Leverage AI Price and Promotion Optimization

Shoptalk 2019 Key Takeaways, Part 2
March 20, 2019 Sue Dale - VP and Managing Partner, Global Strategic Consulting, Revionics

This was Aditya Rastogi’s and my first year attending ShopTalk and we are in awe at how well the themes of learning, collaboration, retail and creating the future were embodied in all aspects of the event. As we did in Part 1 of this blog, we’ll look at three key themes that are takeaways we benefited from.

Barbara Kahn, Professor of Marketing at The Wharton School educated on her retail success framework for creating a winning strategy to thrive in the retail environment of today and the future.

Billy May, CEO at Sur La Table, David J. Katz, EVP & Chief Marketing Officer at Randa Accessories and JuE Wong, CEO at Moroccanoil shared their diverse strategies for engaging with Amazon and collaborated openly on ways to further evolve these strategies.

David Isbitski, Chief Evangelist, Alexa and Echo Amazon reflected on how Alexa has become part of our everyday routine. “As human beings, nothing beats speed. If the customer knows exactly want they want, telling Alexa to order is faster than typing and searching”. He highlighted that Alexa is starting to understand the context of things and challenged the retailers to think about this in relation to their customer. “Interacting with your customer in the moment is what builds a relationship with the retail brand”.

After four consecutive days of gaining insights from the practical experiences of traditional multi-channel retailers, legacy brands, digital first natives and innovative technology firms, three common themes for success emerged: know your customer, provide a seamless engagement across the channels and create a single view of your customer.

The Customer, New Advisory Board for Brands and Retailers
The customer is becoming the most valuable business advisor to Retailers and Brands. Companies that are thriving in this disruptive market have embedded a real-time, continuous voice of the customer into all aspects of their decision-making process. Customer feedback and insight is shaping the brands’ growth strategy, influencing innovation and enabling a more personal engagement that strengthens loyalty and market share.

Michelle Cordeiro Grant, Founder and CEO at Lively, shared how she leveraged customer community feedback to successfully build her brand. Lively leveraged social media input to influence product designs, create compelling marketing messaging and expand from an online DTC retailer, to a brand presence within established retailers like Nordstrom and ultimately to physical store locations.

DSW CEO Roger Rawlins discussed how their new Nail Bar services within the store are resonating with millennial women, increasing their shop frequency, purchase conversion and basket spend. Nail Bars are part of a broader service strategy to differentiate the DSW customer’s experience and set them apart from the competition who are mostly focused on price.

It is undeniable that retailers and brands are in a customer-first race. Those companies that fully understand their customer and leverage this information to ensure the customer is as satisfied as possible are building loyal shoppers.

Seamless Omni-channel Customer Experience
The customer is engaging with the retailer in many ways. Those companies that have developed a consistent, seamless method for interacting with the customer online and offline are successfully growing market share. Leading retailers like River Island, DSW, and Nordstrom don’t talk about “the channel”, they talk about the customer and have heavily invested in adjusting internal processes and reinventing the physical store experience with buy online, in-store pickup, mobile POS, and leveraging stores as warehouses for the shipping and receiving of digital demand and returns.

When River Island launched click & collect capabilities, 40% of the online business shifted to buy-online, pick-up-instore. Doug Gardner, CIO, reflected on how the adoption of click & collect changed River Island’s entire culture from the physical store layout, role of the staff, KPI’s for measuring success of the store and redistribution of displaced inventory.

DSW has been awarded the #1 Omni-channel retailer for the last two years based on the breadth of capabilities they have enabled and seamless customer experience. Today more than half the company’s e-commerce orders are being fulfilled in-store as opposed to a fulfillment center.
Nordstrom’s CEO Erik Nordstorm shared how the company is learning from the customer’s online engagement and applying these learnings to the store. “We have a lot of data that shows that if we do what the customer wants, we will be successful.”

Retailers that can seamlessly engage the customer across channels are learning that cross-channel shoppers spend more money than single channel shoppers. And with today’s sophisticated AI-based price optimization capabilities, retailers can bring their pricing strategies to life online and at the shelf with carefully crafted prices targeted to engage shoppers on the items they care about, granular to the channel, item and store level.

Single, Vertically Aligned View of the Customer
To effectively engage the new customer, retailers are investing energy and effort to capture everything they can about the customer’s characteristics, preferences and shopping behaviors. Retailers are hiring data analysts to assist in interpreting business insights from the vast amount of data and educating the broader company on the single view of the customer. To retain their loyal customers, retailers are adopting AI and ML technology across all business functions to better predict responses to merchandising actions and make relevant recommendations.

Sarah Engel, VP Marketing & Creative Communications at Lily Pulitzer, talked about the importance of looking at the data cohesively and gaining alignment across all levels of the organization. She recommended to start with the data you have, realize that the data is dirty but can be leveraged for contextual discussions while working on improving the quality. Sarah reflected on how digital performance is easier to analyze as more data elements are available, but you may have to build processes to gather data from the field. She cautioned not to get hung up on being 100% factual in the beginning, directional is okay. If you are trying to achieve perfection, it will be difficult to keep up with what the customers want. Sarah coached that “Getting action out of the data is the most important outcome”.

RJ Cilley, SVP & Chief Digital Officer, shared Hudson Bay Company’s strategy for building a data-informed culture. He recommended that if the retailer can nail down the core fundamentals it will be quicker and easier to innovate. Data is critical to understanding the customer. He suggests ingesting everything you want so that you can build customer campaigns rooted in data and make recommendations before the customer knows they want it.

We came to the conference feeling concerned about the health of retail but left energized by the ability of traditional retailers and brands to quickly innovate and influence significant change in their organizations, processes and technology. In addition, we were impressed by the technological innovation available to help retailers connect with and better understand their customer, and how the digital-first brands are redefining retail and integrating into legacy retail brands to build their business.

As more retailers see the power of leveraging AI-based technology to unlock the value of their data, it’s worth considering how to get started quickly to harvest the low-hanging fruit. We’ve had the privilege of working with innovative retailers worldwide who have implemented our price, promotion and markdown optimization capabilities to unlock rapid ROI, increase their relevance to shoppers, and positively impact the bottom line.

We LOVE how the empowered consumer is driving dramatic change in retail and technology; contributing to sustainable and health conscious business practices; and reminding us to enjoy the journey!!! We are looking forward to continuing to support retailers and brands in their retail evolution over the next decade.