Human Curation Meets Assortment Automation
Automated assortment targeting is one of the most important technology-aided merchandising strategies to develop in the past 10 years. Retailers can use advanced algorithmic and behavioral tracking solutions to instantly determine what items a customer is most likely to buy and present them in a way that maximizes conversion potential. Omnichannel devices like smartphones, tablets and kiosks allow retailers to effectively deliver personalized assortments within the confines of a physical store, as well as online.
However, when it comes to assortment targeting, retailers often forget about the human touch. While actual people still create broad seasonal assortments, computers are usually left to perform assortment planning and targeting at a deeper level. Of course IT is a vital component of any tailored assortment strategy, but allowing humans to help curate automated assortments can make the end result even more compelling. Consider a few ways in which human curation can blend with assortment automation.
Listen to the People
Sweden’s X5 Music Group is enjoying success in the world of digital music downloads by presenting collections of digital songs aimed at specific types of music fans, such as classical aficionados. This is not especially noteworthy, except that X5 uses human music experts to curate its collections, which often outsell similar offerings from competitors that use automated techniques.
While human merchandisers cannot realistically tailor assortments to the level of the individual consumer, they can tailor assortments to the level of region, city, neighborhood or even store. By matching merchandisers with similar demographic traits to a target customer group, retailers can make sure localized assortments still retain the “human touch.”
Of course, analytical solutions will still be needed to obtain detailed demographic profiles, and it never hurts to double-check human merchandising decisions against automated recommendations.
Race with the Machines
Best-selling author Andrew McAfee, who also happens to be co-director of the Initiative on the Digital Economy at MIT Sloan School of Management, has a strategy he calls “Racing with the Machines.” This refers to the fact that although machines can significantly outperform humans at virtually any task, humans combined with machines are still much more effective than either machines or humans alone.
For example, computer chess programs can easily beat top human chess grandmasters, but in “freestyle” chess tournaments where people can team up with each other as well as use chess programs, human-machine teams invariably dominate both machines and people on their own. The intangible benefit of human intuition, combined with the advanced logical deduction of computers, creates a powerful combination.
Retailers should “race with the machines” when tailoring assortments. Merchandising experts can monitor assortment results using exception reporting and near- or real-time dashboards, allowing intuitive corrections and adjustments when shopper behavior defies computer logic. And sometimes it will.
The Human Touch
In The Pink, a Massachusetts-based affiliate of Lilly Pulitzer, makes a customer dashboard accessible to store associates via mobile device. For customers who identify themselves or are recognized, associates can get a comparison to all shoppers on average during the past 12 months. They can look at data like average transaction margin, units per transaction, total sales and rate of product return. Associates can also view customer preferences by vendor, category and style, and make adjustments as needed.
iBeacons can also identify customers, their preferences and their proximity to certain items, but cannot engage customers to obtain personal insights or make real-time observations like human associates. A little informed, in-store, personalized curation can go a long way.