The shopping experience for customers has drastically changed over the past few years with online shopping more popular than ever. As retail has transformed to extend to a digital experience, data has been positioned as the key to unlocking value and growth. Yet, challenges are presented in integrating, analysing, and storing this information, especially for legacy systems.
Meanwhile, there is a global shift in consumer data privacy as Australia follows suit with their own review of how businesses interact with the data they collect from consumers. For retailers, remaining cognizant of what data they hold and what is essential for their operations is imperative. The smart use of data, that is aligned to an overarching data strategy, can deliver a superior customer experience that grows loyalty and slows the race to the bottom in pricing.
When Google Chrome commences its plans to phase out support for third-party cookies, this will force companies to build out their own first-party data environments for direct ad targeting. Dubbed the cookiepocalypse, the move will turn how online targeting, ad tracking and privacy will work for online retailers on its head. Cookies remaining available until Q3 2024 might seem like a long lead time, but this will be such a wide-reaching change that companies that fail to start planning now, run the risk of being caught unawares.
A strategy for the cookiepocalypse
Data is both an asset and a liability for companies. Mishandling data can lead to privacy issues and legal action, so as the cookiepocalypse approaches, retailers should be aware of best practices and data strategies.
Implementing a long-term data strategy can define the management of technology, processes, people, and information assets. This is essential for companies to stay relevant, competitive, and innovative with the modernisation of the sector. In doing so, retailers can continue to enhance their offerings of choice in payments, customer relationship management (CRM) and inventory control management in line with data governance.
There are plenty of benefits to having a good data strategy including analytical capabilities, regulatory compliance, effective usage of quality data, and solving challenges of data management such as silos and duplication. A particular benefit is improving customer experience with hyper-personalisation and proactive servicing.
Mitigating the race to the bottom
Customer experience has long been a focus for online retailers to find ways to drive traffic and boost revenue. Reimagining the experience works to increase customer loyalty and keep customers coming back. This is also needed to mitigate the race to the lowest price in a competitive market with uncertain consumer spending.
With the digitisation of businesses and an improved shopping interface, Australian shoppers have been shown to be willing to spend more for a ‘convenient’ shopping experience. As mentioned previously in Retail Biz, the choice of payments, loyalty programs or other mechanisms to build customer loyalty contribute to convenience.
To build these solutions insights distilled from the data collected by different technologies across a company are leveraged for decision-making. Parts of this data are sourced through networks of cookies and without their existence in 2024, retailers will need to re-evaluate how they tailor their personalisation tools, payment prompts and inventory management.
For some, the cookiepocalypse poses the risk of reduced customer loyalty which will eventually lead to a drop in prices to reclaim favour. However, if prices are dropped from the start while the experience is still poor, then products will always be sold at a discounted price.
As the bricks-and-mortar shopfronts evolve to become a channel to drive engagement and showcase products, the importance of online stores shifts to focus on purchasing and payments experience. Bringing together all payments into one backend system to support both the online and physical experience develops what is called “unified commerce”. With this, retailers can deliver cross-channel experiences all while keeping reconciliation simple.
From a wider lens, this looks like inventory control matched with ordering systems to sync on stock quantity and availability, however, the possibilities reach far wider than this. Shoppers appreciate a seamless end-to-end experience more than ever, while retailers make better-informed decisions, recognise more accurate forecasting and welcome better offerings across channels. With a robust data strategy supporting a unified commerce solution retailers never have to race towards the lowest prices again.
David Marsh is principal industry consultant for Endava.