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In part two of our blog series exploring some of the common challenges in setting up a Retail Media operation, we take a look at the building blocks of a strong business case.

In July last year, we estimated that grocery Retailers in the UK could be missing out on as much as £1.7bn in unrealised media revenues – equivalent to some £11bn across EMEA. While those numbers might give us an indication of the overall scale of the Retail Media opportunity, they tell us a little less about its potential on a business-by-business basis.


One way to start working that out for your own organisation is via the creation of a business case. Not only will this help you evaluate your current capabilities around Retail Media, it will give any other stakeholders involved a clear analysis of the benefits, costs and risks involved.

The good news is that, for many Retailers, the key components needed to turn Retail Media into a profitable reality will already be in place. And where they aren't, many options exist for augmenting your existing activity to maximise the value it can deliver.

Let's take a look at some of the most common considerations, and the questions that will need to be addressed in an accompanying business case.

Channels

Every Retailer today owns valuable, engaging advertising inventory. From in-store space to apps, websites and more, Retailers have an opportunity like few others to reach Customers with relevant, timely content across the duration of their shopping journey.

Many Retailers, of course, already utilise these channels for advertising to some degree. As a result, the biggest question that needs to be answered as part of a business case here is not "can we do this?", but "can we do this better?".

Historically, most Retailers have included advertising opportunities as part of trade negotiations with consumer packaged goods (CPG) suppliers. But with access to Customer data on an unprecedented scale, Retailers now have a gigantic opportunity to offer those brands a more targeted and personalised way to reach out to shoppers – maximising the value of their media inventory in the process.

The major questions to answer in your business case around channels are:

  • Does our store portfolio give us the ability to execute consistent advertising campaigns in partnership with or on behalf of our CPG suppliers?
  • How many customers can we reach out-of-store through channels such as websites, apps, email or direct mail?
  • Is there a strong enough financial incentive for us to offer this service to CPG brands?

If the answer to those questions is yes, then you may also want to consider maximising the effectiveness of your channels by:

  • Providing your CPG partners with insight and measurement solutions that prove the value of data-driven, personalised campaigns.
  • Adapting your primary ecommerce channels to take advantage of banner ads, search-led promotions and other non-intrusive advertising techniques.
  • Offering CPG partners the ability to book, execute and optimise media campaigns across your inventory using self-service tools or via a dedicated managed service.

Data

As is the case with media inventory, Retailers are in a unique position in terms of their ability to gather and analyse data on Customers and their purchasing habits. If digital media revolutionised advertising by introducing unseen levels of precision and measurability compared to traditional media, Retail Media makes a similarly evolutional shift by allowing Retailers to add real purchasing behaviour into that equation.

As vital as this data is to Retailers for their own planning and loyalty purposes, it can be just as invaluable to CPG suppliers looking to maximise their own return on advertising spend. Put simply, the easier you can make it for them to target, reach, and influence the Customers they care about, the more likely they are to spend on advertising with you.

Monetising data in this way isn't just about pure profitability either. For your stakeholders with an invested interest in loyalty and satisfaction, they'll no doubt be pleased to hear that around two-thirds of Retailers who do monetize their data see an improved Customer experience as a result[1].

The major questions to answer in your business case around data are:

  • Do we operate a loyalty card scheme or have customer-level transaction data that allows us to track the relation between delivery of promotions and purchase behaviour in-store and online?
  • Do we capture enough information on our ecommerce channels to be able to make data-driven decisions about Customer behaviour?
  • Is the quality of the information that we hold on Customers as accurate, current, and complete as it could be? Do we hold the right permissions to use it commercially?

If the answer to those questions is yes, then you may also want to consider maximising the effectiveness of your data by:

  • Applying advanced data science to create a deeper understanding of your Customers' needs.
  • Linking and packaging this data in a way that makes it useful and valuable to CPG suppliers – i.e. by helping them identify target and high-intent audiences or set pricing strategies.
  • Exploring the possibility of using this data to help CPG brands target customers across digital, social and physical channels.

Other considerations

While effective use of data and channels form the backbone of an effective Retail Media operation, some other issues are worth addressing as part of your business case. As with the above, few of these questions should prove difficult to answer.

  • How many CPG suppliers do we work with, and how strong are our relationships with them? How best will we generate demand and become their marketing partner of choice?
  • What percentage of my product sales are own brand compared to CPG lines? In which categories are the greatest opportunities?
  • What does success look like, and how will it be measured? Is it purely revenue-based, or will we measure improvements in Customer loyalty, satisfaction, and the strength of your relationships with CPGs? How will you measure the contribution of Retail Media to these criteria if so?
  • Which departments within your organisation will have a role to play, and are there any skills or areas of expertise that you should invest in?
  • Ultimately, when putting together a business case around Retail Media, the majority of grocery chains will likely discover that they already have many of the fundamental elements in place and running well. The challenge will be not in making sweeping changes or justifying grand expenditure, but in fine tuning existing processes in order to maximise their value – something that external expertise can really assist with.

Next in this series, we'll be looking at building the perfect Retail Media blueprint.

[1]The Future Of Retail Revenues Must Be Data Led, Forrester Consulting, November 2019

[This is the fourth in a series of articles advocating the voice of the Customer in the highly competitive food-retail industry. David Ciancio is Global Customer Strategist for dunnhumby, a pioneer in Customer data science, serving the world's most Customer-centric brands in a number of industries, including retail. David has 48 years experience in retail, 25 of which were in Store Management. He can be reached at David.Ciancio@dunnhumby.com].

Treating Customers differently based on their 'profitability' is counter-productive to building loyalty and toward creating a healthy retail Customer Experience.


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The new wave of online grocery customers

Throughout the COVID-19 crisis we've seen the sharp rise and fall of many trends. As countries veered from one phase of the pandemic to the next, we've seen everything from panic-buying and stockpiling, to a booming demand for hygiene products. While some of these trends have stuck, the resumption of a more 'normal' life in many parts of the Asia-Pacific have seen others tail off.

One trend which is set to stay is in eCommerce, particularly within grocery. Lockdown drove a surge to online grocers the likes of which we have never seen – and it seems customers have been convinced by the online experience. According to multiple recent studies[1] China's grocery eCommerce market, already a booming sector with 29% growth last year, is now tipped to grow by 60% this year as the coronavirus has driven whole new segments of customers to the online grocery market. The trend is also sustaining; the main growth driver in JD.com's record-breaking '618' event this year was grocery, with sales almost doubling[2].

While general retail has been building momentum online for some years, grocery has been something of a laggard, rarely accounting for more than 15% of the overall grocery market. Historically the major barrier to entry to online grocery has been trust – over 50% of customers do not trust online grocery deliveries to pick the freshest and best items[3]. For years this has been a catch-22 scenario for retailers: customers don't trust the quality of online grocery because they haven't tried it, but they won't try online grocery because they don't trust the quality.

COVID-19 has caused a new wave of customers to finally take a leap of faith into digital grocery. Retailers can be happy that they've won new customers online, but now comes the hard work of retaining them.

The need for Customer Infrastructure

Much has been made of retailers' attempts to keep up with surging online demand during the early phases of the pandemic. Even in globally advanced eCommerce markets like the UK, the lead retailer has had to significantly expand delivery capacity to keep up with demand[4]. In order to meet the needs of new customers, retailers have rightly focused on having the right physical infrastructure in place.

However, if retailers want to keep meeting the needs of customers, they'll now need to focus on a different kind of infrastructure - the online customer experience.

The ease of shopping online is a double-edged sword for retailers. If customers can shop online with one retailer, they can shop online with any retailer. Your competitor store is no longer 1 kilometre away, it is one click away. Customers can literally browse competitor shop windows while they are in your store, and for countless retailers in the Asia-Pac region where online sales have historically been low, their digital stores may be looking rather outdated.

So while you may have won new customers, the fight to keep them is much more challenging.

Getting the digital experience right

The principles of great customer experience online are the same as instore. It's about helping customers easily find what they want. It's about helping customers feel they've got a good deal. It's about having a well-laid out store. Fundamentally, a great digital experience is about putting customers first and responding to their needs. Thankfully, the nature of eCommerce makes it possible to know these needs in detail through the wealth of data available to retailers. The data you're likely already collecting will tell you everything required to build a better overall and individual shopping experience for each customer who shops online.

Here are 3 ways retailers can act now to build a winning customer experience online:

  1. Bring the offline online
    Your customers may be new online, but many of them will be existing offline shoppers. Their loyalty card history enables you to show them items they already buy. Better still, predictive data science can detect which of those items are staple and regular purchases that each customer might need right now – helping them quickly and efficiently build a basket based on their own personal behaviour. This knowledge can also help act as an online virtual assistant, helping customers find substitutes for out of stock products and prompting them with items they may have forgotten to add at the checkout.
  2. Make it easy to find value
    In a world where customers can price compare at the flick of a tab, maintaining price perception is vital. This is easier said than done online, as customers won't spend time browsing the 500 products you have on special that week. Instead, use relevancy algorithms to curate your promotions list at the customer level using their previous behaviour, and show each customer the offers that actually matter to them.
  3. Optimise the navigation
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Retailers in Asia have a limited window of time to win the continued business of new online customers. As these customers become more familiar with the experience, the greater will be their demands and their likelihood to look elsewhere when their experience is sub-optimal.

At dunnhumby, we've been advising grocery retailers on digital best practise for over 10 years, led by 30+ years of leading experience in data science and we have developed a range of products for retailers to deliver exactly these kinds of industry-leading customer experience online, powered by retail data.

In the next part of our series on the post-COVID landscape in Asia-Pacific, we'll explore the diverging needs of customers in the wake of the pandemic, and how omnichannel personalisation can help retailers meet those needs efficiently and effectively.

[1] E-commerce drives China's stay-at-home economy in coronavirus aftermath & China's online grocery sector set for explosive growth, says GlobalData

[2] Chinese shoppers are staying online. That's great news for JD.com

[3] Study cites barriers to online grocery shopping

[4] Tesco Delivers One Million Online Orders In A Week In The UK

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