Think Tank: Focus on Customer Centricity to Compete in Retail’s New Normal

Lori Mitchell-Keller

Updated May 22, 2018 at 1:25 PM

Retail continues to evolve at a rapid pace. While some have had to close shop in the face of change, others are finding extraordinary success playing by the rules of retail’s new normal.

With significant changes in consumer behavior and demands shaping the industry over the last few years, technology has quickly developed to become a cornerstone within every successful retailer’s business model. As consumer expectations continue to evolve, retailers can stay ahead of demand by leveraging a digital core with real-time analytics to better meet and anticipate consumer needs with more personalized, convenient and superior shopping experiences — both in stores and online.

To compete in retail’s new normal, one key area retailers should focus on is customer centricity. Retailers doing this successfully, such as Under Armour, have been able to create an end-to-end immersive consumer experience for customers.

Embedding the Customer at the Center

Consumers today are digitally armed, and they expect new types of shopping experiences. In fact, according to PwC, consumers are willing to pay up to 16 percent more for a better customer experience, and 73 percent say that a positive experience is among the key drivers that influence their brand loyalties.

Customer centricity is not only putting the customers’ point of view at the center of every decision, it also requires building the entire experience around the customer. Implementing this type of thinking will help retailers meet and exceed consumer demands while anticipating their needs proactively.

Let me walk you through a great example. Under Armour has really put the customer at the center of its business, and they are leveraging technology to make it happen. Based on customer preferences, Under Armour can connect with customers multiple times a day through its MapMyRun app. Even when a customer is traveling, it instantly knows how to adapt its communications and functionality to cater to the customer’s immediate needs based on location. This provides the consumer with an enhanced brand experience, while also providing the brand an opportunity to re-engage them in the buying journey.

Specific interactions during a customer’s business trip may include an early morning notification with an invitation to join a nearby runners’ club, leveraging insights on past preferences, location data and access to their calendar. While getting ready for the run, the app notification may flash again with a recommendation to wear their recently purchased light Under Armour runners jacket and Under Armour running shoes. This is sent via e-mail using purchase history, athlete preferences, mapping, weather and local details.

Later that morning, the customer may receive another notification, “Weather tomorrow will turn for the worse. Get the gear you need now.” Clicking the notification takes them to a personalized Under Armour store, which is exclusively curated for sizes and interests, and in this case there are three items front and center: a breathable rain-proof running jacket, performance running tights and the latest version of their running shoes with the note, “Your current pair of Under Armour running shoes should be replaced in 30 miles; show recommendation based on running profile changes over last 65 miles.”

If the customer decides to make a purchase, they are able to choose same-day Uber delivery to the hotel. The app already knows the hotel address, and credit card details are stored securely in the Under Armour Wallet within the app, making checkout speedy and efficient.

With a deep level of consumer understanding based on history, social data and data collected from sensors, Under Armour can serve consumers with offers that best match their lifestyle, nutrition and health preferences. The result is a highly individualized and integrated shopping experience for consumers that earns lifetime loyalty, while also delivering significant advantages and new business opportunities.

Technology Enabling Customer Centricity

In the Under Armour example, there are a few key technologies and processes used to enable rich insights, like the Internet of Things and machine learning.

The Internet of Things is a network of physical objects with embedded intelligence that sense the environment and interact with business processes and systems accordingly. It’s leading to unprecedented efficiency and optimization, as well as new levels of customer connectivity and new retail business models. The sensors in Under Armour shoes, for example, are synced with its consumer app to automatically track stats like distance and pace, as well as wear and tear to make recommendations on replacement.

Machine learning, on the other hand, enables computers to learn from data without being explicitly programmed. Growing volumes of data and improved processing power are making machine learning applicable in more and more retail areas, enabling further optimization of business processes and driving more impactful, personalized and contextual consumer experiences. With machine learning, retailers can see which products each consumer is engaging with and what interactions they’ve had with a brand across touch points, both online and offline. Businesses can better understand each consumer’s needs and effectively cater to those desires.

Intelligent, effective integration of these technologies is made possible by a digital core. Much like customer centricity focuses on consumers at the center of each experience, a digital strategy must have a digital core at its center, meaning a framework to interconnect all aspects of the shopper journey — making it the backbone of all business operations. Without a digital core in place, customer data is siloed and the experience is fragmented.

Thriving in Retail’s New Normal

With more data about shoppers than ever before, retailers can put that data to work by incorporating a technology-rich, customer-centric business model enabled by a digital core. With this approach, retailers can establish a deep understanding of consumer wants and needs — and then deliver accordingly in real-time. By consistently exceeding consumer expectations and seamlessly supporting consumer lifestyles, retailers can foster long-lasting relationships that revolve around what consumers really want. With this advantage, brands can get ahead of the competition and truly thrive in retail’s new normal.

Lori Mitchell-Keller is the global general manager of consumer industries at SAP. In this role, she leads the retail, wholesale distribution, consumer products and life sciences industries with a strong focus on helping SAP customers transform their business and derive value while getting closer to their customers. Mitchell-Keller brings over 25 years of experience in the software and consumer goods industries, including more than fifteen years as an executive driving business strategy while building strong and sustainable relationships with customers, partners, financial analysts and industry experts.

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Think Tank: Focus on Customer Centricity to Compete in Retail’s New Normal