Recent changes in the economy have affected every sector, and the retail and CPG (Consumer and Product Goods) sector has been no exception. New capabilities in the past few years – cloud-native approaches to infrastructure and the enterprise view of retail data, for example – have given retailers exciting tools to attract and retain customers. But customers are demanding more and more from retailers, and companies have to draw on diverse resources to respond to consumers’ needs and competitors’ initiatives. Here are some of the most important technology-driven trends in retail and CPG that our customers are telling us they are looking out for.
Finding True Sustainability
Sustainability is not just a buzzword any longer. Consumers are way too savvy to be fooled by greenwashing, where a company pays lip service to environmental causes without making any real, fundamental changes. As jurisdictions around the world enact regulations to minimize industries’ impact on the planet, sustainability has become standard practice in many companies. What’s more, environmental sense is good business sense as well.
As consumers demand more or better sustainability practices, companies are addressing the problem in a variety of ways. New packaging solutions are becoming more affordable, and the use of renewable energy (whether generated by the company itself or by energy suppliers) is increasing.
But organizations are also finding less direct and less obvious approaches to lowering their environmental footprint. For example, enhancing or modernizing supply chain software can significantly affect a company’s use of energy and other resources. Similarly, newer fleet management solutions enable companies to reduce their fuel use by reducing mileage and idling. System-based automation is poised to have a major positive impact on the effect that companies have on the environment.
Enhancing Engagement through Loyalty and Personalization
Studies have shown that many consumers become frustrated when their shopping experience is impersonal. Conversely, shoppers who experience an effectively personalized buying experience have reported a positive influence on the purchasing process.
Retailers’ loyalty programs have increased in recent years, but consumers are beginning to consider whether they provide real value to them, and not just the retailers. While loyalty programs promise discounts, extras, or experiences, if customers do not feel that they are receiving value from the program, they either don’t bother with the program or move on to a competitor.
Consumer expectations are already very high, and the retail experience, whether through loyalty programs or personalization, must meet those expectations. Retailers are working to implement predictive analytics using rich customer data to shape the buying experience around individual customers’ needs and preferences. Larger retailers with a wide geographical spread can implement machine learning and artificial intelligence to provide a responsive and agile interaction with individual customers. Large retailers and CPG firms are now looking to pioneer personalized direct marketing, by leveraging cloud-based analytics and drawing on cutting-edge products like Quisitive’s LedgerPay that can help them deliver a much great personalized customer engagement that goes beyond what a typical retailers loyalty program captures.
Building Digital Twins
The availability of modern tools to create digital representations of retail spaces has been a major breakthrough for retailers and CPG companies alike. Creating “digital twins” – realistic 3-D spaces that analysts and customers can actually visit and experience – has made new possibilities for retailers. With increasing success in construction, smart cities, consumer-packaged goods, and supply chain management, digital twins are beginning to have a significant effect on the retail space as well.
With a digital twin, retailers can model new uses of their retail space to understand how it will affect customer navigation and use of the space. Non-customer areas can be modeled too; for example, a quick-service restaurant can measure the potential impact of new equipment on the kitchen layout and use it to increase efficiencies.
Testers can do virtual-reality walkthroughs of a digital twin to help modify the design. But other assets, like enterprise-level customer data and Internet of Things (IoT) data, can also connect to the digital representation to better model and analyze the physical experience. The value of the vast quantity of data that is potentially available to retailers is only rising; digital twins show how organizations that collect and capitalize on their data can find new innovations in the retail space.
Merging Online and Physical Stores
Benefits of a Ubiquitous Shopping Model
COVID created some overheated predictions that online shopping would forever destroy the bricks-and-mortar marketplace; this has been disproven long ago. However, merging the customer experience across online and physical interactions remains challenging for many CPG and Retail organizations.
Today, whether it’s online, mobile, kiosk or at a point-of-sale, customers want the same look and feel across all platforms so retailers and CPG companies must create an Omnichannel experience to meet these expectations.
Making both the online experience and in-store experience consistent creates a greater customer experience, making it easier for the consumer to shop through the entire process.
Having the same buying experience creates the ability to track customers’ preferences more easily by leveraging data analytics so that they can meet customer expectations effectively through any point of interaction
Omnichannels that leverage cloud base data stores provide the ability to use analytics more effectively allowing companies to not only offer better customer service but to provide consistent targeted campaigns and promotions specifically for that buyer.
And providing better and more efficient customer service, in turn, creates greater customer loyalty and satisfaction.
Customers expect a seamless, personalized experience no matter where, when, or how they engage with retailers. A modernized, cloud-based infrastructure, powered by data services that link information across the enterprise, is the key to success for many retailers.
The Future of Retail and CPG
The extreme challenges of the last couple of years have left their mark on the retail sector, just as they have on every other facet of the economy. As the online-native millennial generation matures, as shoppers become more sophisticated in their online behavior, and as the online and physical retail spaces become ever more crowded and competitive, companies are looking to take every advantage they can to stay ahead. Technology will continue to play a major role in retailers’ strategies, whether it’s harnessing the power of the customer data they possess, creating new opportunities for engaging with customers or finding new digital and online possibilities.
A conversation with Scotty Perkins and Jose Luis-Gomes
In today’s highly volatile retail environment, creating value for the consumer right at the point of sale is everything. But brick-and-mortar merchants are at a disadvantage compared to e-commerce retailers when it comes to personalizing customer experiences. They have very limited ability to gain detailed information about the purchasing behaviors of individual consumers.
Quisitive recently launched LedgerPay, a modern, direct payment processing platform that replaces traditional payment processing layers and fees with a cloud-enabled payments and data analytics solution. LedgerPay’s payment tokenization securely taps data from every single customer who used a payment card, making a process that was once a tax now financially lucrative for merchants. But what really sets LedgerPay apart is the focus on using that payments data to provide unique insights into consumer behavior for brick-and-mortar retailers.
LedgerPay recently announced a strategic go-to-market relationship with dunnhumby, a global leader in customer data science. The LedgerPay-dunnhumby offering is a first-of-its-kind service for brick-and-mortar merchants such as quick-serve restaurants (QSRs), grocers, and other retailers who want to encourage repeat and more valuable sales by capitalizing on past purchases at the point of sale (POS). It combines the power of an innovative payment processing platform with tokenization to offer merchants an unprecedented level of precise, secure, and actionable customer data derived from real-time, non-cash POS transaction data.
LedgerPay SVP Scotty Perkins had the chance to sit down with Jose Luis-Gomes, President of North America for dunnhumby, during a discussion with our investor community to talk about our firms’ go-to-market relationship.
Thanks for talking with me today, Jose. Can you give us an overview of dunnhumby?
dunnhumby is the global leader in customer data science, empowering businesses to compete and thrive in the modern data-driven economy. We’re a purpose-driven organization that exists ultimately to help retailers become more customer first. That entails understanding what customers want and need and understanding how they can deliver that better than the competition. With this information, our customers can make decisions that will prioritize those investments in the best way possible.
dunnhumby has always relied on customer data coming from traditionally loyalty programs — we invented this space back in the 90s and continue to be active globally. But we have recently found that the expansion of loyalty programs is limited for many industries. The ability to tokenize transaction payments becomes essential for areas like QSRs and convenience stores where loyalty programs don’t make sense. We see a real opportunity to augment the understanding of what loyalty programs bring and we’re really excited about the ability to do that with a global solution like LedgerPay.
Why is go-to-market relationship with LedgerPay important in the context of how dunnhumby can more broadly support your customers and monetize the data opportunity further?
Like any successful companies we know where our strengths are, and we want to play in those areas. There is a lack of customer data in areas like QSRs, [drug and pharmacy chains], and [dollar stores], which means that we can’t create a longitudinal view of customers. That inhibits a few monetization opportunities:
- The value of the data when you sell it to the manufacturers.
- The ability of any of the media targeting, a tremendous personalization opportunity for retailers.
A large part of dunnhumby’s offering is predicated on our ability to track and communicate with customers. Up to now, large swathes of the market have been off-limits to our offering. Our go-to-market relationship with LedgerPay will allow us to provide retailers with the capability to track customers and to create better strategies for their business. Many of these industries have been traditionally dark. Convenience Stores, for example are the most profitable channels for the package goods companies. Our go-to-market relationship with LedgerPay provides a real opportunity for us to penetrate this market.
As I mentioned before, dunnhumby is also excited about the global reach of this relationship. There are a number of countries where loyalty programs are less evolved, so even in the grocery space this becomes an opportunity.
Can you expand on how LedgerPay and dunnhumby will activate together?
Most of the added value and the benefit is business as usual for dunnhumby. Today, for example, we’ll get feeds from our retail partners that will have some sort of tokenization element whether that’s brought to them by their loyalty program. So the fit with LedgerPay should be seamless and we can switch on 100% of our customer-driven capabilities immediately.
The LedgerPay system will tokenize the payments in real-time and will feed through to dunnhumby. We’ll turn on all of our insight’s platforms, turn on our personalization algorithms, and feed those back either to the retailer or monetize those with their partners.
We’ll explore how to leverage real-time data feeds, which is a tremendous opportunity, particularly if we’re trying to understand things that happen before the shopping trip happens or immediately after the shopping trip is ended and on the receipt. That gives great scale to the retailers into the [consumer packaged goods brands] which is one of the secrets around personalization and one of the failings for the convenience sectors. We’ll be able to plug that data feed into our existing capabilities. Over time we’ll explore what we can do in real-time– a capability that we already leverage extensively in eCommerce. We’ll be able to bring that capability to the brick-and-mortar world which will be a real game-changer.
Is there anything else you’d like to add?
We are excited that the dunnhumby/LedgerPay go-to-market is integrated with execution. We’ve collaborated with other partners with different tokenization capabilities but it’s incredibly expensive today to do this right. Many of our partners shy away from tokenization as they find it’s difficult to break even. The LedgerPay platform, on the other hand, has the unique ability to think about real-time. dunnhumby looks forward to using that perspective as we onboard new partners onto the platform.
The wider dunnhumby family is excited about leveraging our go-to-market relationship in other core markets including Europe, Latin America and Asia Pacific where transaction-based payment systems are much more valuable. Finally, dunnhumby just signed a huge partnership with Microsoft, so the integration with Quisitive has been very beneficial for dunnhumby – closing the loop as we go to retailers and have a broader proposition.