signaled panic, in what many are referring to as ‘The Retail Apocalypse’. Some retailers have reduced the number of their brick and mortar stores, while others have shuttered them altogether to cut down on overheard costs and focus their investments on the digital space.

Regardless, retail is still very much alive and well in North America. eMarketer’s The Future of Retail 2019 states that U.S. retail sales brought in $5.3 million last year, a number which will only continue to rise in 2019. And while digital disruptors like Amazon are largely responsible for this growth – the report forecasts a 15% year-over-year increase in e-commerce sales this year – brick and mortar stores are still expected to account for more than half of overall sales growth, and 89.1% of consumer spending.

A connected retail media strategy

As you can see, building a successful media strategy is not about hedging your bets on one media channel over the other but about making sure that you are reaching the right customers, at the right, with the right message – no matter where, or how, they’re shopping.

That’s why dunnhumby is excited to introduce dunnhumby media – a unique combination of cross-channel media, data science and partnerships that connects retailers and brands to customers, whether they’re at home, in store or on the go.

Powered by dunnhumby’s 30+ years of customer data science, dunnhumby media helps advertisers grow customer loyalty and increase their return on their advertising investment and enables retailers to monetize their owned media for measurable sales growth. This media solution provides personalization across all media channels – from point-of-sale to direct marketing to digital onsite media, and more.

A more competitive programmatic offering

Programmatic continues to be a major player in online media; eMarketer forecasts that programmatic advertising spend will reach almost $69 billion by 2020, making up 86.3% of all digital display advertising. dunnhumby recognized this opportunity when it acquired Sociomantic Labs in 2014, investing heavily in its real-time bidding platform and supporting the growth of a world-class, global team.

As part of dunnnumby media, programmatic campaigns across desktop, mobile web and in-app will continue to run through Sociomantic’s proprietary technology. Clients will continue to receive the same level of white-glove service from dedicated account and in-house creative services teams and will now also be fully supported by dunnhumby media’s vast array of shopper insights and customer data science, for more competitive results.

Retail media presents an untapped opportunity to connect brands with consumers, create meaningful engagements and build long-term financial success, and dunnhumby media seeks to make the customer journey more relevant through personalization – both online and in-store. 

As technology, business and shopping habits evolve, it’s more important than ever to understand how each customer shops – and how their omnichannel journey can be influenced by relevant and timely communications at every step of the way. Online and offline, at home and on the go - all touchpoints are an opportunity to engage your target audience. Our infographic below outlines why having an omnichannel strategy is so important, and highlights the growing complexity of the modern customer journey that retailers and brands must understand.

Need help connecting your media strategy? Get in touch with our experts today

As I reflect on what I saw, heard and experienced at NRF earlier this week, I was once again struck by the extent of forces impacting the industry. The speed of change is undeniably fast, and some of the new technological developments will feel still very futuristic to traditional grocers whose focus may be on keeping their shelves stacked with the freshest produce, milk and bread, rather than in-store robots and people-free cashiers. If you embrace the storm of change, there is much to be excited about in the retail trends I predict will be gaining traction in 2019.  These are what I see as potential game changers:

The use of Robotics and Crowdsourcing for grocery eCommerce fulfilment

2018 saw a boom in eCommerce as grocery retailers began to take online seriously. This included a surge of M&A activity and joint ventures as a means of leaping ahead of the competition. For many retailers though, fulfilment is the biggest hurdle to profitability when adopting online. In 2019 we expect the fulfilment side of the operation to take a significant leap forward with regard to technology and sophistication.

We see this happening in two ways; The first is the implementation of dark stores. The use of dark stores is common in more mature grocery eCommerce markets such as the UK, however, in the US, the practice is rarely leveraged. Instead, many utilize their existing stores to fulfil ecommerce orders. However, the rise of robotics to assist in the ‘pick and pack’ process is more conducive to a warehouse environment where the layout can be optimized.

The first signs of this emerged with the partnership between Kroger and UK based Ocado and shortly after, between Albertsons and Takeoff Technologies. The trend was confirmed most recently at NRF where robotics companies were front and center.

The second is the specialization of fulfilment vendors. For many retailers, the labor and operational cost of ‘pick and pack’ and delivery can be significant. In many ways, this has led to the tremendous growth of marketplace vendors such as Instacart and Shipt, who built operational expertise into their business model. However, as more retailers look to gain greater control over the eCommerce experience by replacing or sitting alongside vendors such as Instacart, the need for operational expertise still exists. Companies such as Jyve, on the ‘pick and pack’ side and Onfleet (a dunnhumby Portfolio Company) on the delivery side, are helping to fill that void, and can often do at a lower price than if the retailer attempted it on their own.

Mobile Self-Checkout

Will 2019 be the year we finally lose the checkout line? Scan, bag and go and self-checkout fulfilled some of our needs as consumers, however, what we really want is to grab our items and walk out. Amazon’s Go stores and Alibaba’s Hema Supermarkets inspired what could be, however, a number of competing technologies have also emerged that will allow other retailers to deliver similar capabilities. One example is Standard Cognition, a startup aimed at delivering similar capabilities as Amazon Go. It raised over $50m in a year and is poised to start rolling out with select customers across Asia, North America, and Europe.

Other examples are self-checkout technologies leveraging existing mobile scanning technology, which enables the customer to pay directly via their mobile device. Grocery eCommerce platform provider, GrocerKey (a dunnhumby Portfolio Company) rolled out their offering late last year and have landed several clients who plan to go live early this year.

For some retailers, their comfort level will vary and may still require an audit before walking out of the store, similar to the process deployed by BJ’s or Costco. However, a completely frictionless experience can be expected in the very near future, especially for those customers who are most loyal. Walk in the store, scan your items, click pay, and walk out.

If successful on a larger scale, it could lead to a reimagining of the layout and in-store experience, specifically within grocery, where the checkout lanes occupy the majority of front-of-store real estate.

Blockchain and Loyalty

In recent years, there has been much discussion around whether some traditional loyalty schemes are losing their lustre in this increasingly dynamic and competitive retail environment. While ‘me too’ simple points programmes might still engage some customers, modern loyalty programmes need to work much harder to deliver for both retailers and their customers. The recent backlash against Facebook and the introduction of regulations such as GDPR have also brought to light the real value of personal data and the trust we as consumers have that this data is used properly.

The next iteration of loyalty programs will need to create a more engaging experience by giving the consumer greater transparency in the use of their data and ensure the value exchange is much clearer and beneficial to both sides. The use of blockchain technology in this equation is now being leveraged by innovative startups such as EVERY and Bright Yellow Circle, who see blockchain as a means of establishing trust between the consumer and the retailer or brand. This level of trust makes the value exchange of consumer data for perks much more explicit. It also enables those perks to be extendable, so that they can be carried across retailers as a form of currency.

5G Technology will unlock the next generation of connected devices

5G networks are the next generation of mobile internet connectivity, offering faster speeds and more reliable connections on smartphones and other devices than ever before. Roll out began in late 2018 with 5G enabled devices anticipated to be widely available by mid-2019.

If we look back in time at how LTE (long term evolution) networks changed the mobile landscape (2010), we can see a direct correlation between LTE technology and smart phone adoption.

We may see a similar correlation as a result of 5G technology, with many believing the impact will be on connected devices (Internet of Things). This could result in a tremendous volume of new data being generated by connected devices.

It will also enable greater adoption of AR and VR technology and will create an even greater reliance on and use of smart phones.

We also expect 5G to be an enabler of some of the other trends mentioned above, such as mobile self-checkout and robotics.

In-Store Digital Display

Another big trend emerging from NRF was the proliferation of in-store digital display technology. In many ways the least talked about aspect of the Kroger / Microsoft partnership was their use of digital display at the shelf edge. The potential that this provides could be considerable; dynamic pricing, rich product data, hour by hour promotions, and new real-estate for digital advertising are all possibilities.

The decreasing cost of display technology combined with greater consumer acceptance and enabling technologies such as 5G, mentioned above, could be the catalyst for digital display to make its mark.  

“Retailers are designing their locations with Digital LCD and LED Displays of various shapes and sizes, lining entire feature walls inside stores, replacing backlit printed displays and transforming storefronts,” said Chris Mertens, Vice President, B2B IT Sales, Samsung Electronics. 

Digital signage vendors and startups are also offering more advanced analytical technologies to gain greater insights into their customers, to personalize the in-store experience. This includes face recognition and touch technology that will enable retailers and advertisers to measure how people react to content on screen.

Summary

The retail revolution shows no sign of slowing down in 2019, however, from what we’re seeing, brick and mortar is far from dead. Digital will play as big a role in-store as it does out of store – providing ample opportunity for innovation in the shopping experience. Retailers who leverage new technologies that add value and engage the consumer will distinguish themselves from the competition.

Verbraucher suchen beim Einkauf von Lebensmitteln häufig nach "Wert". Daher ist es für Einzelhändler wichtig, die Erwartungen ihrer Kunden zu verstehen, um ein Angebot zu erstellen, welches das richtige Gleichgewicht zwischen dem bezahlten Preis und dem wahrgenommenen Wert schafft. Welche Faktoren beeinflussen jedoch die Wahrnehmung des Preises und damit das Kaufverhalten?

Die dunnhumby Studie hat gezeigt, dass eine positive Preiswahrnehmung nicht nur von dem Grundpreis und einer Promotion abhängt. Die Einzelhändler mit den besten Ergebnissen erzielten auch gute Resultate in anderen Bereichen, darunter im Sortiment der Eigenmarken, der Kommunikation oder einem Treueprogramm, welches die Kunden als nicht weniger wertvoll empfanden.

Laden Sie den Bericht herunter und erfahren Sie, welche Faktoren die Wahrnehmung des Konsumentenpreises in den wichtigsten Einzelhandelsunsternehmen Deutschlands beeinflussen, und wie sich dies auf ihr Einkaufsverhalten auswirkt.

Über die dunnhumby Preiswahrnehmungsstudie
Die Studie "Perception of Price" von dunnhumby wurde zwischen Juli und August 2018 unter Beteiligung von 3.000 deutschen Verbrauchern durchgeführt. Um die Studie durchzuführen, wählte dunnhumby die dreizehn größten Einzelhandelsgruppen für Lebensmittel in Deutschland und bat die Kunden, verschiedene Aspekte ihres bevorzugten Einzelhändlers zu bewerten.

Kicking off our series of 3 minute interviews with retail capability experts, this month we sat down with Tom Langley, dunnhumby's Global Head of Media Capabilities to learn more about what he believes are the biggest challenges for retailers and how they can win in this rapidly changing retail and media landscape.

With the retail landscape evolving, what factors do you think retailers need to prioritise more than ever?

Given the disruption in retail and competition from many an­gles, now more than ever retailers need to be clear about their business strategy. Whether it is focusing on quality, price, range, experience, or convenience – retailers must have a strong understanding of the key reasons that keep bringing Customers back to them and be able to continuous­ly differentiate themselves from the competition.

What do you see being the biggest challenge that retailers face in putting Customers first?

A big challenge is navigating the myriad of different solu­tions available to retailers to support them in areas such as personalisation and CRM. The complexity of the technology and the plethora of options can make it tough to know where to invest and with whom to partner. This is why it’s so im­portant for retailers to first and foremost understand their customers’ needs; only after determining this can they work effectively with their solutions provider and build a roadmap on how best to achieve these goals.

What is the media team at dunnhumby working on now, and why is it important to retailers?

We design media propositions for retailers which support the broader shopper journey for their Customers. A core fo­cus for us has been bringing together personalisation and monetisation capabilities as we view these as complemen­tary. Our ethos has always been that media should enhance the shopper journey by creating connected experiences from sofa to store.

Retailers have a huge number of Customer touchpoints and it’s important that these all support the needs of Customers and give them the right message at the right time.

What changes in the industry do you see happening in the upcoming year?

Overall, I foresee that retailers will be forced to create more frictionless journeys between online and in-store in order to meet Customer demands. This means that they will contin­ue to create engaging experiences in-store to entice shop­pers to visit but will also invest more in digital platforms to drive ecommerce and provide shoppers with an avenue to research content and store information from the comfort of their own sofa.

dunnhumby media offers a unique combination of media, science and partnership capabilities to connect retailers and brands to Customers as they shop. Contact us to find out more.

Part 2: Foundational principles for developing a brilliant loyalty strategy. View part 1 here.

The Evolution of Loyalty: Loyalty Programs are already changing

Technology has driven fundamental changes in Customer behavior and how they shop. Today, Customers search for products, seek thoughts and opinions of other Customers, and increasingly order and pay for items online and via apps. Customers are also commenting on social media and even playing online games to earn virtual rewards. Thus, retailers have increased opportunities to listen to Customers and connect with them to deliver added value and help meet their needs at every touch point. For example, we can recognize our loyal Customers and drive engagement by providing advice on wine pairings, for example, or thanking them for posting a review and surprising them with a personalized offer while they are shopping online. By tracking and rewarding interactions beyond spend, we obtain a deeper understanding of our Customers to build  stronger relationships. It’s about creating lasting connections through relevant rewards and experiences where and when Customers want them.

Foundational principles for developing a brilliant loyalty strategy

Below are principles to follow to develop a successful loyalty strategy:

What to Avoid

• Low relevance for Customers
• Low perception of generosity
• Barriers across the Customer experience
• Reward/tier thresholds that are too high
• Developing a complex proposition which is difficult to understand
• Treating the program just as a promotional tool
• Having partners lack appeal or relevance
• Requiring too much effort for the Customer to participate

A Look to the Future

Measuring the Success of Loyalty Programs

There are many ways to measure loyalty programs– diagnostic measures that evaluate how well the program is being executed. Do you have awareness, appeal, and participation? Is the program driving engagement and increased loyalty among members? Stay tuned for Part 3: Measuring the Success of Loyalty Programs.

This is the ninth in a series of LinkedIn articles from David Ciancio, advocating the voice of the customer in the highly competitive food-retail industry.

Our second annual Retailer Preference Index (RPI): Grocery Channel Edition determines which of the 56 largest U.S. grocery retailers have the strongest combination of financial performance and emotional connection with their Customers.

The report comes at a crucial time for the industry, revealing insights and strategies to help retailers improve Customer preference despite intensifying pressures and threats.

Here are a few key takeaways:

For a closer look at the winner of each pillar and the key findings from this report, download a free copy of the report. If your banner is in our report and you'd like your custom banner profile, contact us. 

The list of banners evaluated, in alphabetical order, include:

With the balance of power shifting from business to consumer, it’s no surprise that improving the Customer experience is something high on the agenda of many brands and retailers right now. This month for our 3 minute interview, we talked to Emily Turner, Customer Engagement Director for dunnhumby in North America, to hear her views on what retailers and brands must prioritise to deliver truly high-value Customer experiences...

With the changes going on in the retail landscape, what factors do you think retailers and brands need to prioritise more than ever?

Building trusted and transparent relationships with their customers. A good relationship starts with being open and honest about how they use their Customers’ data and what benefits they deliver in return.

Customers generally trust retailers with their shopping data and are happy to share it providing there is a fair exchange of value. Not providing value back to customers in return through the experiences retailers and brands deliver, whether that’s in the form of irrelevant messages or ignoring channel preferences, is one of the fastest ways to erode that trust.

By using Customer data to design and deliver a superior experience for the Customer, retailers and brands have a greater opportunity of making every interaction more personalized and more rewarding, meeting the customers’ needs in that moment.

What do you see being the biggest challenge that retailers face in putting Customers First?

Commitment. Being truly Customer First takes unwavering organisational commitment. It is not for the faint of heart!

Yet to keep pace with Customers' ever-evolving needs and expectations, retailers can’t afford not to put the Customer at the heart of their decision-making. We work with many partners around the world to develop the right strategies that enable them to undergo this transformation.

It’s not easy to do and another of the biggest challenges is knowing where to start and how to make the change manageable. With over 30 years’ experience in using Customer data and advanced science to create unique and meaningful Customer moments, we have the necessary know-how to help retailers and brands achieve it.

Tell us a little bit about how the Customer Engagement team at dunnhumby helps customers win.

We start and end with the customer. We’re committed to helping our clients keep up with their connected Customers to improve every interaction their customers have with them, by delivering highly personalised and relevant experiences.

What are your trend predictions for the upcoming year?

Customers will continue to want to be treated like individuals, to choose how and when they want retailers and brands to communicate with them. They’re also increasingly looking to exercise more control over the experience they receive through things like selecting the benefits they want within a loyalty program for example.

For retailers, there will be an increased focus on removing friction, reducing barriers and building seamless Customer journeys across channels.

Customers are becoming more and more aware of the value of their personal data, questioning who is collecting it and why. They expect companies to treat it with respect and use it wisely to provide more personalised services and offers.

Customers are only going to get more demanding, and as such, retailers and brands will need to relentlessly pursue what matters most to their Customers. Or else someone else will.

The Customer Engagement team at dunnhumby helps retailers and brands identify and quantify Customer headroom opportunities, to enable personalised communication strategies and enhanced Customer experiences. Contact us to find out more.

While the popularity of buying groceries online has lagged behind other retail categories in terms of sales penetration, as witnessed in pet care, fashion, toys, electronics, and suchlike, this may all change. As increasingly time-pressured consumers are opting for the convenience of not having to visit a physical store, online grocery is at a pivotal point for many retailers, especially in some of the larger consumer markets.

According to the Institute of Grocery Distribution (IGD), online grocery sales for the world’s top two consumer markets, China and the USA, are projected to grow by a combined $181bn within 5 years. China's online grocery spend will likely triple by 2022, accounting for 11 percent of overall grocery sales and the US is expected to more than double within the same period.

Even with the market so fertile for growth, many retailers are still hesitant about investing in the online channel. Perceived cost and complexity is undoubtedly a barrier for some, but there are many misconceptions about selling groceries. Myths about the profitability, demand and potential of online grocery are likely contributors to slow adoption by retailers, unlike in other verticals.

These are what I see as the top 5 myths surrounding online grocery:

1. E-commerce cannibalises in-store sales

As customers become more digitally savvy and change the way they shop grocery, there will inevitably be some channel-migration. However, through our work with a number of retailers around the globe, they’ve witnessed an upward trend for revenue incrementality when including online as a purchase channel. In the most optimistic case, one of our clients saw 75% incremental revenue through online in addition to winning new customers with this channel.

Omni-channel is now the new normal for much of the retail industry and channel migration should not be viewed as ‘cannibalisation’ of in-store sales. Retailers need to think about omni-channel strategies to grow their overall market share rather than to think in channel silos (e-commerce vs in-store) as customers today are increasingly channel agnostic and traditional retailers will face the risk of losing out to the e-commerce pure players, many of whom are now developing their off-line presence through brick & mortar outlets.

2. Online shoppers are just deal seekers

In the online marketplace environment where brands and sellers are encouraged to compete on price to drive volume through the platform (often a race to the bottom), it would be easy to assume that online shoppers are all seeking the lowest prices. While this may hold true for certain product categories, such as non-food / general merchandise, our research has highlighted some interesting findings. Studies into price perception revealed that customers are more motivated to make decisions about where they shop based on the perceived overall value, which goes beyond price, and includes convenience, assortment and shopping experience.

Our research into omni-channel behaviours, based on millions of household baskets also revealed that online baskets on average are three times the size compared to in-store baskets. The findings also showed that today’s online customers are not shopping exclusively online but topping up their online shop with visits to stores as well. Using both physical and digital channels, these omni-channel shoppers are three to four times more valuable.

Furthermore, analysis of customers who shopped online revealed that the majority were in fact the best (strategic) customers, largely affluent and loyal to the retailer. More than half fell into this segment and this was consistent across markets from emerging to mature economy.

3. People do not buy fresh food online

This is probably the most common argument I hear from traditional grocery retailers as to why they feel online grocery will never take off at scale. The premise that customers are reluctant to buy fresh food online as they want to touch, feel and select their purchases is becoming less of a barrier as customers are becoming more comfortable with ‘outsourcing’ this task to the retailer.

According to Ocado’s CEO, the Fresh category represents 48 percent of its business. Similarly, Redmart’s CEO states that Fresh is one of their fastest growing range. The importance of a retailer having control over the ‘pick and pack’ and the ‘last mile’ elements of online grocery selection and delivery shouldn’t be understated, as this aspect will have a huge role to play in customer satisfaction of the online grocery experience.

4. Only millennials and tech-savvy shoppers shop grocery online  

Another common belief is that online shopping is largely driven by the younger and more ‘tech-savvy’ millennial segment, with older shoppers not engaging in the channel. An industry study found that Generation X consumers in fact made twenty percent more purchases in 2018 than their younger counterparts.

In addition, during Alibaba’s 2018 investor event, it was revealed that Hema’s largest customer demographic, which accounts for 35% of the total base, are in their early 40s with large homes. The next largest segment are senior shoppers in their 50s, who make up 25%. This group places a larger emphasis on convenience and value for money[1].

Our own customer analysis has found that all age groups shop online, especially time-pressed families, and this is true of retailers in many countries. Ocado, the world’s largest pure-play grocer also has the highest market penetration with families.

The pre-conception there is a lack of demand for online grocery shopping by the general population is far from the truth and poor customer experience is often the cause that hinders demand which then results in poor supply. Our analysis found that the first 3 online orders for ‘new to online’ grocery customers are crucial, as grocery is a highly habitual category and customers require motivation when new to this channel to form that habit.

5. You need real time inventory to succeed

Real-time inventory is not the key factor that breaks the online shopping experience if retailers are able to offer best substitutes based on deep understanding of their customers.

Through our experience helping some of the world’s leading grocers develop and optimise their online channels, we’ve observed that many customers are happy to get best substitutes when their preferred brand is out of stock. We’ve witnessed over 90 percent acceptance rate for recommended substitutes selected through data science based on the customer’s preference (down to the pack size) and product proximity.

The truth is that retailers can no longer afford to ignore online grocery. It will play out differently in each market due to factors such as population density, disposable income, and customer nuances, but the value at stake is high and the market will continue to evolve. Early movers could win big on incumbent advantage, but only with an outstanding omni-channel value proposition, a relentless focus on profit optimization, and continuous innovation.

Operating in a volume-intensive, slim margin business with perishable products that require quick delivery in special temperature-controlled vehicles, means online grocery can be complex and costly. However, the opportunity cost of failing to act, the risk of ceding market share in the future is far greater.

China, the most digitally mature market globally, offers us a glimpse of the future of global retailing. Chinese consumers are “the most demanding, advanced, and innovation-hungry digital shoppers”, with 72 percent ranked as “Progressive Pioneers” compared to just 25 percent of US consumers according to Forrester. In the past year, both Alibaba and JD.com have been in an arms race to win the online grocery market to increase their share of wallet and purchase frequency. Traditional grocers are at risk of losing market share to these platform giants with very deep pockets and significant digital expertise.  

As many retailers are fully aware, understanding customers’ current and future needs and tailoring the shopping experience to meet them is table stakes. The good news is that the data, tools and expertise that these pure play retailers possess is now within reach of every retailer.

Category Management is an essential component of retailing, but it has failed to move with the times. The changes witnessed in the retailing landscape, fuelled largely by increasingly dynamic customer behaviour, have not been adequately addressed in the way many grocery businesses still approach the management of their categories.

In order to grow your business and meet more complex customer needs, efficient category management with a data-driven, behavioural focus is now essential. This report introduces Category Leadership - a new customer-centric approach to category management – and outlines how retailers can implement this best practice to drive growth.