Embracing Hyper-Personalisation: The Future of Retail in a Data-Driven World

In the evolving retail landscape, driven by Millennials and Gen Z, seamless, personalised, and convenient experiences are pivotal.

By leveraging Point-of-Sale data and insights-led space planning, retailers can tailor product assortments and store-specific layouts, enhancing the shopping experience, establishing brand connection, and enabling customers to have “Ah, there’s my brand” moments.

The integration of physical and digital retail presents exciting engagement opportunities. However, maintaining privacy and data protection is paramount. Collaboration between retailers and suppliers is essential for driving innovation, improving efficiencies and strategic planning.

Balancing innovation with human interaction is crucial for success in this evolving landscape where experiential marketing plays a crucial role.

This essay concludes that by prioritising customer experience and staying attuned to emerging trends, retailers can thrive in this new era of retail.

“I would like a Venti, half-caf, triple-shot, caramel, mocha, soy, no foam, extra whip, extra hot, upside-down, caramel drizzle, with seven pumps of caramel syrup and seven pumps of mocha syrup, double-blended Frappuccino.” [1]

Let’s imagine this is your usual order and walking into a local coffee shop that you’ve been to a couple of times, and before you even reach the counter, the barista greets you by your name and starts preparing your order. This simple act of remembering your order may seem small, but as a customer, you would feel valued & understood and are more likely to return and become loyal patrons of the coffee shop as well as recommend to others.

The Customer of the Future

Data released by the Australian Bureau of Statistics in March 2022, indicates that ‘Millennials’ (ages 25 to 39) have now overtaken Baby Boomers as the largest generational group in Australia, accounting for 22% of the population (5.6 million people). Closely following Millennials are ‘Gen Z’ (ages 10 to 24), who represent 18% of the Australian population; with 2.2 million of this population group being between the ages of 18 to 24.[2]

Mind you, Gen A doesn’t have disposable income yet, they do have plenty of influence on shopping decisions and loads of opinions about shopping.[3]

Figure 1. Australian Population by Generation

According to CPM Australia, “89% of consumers stopped shopping with at least one company in 2022 because of a poor customer experience.”[4]

What matters the most to them?

For Millennials and Gen Z, customer experience goes beyond the product or service, focusing on seamless, personalised, and convenient interactions. They expect brands to understand their preferences, deliver exceptional service across all touchpoints, and provide engagement beyond transactions. Social responsibility, transparency, and authenticity are also key, as they seek meaningful interactions that align with their values and lifestyle.

Gen Z is a goldmine of possibilities. Their growing influence on each other, and the generations before and after represents both a challenge and an opportunity for brands to adapt their customer experience. As they bring new challenges to perfecting the customer experience, there is no question that the time is now to mould a business to the new wave of customer experience.[5]

About to get Personal

Just as discipline starts from home, personalisation also begins in the same familiar setting. It is within the walls of our homes that we develop a sense of what resonates with us, whether in terms of product preferences, communication styles, or service expectations. This internalised understanding of our needs and preferences serves as the foundation for how businesses tailor their offerings to resonate with the consumers.

95% of consumer decisions are emotionally driven. Understanding the consumers’ emotional behaviour-based purchasing choices can increase sales conversions by up to 71%, yet only about 2 in every 5 Australian retailers (39%) are making personalised consumer targeting a business priority for 2024.[6]

KPMG considers Personalisation as one of the Six pillars of Customer Experience Excellence and so does Forbes[7]:

Figure 2. Six Pillars of Customer Experience Excellence[8]

The New Size is Custom

In today’s dynamic retail landscape, segmentation, personalisation, customisation have become the cornerstones of the industry. Gone are the days of one-size-fits-all strategies.[9] We have come a long way from this approach especially in brick-and-mortar retail.

It all starts with knowing your customers (KYC). By collecting and analysing Point-of-Sale data across multiple touchpoints for demographics, preferences, and buying patterns, retailers can tailor their offerings to specific customer segments, ensuring that products and messages resonate emotionally, based on sales performance, trends, popularity, seasonality and more.

Data-driven, insights-led space planning takes this concept further, leveraging insights from customer data to optimise store-specific planograms and product placements. By analysing Point-of-Sale data, retailers can understand which products are selling well and in what locations, allowing them to strategically plan their store layouts to maximise sales and improve the overall shopping experience. This approach ensures that the right products are in the right place at the right time, increasing customer satisfaction and loyalty.

Figure 3. Sample Planogram[10]

Partnering at the Point-of-Sale data

Despite the obvious advantages of leveraging the customer data, challenges remain. It is easy for retailers to guard their findings out of a desire to keep the competition in the dark.[11] Confining customer data from key stakeholders can lead to missed opportunities, inefficient operations, limited innovation, and poor customer experience.[12]

Data democracy, or the sharing of data between retailers and suppliers, is crucial in this context. Accessing retailer’s data can be costly due to compliance and complexity. The best way to achieve this is to offer a meaningful joint business planning process where both parties can leverage common data sets and agreed KPIs, supported by new, faster, innovative methods of accessing data to generate impactful insights without costing them a fortune.[13]

This collaboration provides valuable insights into consumer behaviour and market trends, facilitating a strategic & sustainable space planning and product development that benefits all parties and enhances the overall shopping experience.

The “PhyGital” World

The unparalleled growth of ecommerce, facilitated by the pandemic, drastically changed the way customers shop. It’s no longer about ‘my country or your country’, ‘my company or yours’, ‘my wellbeing or the health of the community’. The virus blurred all boundaries, including the one between physical and digital retailers.[14]

Figure 4. Traditional personalisation vs. Hyper-Personalisation[15]

In recent years, personalisation and it’s levelled-up successor, hyper-personalisation, have become major trends in both B2B and B2C markets.[16] At the heart of this is the wealth of data generated by users across various touchpoints. From online behaviours and social media interactions to transaction histories and customer support engagements, businesses are tapping into diverse data sources to build a comprehensive view of each customer.[17]

This data is then analysed using advanced analytics and machine learning algorithms to identify patterns, trends, and preferences that can be used to tailor product recommendations, promotions, and marketing messages to individual customers.

For instance, a retailer may use data from a customer’s past purchases to predict their future buying behaviour and offer personalised discounts or promotions on relevant products. Similarly, social media data can be analysed to understand a customer’s interests and preferences, allowing retailers to create targeted advertising campaigns that resonate with the customer’s lifestyle and needs.

Figure 5. Woolworths and Coles Mobile Applications

While hyper-personalisation in the grocery retail industry is not a new concept, it remains a dynamic and relevant topic due to ongoing innovations and changing consumer preferences.

As such, it remains a focus for grocery retailers to improve the shopping experience and customer loyalty. They do this by ensuring consistent product placement, uniform branding, and consistent messaging, providing a seamless experience no matter how customers shop. With the duopoly under spotlight, there’s never been a more critical time for them to prioritise a positive customer experience.

Amidst these dynamic market forces, retailers must navigate both geopolitical uncertainties and the burgeoning trend towards cashless transactions, leveraging data-driven insights to remain impactful and deliver exceptional customer experiences.

Given the current geopolitical situation, including the Red Sea Crisis, Ukraine war, Middle East Instability, China-US relations can disrupt and reshape the retail channel through Supply chain issues, changing consumer behaviour, and altering the competitive landscape.

To navigate these challenges, retailers can diversify supply chains, leverage data analytics for consumer insights, collaborate with industry partners, invest in technology for supply chain visibility, and maintain a customer-centric approach. These strategies help anticipate and respond to changing conditions, ensuring sufficient stock holding and minimising out-of-stocks and providing seamless customer experience.

According to 9News, about 40 per cent of Australians are now comfortable leaving home without their actual wallets or even credit and debit cards. The use of digital wallet payments on smartphones and watches has soared from $746 million in 2018 to over $93 billion in 2022.[18]

Despite delays in implementing a Central Bank Digital Currency (CBDC)[19], the evolving financial landscape indicates a strong trend towards digital transactions. This trend provides retailers with abundant data for more profound insights into customer behaviour, offering immediate opportunities for enhanced personalisation.

The Future of Hyper – Personalised Retail – Say Hi to AI

Shelf space is a premium real estate in retail.[20] The importance of effective space planning cannot be overstated.[21]

Figure 6. AR / VR Solutions[22]

Retailers can leverage technologies such as AI, Virtual Reality (VR), and Augmented Reality (AR) and revolutionise the way planograms are created, analysed, and implemented. This leads to more efficient and effective retail merchandising strategies driving positive shopping experiences while boosting their bottom line.[23]

Global retail giants such as Walmart and Amazon are leading the way in leveraging these technologies to create immersive and personalised shopping experiences that drive sales and enhance customer experience.

Walmart leverages AI to streamline its operations in several ways, including Inventory and Supply Chain management, Pricing Optimisation, Fraud Detection, Customer Service and many more.[24]

Amazon, in addition to the services for which Walmart leverages AI, also uses AI for flagging defective products before they ship.[25]

Thanks to Hyper Personalisation, retailers can now deliver bespoke solutions in real – time by leveraging Data Analytics, AI, IoT, Big Data and AR / VR technologies to drive loyalty and stay ahead of the competition.

For robots have no emotions … only humans do!

The future of brick-and-mortar stores is evolving alongside the rise of ecommerce, with a shift towards more experiential shopping experiences. This is a growing trend in the world of growth marketing, and for good reason. Retailers are creating elevated experiences that resonate with their target audience[26] and are demonstrating the value of emotionally impactful consumer experiences in fostering community and generating long-term brand loyalty.[27]

Physical retailers are leveraging their brick-and-mortar advantage over pure-play e-commerce sites by offering cross-channel shopping experiences — such as buy-online-pickup-in-store and buy-online-return-in-store — to drive more in-store traffic. The store is no longer just a channel for buying and selling — it’s a fulfillment centre, an experience and an incredible touchpoint between customer and brand.[28]

Studies show that people make other people happy. Despite technological advancements, people still crave human interaction, and we still must leave the house to get that.[29]

It’s All About a Happy Customer

In conclusion, the call to action for retailers is to embrace AI and data analytics to personalise experiences, focus on effective planogramming for improved sales, adapt to changing landscapes, and prioritise positive shopping experience to stand out in a hyper-personalised retail world.

Millennials and Gen Z demand seamless personalised interactions, making hyper-personalisation and data-driven insights essential.

While technology can enhance experiences, human interaction remains paramount. Experiential marketing plays a key role while striking a balance between leveraging AI and data analytics while preserving the human touch.

Collaboration between retailers and suppliers is crucial for success, as is adapting to geopolitical uncertainties and the shift towards cashless transactions. In an era of hyper-personalisation, the brands that listen, adapt, and engage on a personal level and can provide seamless shopping experience will only truly stand out to shoppers.[30]

“Happy Shopping, where every purchase tells a story!”

[1] https://www.quora.com/What-is-the-most-complicated-drink-you-could-possibly-order-in-Starbucks#:~:text=Here’s%20an%20example%20of%20a,%2C%20double%2Dblended%20Frappuccino.%22

[2] https://www.colliers.com.au/en-au/research/retail-consumer-spending

[3] https://nrf.com/blog/7-retail-industry-predictions-2024

[4] https://acxpa.com.au/customer-experience-statistics-to-use-at-work/#:~:text=89%25%20of%20consumers%20stopped%20shopping,State%20of%20CX%20in%20Australia)

[5] https://www.forbes.com/sites/jefffromm/2023/03/16/gen-z-is-impacting-customer-experience-forrester-gartner-experience-dynamic-execs-share-insights/?sh=58ba68e7d387

[6] https://www.linkedin.com/pulse/future-australian-retail-2024-beyond-trend-2-using-cjl8c/

[7] https://www.linkedin.com/news/story/personalisation-to-take-off-in-2024-5941676/

[8] https://kpmg.com/au/en/home/insights/2023/11/customer-experience-excellence-report.html

[9] https://medium.com/@priyankaharlalka/one-size-doesnt-fit-all-the-role-of-personalization-in-modern-marketing-70b10deedd6e#:~:text=Gone%20are%20the%20days%20of,loyalty%2C%20and%20drive%20remarkable%20results.

[10] https://www.designalytics.com/insights/design-testing-the-planogram-predicament

[11] https://www.springglobal.com/blog/4-big-benefits-of-retailers-sharing-pos-data-with-supply-chain-partners