The Amazon Approach To Physical Retail Intelligence

The physical retail industry is shifting at a rapid pace to compete with the online e-commerce sector. Unlike the online industry, the changes, innovation and benefits in physical retail can take some time for realisation. Kaizen – Which means ‘Improvement’ in Japanese, is often applied in business as continuous incremental improvement. In order to be innovative in a company, big plans are required to make significant change. However, being agile in implementation not only caters for improvement but also allows a company to be iterative which can aid in overcoming common barriers to successfully innovate.

“If we want to move toward a big vision, but we don’t want to make big bets, we have to think carefully about the first steps. Whether it’s a minimally viable product or Agile approaches, at Amazon, they try to start with smaller, incremental bets”

John Rossman, Author – “The Amazon Way”.

So, how can retailers start innovating? Hand over to third party of researchers or consultants? – NO, at Intouch.com, innovation begins by questioning the current state. Change starts when there is a clear definition of the problem, the domain and then proceeding towards the required expertise. The retailer can set their goals in terms of sales, brand recognition, increased footfall and many others. A retailer can also consider increasing return on promotion.

Most retailers run thousands of promotions but are hesitant to scale the volume. Mainly because they are unsure which promotions are successful. However, from a strategic point of view, promotions are essential for gaining a competitive edge in the market. Small steps can be taken to help improve the return on promotions.

By simply starting with a store level personalisation of promotions, small steps can be taken to improve the customer experience. This can be done by taking external factors into account, such as the weather outside, events nearby and social data. This gives a complete understanding of what happens at your stores using as many data sources as possible.

Using a step by step approach the next logical step is segmented personalisation. This allows you to tailor in-store messaging for specific audiences. Understand group-level shopping patterns and buying preferences to show relevant content at scale. This can be done through gender-based targeting, age segmentation, or measuring shoppers moods.

Retailers can start these processes by auditing the existing touch points and the various sources of data available in their store. It can be started by gaining a basic level of data like community demographics, shared interests or cultural values to gain a deeper understanding of shopper preferences.

Examples of some touchpoints

The different touch points in-store can be one way or two way, it’s important to understand how these points can be used for promotions. Taking a step-by-step approach, testing and optimising can help retailers promotional efforts.

“Retailers should use analytics to make offers and decisions that are targeted and localised, as well as delivered in real time. These offers and decisions should be informed by product preferences and influences. They should also be customised by location and shopping occasions”

McKinsey & Company

The major benefits of improving promotions are increased sales and footfall by offering a lower price and better value proposition. In turn this attracts customers away from competitors and enables a retailer a further opportunity to upsell and cross-sell once the shoppers are in store. Personalised promotions or a specific product match at a variety of touchpoints (e.g. Mobile phone, ESL, Self-scanner)  enables a retailer to compete with online players. The data asset can be used for future sale predictions and will aid decisions on promotions to the level of the supply chain.

Staggering your innovation, one touch point at a time allows retailers to test the effectiveness and optimise the experience. Nowadays retailers need to fully harness the potential of their promotional efforts to prevent marketing wastage. Though promotions are a significant challenge for the retailer, it is inevitable. By innovating and moving forward in the “Amazon way”, a retailer can overcome these challenges.

Want to take the first step? We would be happy to chat. Get in touch!

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