Discounter uses machine learning to stay ‘on Target’ with shopper demand
Target’s omnichannel journey may have started five years ago, but newly-emerging digital touchpoints continue to change the game.
By leveraging machine learning to tap into customer demand, the retailer is defining which touchpoints are not only valuable, but influencing its shoppers' paths-to-purchase. The initiative was discussed during a session ("Determining New Omni-KPIs To Hit Goals And Key Drivers") at the recently held eTail West 2017, in Palm Springs, California.
Retailers continue to break down the barriers separating channels and lines of business as a means of delivering a seamless shopping experience. However, as the industry moves even closer to the holy grail of frictionless, unified commerce, they need to take the next step: transforming their organization, business processes and technology to align with the demands of their customers.
For Target, this means delivering convenience, customer satisfaction and better engagement regardless of the touchpoint consumers use when shopping with the chain.
“We need to tailor assortments to individual shoppers’ needs, and make sure merchandise is available both digitally and in-store,” Meghna Sinha, senior director for enterprise data analytics and business intelligence, Target, said at the session. “This requires us to understand our customers’ demand. To do so, we needed a single view of the shopper.”
This can be a complex task when shoppers engage with the brand through five touchpoints: the Web, a mobile-optimized site, Target's native app, the Cartwheel app, and its network of approximately 1,800 stores.
Aligning digital and in-store shopping data in a central location was the first step in getting a single view of the shopper. However, “looking at [their] total store and enterprise sales wasn’t enough. We needed to dig deeper if we wanted to understand how they visit us and make decisions,” she said.
Enter the value of machine learning — sophisticated artificial intelligence (AI) that is not only robust enough to siphon through increasing levels of unstructured digital information, but continues to learn from previous computations, improving the level of data analysis.
Target began its machine learning journey about a year ago, applying the analysis method to its supply chain operations. Running daily and weekly tests, machine learning is already helping the chain to optimize operations based on insights derived through tests. “We are still at the beginning of this journey,” Sinha said. “The only way to prepare for the future is to understand customer demand.”
Knowing this demand is harder to harness at store-level, Target will use machine learning to measure the influence of its touchpoints — including those used in-store — on customer purchase decisions. “It allows us to test the customer journey as one experience vs. multiple broken experiences,” Sinha said.
Target is in good company when it comes to leveraging AI and machine learning, as 50% of retailers reported they already extensively use automation powered by AI to deliver IT tasks. Meanwhile, 47% use the technology for customer interactions, according to “People First in Digital Retail: Accenture Technology Vision for 2016.”
While it was too soon to share results, Sinha believes the chain will remain committed to machine learning. “Knowing this is not a slam dunk, we will continue to test and learn,” she added. “It’s an ongoing, multi-year journey that will be fine-tuned over time.”
Study: Majority of retailers are ready to invest in IoT
As the retail industry continues its digital transformation, chains need a new formula to best service its shoppers.
To achieve this goal, 70% of retail decision makers are ready to make changes to adopt the Internet of Things (IoT), according to the 2017 Retail Vision Study, from Zebra Technologies. The study analyzes the technology trends shaping the future of the global retail industry and enhancing the shopping experience.
As online shopping becomes mission-critical in this age of transformation, retailers are challenged with providing unprecedented levels of convenience to help drive customer loyalty. While efforts only scratch the surface currently, within four years, these intentions will become priorities.
With 57% of retailers believing that automation will shape the industry by 2021, retailers will pursue IoT-enabled programs to streamline packing and shipping orders, tracking inventory and checking in-store inventory levels, and assisting customers in finding items. The first step in the equation, however, is to integrate e-commerce and in-store experiences to create seamless shopper experiences — and issue that 78% of companies find important or business-critical.
Within four years, 65% percent of retailers also plan to explore innovative delivery services, such as delivering to workplaces, homes and even parked cars. Meanwhile, nearly 80% of retailers will be able to customize the store visit for customers as a majority of them will know when a specific customer is in the store. This will be enabled through technology such as micro-locationing, which allows retailers to capture more data, accuracy and customer insights.
And 65% plan to invest in automation technologies for inventory management and planogram compliance, the study said.
To speed check-out lines, retailers plan to invest in mobile devices, kiosks and tablets to increase payment options. Specifically, 87% of retailers will deploy mobile point-of-sale (MPOS) devices by 2021, enabling them to scan and accept credit or debit payments anywhere in the store.
With big data becoming mission-critical to 73% of retailers’ digital retailing endeavors, by 2021, at least 75% of companies anticipate investing in predictive and software analytics for loss prevention and price optimization, along with cameras and video analytics for operational purposes and improving the overall customer experience.
These digitally centric tools will also benefit the shopper. The top sources of shopper dissatisfaction include inconsistent pricing between stores and the inability to find a desired item, whether it’s out of stock or misplaced within a store. That said, 72% of retailers plan to fix these issues by reinventing their supply chains with real-time visibility enabled by automation, sensors and analytics.
“Every inch of the retail industry is changing, from the aisles of the warehouse to the shelves of the store, and retailers are driving this change in a race to better serve customers,” said Jeff Schmitz, senior VP and chief marketing officer, Zebra. “The 2017 Retail Vision Study demonstrates that retailers are poised to meet and exceed customer expectations with new levels of personalization, speed and convenience.”
Tech Bytes: eTail West 2017: Three Takeaways
As the industry remains on its path toward frictionless retail, there is one clear way to achieve this goal: embrace innovation.
There is no denying that innovative solutions are the industry’s ticket to transforming operations, and the recent eTail West conference was chock-full of ideas of how to make this transition. The hottest digital strategies that continue to shape retail run the gamut, from conversational artificial intelligence to redefined mobile strategies that center on personalization, virtual reality and digital payments.
However, being tech-savvy is not enough for survival in an increasingly digitally-driven world. Equally important is a strategy that can support these initiatives for the long-term, and set the tone to embrace future solutions yet to evolve.
With an eye toward putting retailers on the path toward innovation-driven transformation, here are three key takeaways from Etail West:
Integrate innovation into corporate culture. With so many disruptors at the industry’s fingertips, retailers must be more nimble than ever when it comes to adopting innovation. However, when companies fail to change their culture, processes, even individual associates’ daily tasks to embrace digital disruption, creating an innovation-driven enterprise will remain a mere pipe dream.
To support its innovation efforts, NY&Co. has appointed a head of innovation technology who is responsible for working with a team that embraces change, tests solutions and learns from small scale projects. However, this group is more than an isolated team. Their efforts have transitioned into a mindset that’s transforming an almost century-old specialty chain into a strong competitor. “We test and invest in new solutions, a move that doesn't let emerging technology get so far out of reach,” Chau Banks, the chain’s executive VP, CIO and channel integration, said at the conference.
Pursue truly personalization-based programs. Anyone can send a targeted email to encourage consumers to shop. However, its messages that “speak” to a shopper on a personal level that are bound to get the job done. Called program-based shopping, this concept uses collected shopper data to create customized engagement with individual shoppers.
JustFab is testing this concept with customized videos. Based on merchandise that was “abandoned” in their online shopping cart, JustFab shoppers are receiving short videos personalized with their name and “forgotten” product, as a reminder to complete their transaction. The test, which was launched among 10% of its shopping base, started about a month ago.
Don’t forget to test, test, test. With so many technology solutions and disruptors influencing the path-to-purchase, retailers are inundated with options to pursue — and not all initiatives will be winners. However, all projects deliver actionable insights that retailers can learn from and apply to other programs. For this reason, “we are always conducting tests and using our findings to tweak and retarget our efforts,” explained Lindsey Morgado, director, customer strategy, Hot Topic. “You should always be learning something.”
Too often however, retailers are preconditioned for success — making failures hard to bear. Take a lesson from industry leaders who have “been there and done that:” Not every plan is going to work great. But the key is keep trying.
“You can’t be afraid to fail,” said Chris Woodard, VP, customer journey management, FreshDirect. “The good news is you don’t have to invest $1 million into an innovation project. Start small and do what you can. If it works, great! If not, learn from your mistakes and try something else. Just keep scratching at the surface.”