New Delhi: Hyper-personalization in the retail industry has emerged as a transformative strategy, tailoring the customer experience to individual preferences and behaviors. While it holds immense potential for enhancing customer satisfaction and loyalty, retailers often grapple with challenges during implementation. Common hurdles include data privacy concerns, managing vast datasets, and striking the right balance between personalization and intrusiveness.
Overcoming these challenges requires a thoughtful approach, incorporating robust data governance, transparency, and customer consent mechanisms. Generative AI further amplifies this trend, enabling retailers to create dynamic, personalized content that resonates with customers both online and offline. The omnichannel retail experience, fueled by generative AI, seamlessly integrates various touchpoints, offering customers a cohesive and personalized journey across physical and digital channels. As retailers navigate this landscape, mastering hyper-personalization becomes pivotal in delivering a superior and holistic customer experience. In this regard, Mansi Gupta, ObserveNow interacted with Alok Singh, Chief General Manager, Starshine Mfg. Co. Pvt. Ltd.
Here are a few excerpts from the interview:
How do you define hyper-personalization in the context of the retail industry?
These days, brands are also using technology to increase retail customization. To deliver the highest level of customer pleasure, merchants today combine offline and online data to create a comprehensive single consumer profile, thanks to the widespread use of artificial intelligence, machine learning, and predictive analytics. The way consumers act and shop will completely shift by 2022 and beyond. Convenience and interactive experiences will complement consumer preferences as the world opens up again, and consumers already want and will begin to anticipate a better omnichannel experience from retail businesses.
Can you provide examples of successful hyper-personalization strategies implemented by retailers?
The emergence of the metaverse and retail businesses’ positioning around it can serve as a futuristic illustration of this. Global merchants have purchased real estate in the metaverse to open stores, including Louis Vuitton, Adidas, Burberry, Gucci, Tommy Hilfiger, and Nike. This results in a decrease in customer churn, an increase in the number of products in the checkout basket, and an increase in customer lifetime value. According to BCG’s personalization matrix research, shops that implemented this strategy have consistently witnessed a 25% increase in sales.
What challenges do retailers commonly face when implementing hyper-personalization, and how can they overcome these challenges?
The most difficult part of hyper-personalization is getting enough precise consumer data and then having the tools to do the right analysis. To provide more relevant messages via emails or other marketing methods, businesses must find patterns within their clientele. Organizations handling personal data must also abide by regulatory laws. Marketing with extreme customization takes time. As a result, companies need to commit enough resources to develop unique campaigns for every market or client. Predictive analysis, AI-driven client profiles, automated consumer segmentation, and tailored product recommendations can all help address these issues. Through the utilization of AI-powered algorithms, companies can obtain knowledge about consumer behavior and determine which goods or services are best appropriate for any individual. This allows them to deliver more meaningful experiences tailored to each consumer’s unique needs and preferences.
How do you see generative AI impacting the retail customer experience, both online and offline?
In the world of retail, Generative AI technology is a game changer. The competitive nature of the retail industry means businesses face the challenge of keeping pace with rapidly changing consumer expectations and market dynamics. One solution being explored by many retailers is Artificial intelligence (AI), particularly Generative AI — an advanced algorithm that generates new data from existing data while learning patterns and producing outputs that mimic human creativity and decision-making. This can be achieved by using GAI for tailored product suggestions as consumers demand personalized content experiences in both online and offline stores. They can increase customer engagement by offering enhancements in search quality, customization, efficiency, and personalization, this technology creates a streamlined shopping experience that can increase conversion rates and average transaction values for businesses. Enhancing supply chain efficiency as communication is the key in every aspect of business operations. Large language models can enhance both human-to-human and human-to-machine interactions significantly.
Are there specific areas within retail operations where generative AI is particularly effective?
Generative AI can speed up product innovation and facilitate the faster launch of new products onto the market. Designers can use it to explore new design concepts, generate innovative ideas, and streamline their workflow. Generative AI for retail can also optimize shelf space in stores using the data of sales, product turnover rates, and customer preferences to recommend the best allocation of products on the shelves. It can further help determine the specific needs of a particular store and choose an optimal layout. Automating the process of generating unique and engaging product descriptions is another task-generative AI ace.
From your perspective, what defines a truly omnichannel retail experience?
Retailers that use omnichannel retail engage customers through a variety of digital and physical contact points. Applications and data travel through various channels with the customers. As a result, the entire experience is consistent and true to the brand. With this knowledge in hand, major companies are now utilizing an omnichannel shop as part of their media plan in addition to other in-person events to increase their consumer audiences’ reach, exposure, and effect. To create an omnichannel consumer experience, every touch point needs to adhere to a consistent approach and be viewed as component of a larger journey.
Are there emerging trends in the retail industry related to hyper-personalization, generative AI, or omnichannel strategies that you find particularly noteworthy?
GAI is a powerful tool for analyzing consumer spending trends. Some items move around on the sales floor more than others at different times of the year. To ensure that quantities are kept up to date, you need to audit items regularly. Combined with demand forecasting models, you can use AI algorithms to plan inventory reductions and increases according to forecasted changes in demand. Chatbots are typically associated with business-to-consumer interactions, but Wal-Mart has taken a different approach. The major retailer uses a GAI chatbot to negotiate prices and terms with product suppliers. GAI recommendation systems can be built using different approaches. The recommendations can be delivered to customers using omnichannel, such as personalized emails, on-site product suggestions, mobile app notifications, or targeted advertisements. GAI unifying offline and online fronts is an omnichannel strategy, sometimes called a “phygital” approach. By integrating in-store and online experiences, consumers will find their shopping sessions more consistent.
What do you envision as the future of customer experience in the retail industry, considering advancements in technology and changing consumer behaviors?
Omnichannel- customers interact with companies using different channels so there is no particular channel; it is one customer base that interacts across all available channels. E-commerce will see a boom. More traction on mobile commerce. There is Facebook commerce where you can buy or sell on a single social media platform and check out from it too. We will see cloud computing becoming the most important pillar for the future retail industry. Augmented reality will see a surge that will allow consumers to experience the products with convenience before buying. Internet of Things will help in auto-checkout from physical stores and also help the store layout by analyzing consumer behavior in their physical store.
