Scorecard 2018 offered some eye-opening insight into the UK retail market. Pulling back the curtain on the big 50, we’ve identified who offers a great experience and service to their customers.
The numbers and insights provided by this data are enormously helpful, but what does it mean for you? And more importantly, how can you supercharge your business’s retail proposition this year and beyond?
First, a quick recap. Summit Scorecard ranks the UK’s top 50 retailers, using over 14,000 data points to answer 4 key questions across the entire Retail Value Chain:
- eCommerce technology – How easy is it to buy from you?
- Online marketing – How close are you to your customers?
- Trading – How appealing are you to your customers?
- Logistics and services – Do you delight your customers?
The resultant data is used to create a league table, ranking those who deliver the best experience. But it’s not all about looking back.
Gazing into our crystal ball, here we share our top retail predictions across each of the Retail Value Chain’s pillars. Using our own data, along with the views of industry leaders, this is how to win at retail in 2018 and beyond.
1) The multichannel journey: how creative consistency and digital touchpoints can help to close an £8 billion gap
Websites offering a personalised experience with timely, relevant recommendations are the future. In recent years there has been an increase in marketing personalisation, largely led by the widespread adoption of retargeting.
However, creative consistency across channels and relevancy based on a customer’s position in the journey are not fully optimised, an industry challenge that we believe is responsible for £8 billion in lost UK eCommerce sales.
Digital has supercharged multichannel retailing with an ever-growing cocktail of consumer touch points, data, devices, choice and competition. Research reveals that online consumers almost unanimously expect retailers to support multichannel shopping. The retailing channels should therefore be considered holistically and work together to maximise retail success.
Over 50% of purchases are influenced by digital information, and the growing popularity of services like click and collect is clear evidence of the blurred lines between online and offline shopping.
Over the last year retailers have reignited their focus on attribution, looking at options outside of the ‘last click wins’ model. This is likely to prompt revaluation of marketing activity historically cut from the media plan, allowing for a greater understanding of the end-to-end customer journey.
Metrics such as store visits in addition to geo tests, for example up-weighting digital activity around a specific store, can help consumers seamlessly move between the online and offline worlds. Utilising local targeting tactics to serve in-store-specific messages to nearby customers, and collecting and segmenting data from offline consumers, will help retailers to identify and appeal to customers more likely to purchase online versus offline.
2) GDPR will impact how brands collect and use big data and customer information
There are 3.8 billion global internet users; a number which has grown by 42% over the last 3 years. These users are responsible for 5.2 billion Google searches and numerous other interactions every day. Most of the resultant data is unstructured, making it useless until modelled and analysed to create meaning.
In 2018, retailers will start relying heavily on big data to predict trends, forecast demand, optimise pricing and understand customers.
But a potential hurdle looms: GDPR.
The EU General Data Protection Regulation (GDPR) takes effect on 25th May 2018, affecting businesses in all sectors including eCommerce. Retailers will have to invest significant time and money to ensure they are GDPR ready.
Information on how collected data is used for marketing purposes will need to be documented and clearly expressed to the customer. Brands must understand and record the source of collection and have double opt-in policies.
The growth of e-receipts has been a major success over the past 2 to 3 years, with 45% of consumers in the UK willing to provide their email data. To ensure GDPR compliance, brands must therefore be clear on how this data will be used for future marketing communications.
3) Emergence of voice search, artificial intelligence, machine learning and automation technologies will lead to a need for real-time analytics
Amazon Echo and Google Home assistants became hugely popular in 2017. Although impact on eCommerce searches will be limited, this is likely to cause a reduction in use of the traditional search engine, along with increased local and informational based search.
As these devices become more prolific, the more voice command research will be a significant player in product research and, ultimately, purchase. Google have already hinted at how Home will interact with their advertising solutions and have tested integration with local inventory ads.
According to Google, 20% of all searches are voice-based, and this is predicted to rise to 50% by 2020. Retailers must not be left behind by this technology. To win in this space, a considered semantic search approach and structured microdata are key. Think like your customer; write in the language they use, review their journeys, and ensure you answer the questions your target customers are asking about your products.
Artificial intelligence (AI) and the rise of chatbots are improving consumer experience and conversion rates, and will continue to do so as they become more sophisticated. Business Insider predicts that 85% of all customer interactions will be completed with no human involvement by 2020. Within the next 2 years, every retailer should have considered how they can use AI to support their customer service proposition.
Scorecard 2018 reveals that many retailers are not capitalising on the cross and upsell opportunities that they excel at instore.
There is now a wave of companies offering automated related products and merchandising based on machine learning algorithms. Increasingly, retailers can recommend products to customers depending on where they are and what they are doing. These quick suggestions assist buying decisions with a high probability of converting into sales. Real-time analytics could therefore play a bigger role in 2018.
4) Delivery options and cross-border commerce represent growth opportunities for UK retailers
The need for convenience continues to push retailers to consider their delivery options in terms of methods, time slots and speed of delivery. Supermarkets, Amazon Prime and Argos – now offering 4-hour delivery – continue to push other retailers to improve their offering.
Logistics plays a more important role in mCommerce, as shoppers on the move expect click and collect and same day delivery services. Click and collect now exceeds 30% of delivery options, meaning many multichannel retailers regard bricks and mortar stores as crucial despite being less profitable than online stores.
Further afield, the eCommerce share of global retail sales is expected to double from $1.67 trillion (7.3%) in 2015, to $3.55 trillion in 2019. In a recent study, cross-border eCommerce accounts for almost 21% of that revenue, with just 12 countries making up approximately 80% of the world’s cross-border shoppers. Encouragingly for UK retailers, over 40% of these countries use English as a primary language.
Meanwhile, the Asia-Pacific region is growing at an impressive 35.2% year on year and is expected to account for 50% of all cross-border eCommerce by 2020.
Overseas revenue represents up to 50% of some retailers’ sales. With international retailing becoming easier thanks to improved logistics, accessible global payments and more sophisticated fraud control, more online retailers should look to expand.
Even with Brexit uncertainty, eCommerce is a growing global game that offers retailers the opportunity to maintain their online growth. With barriers to entry at an all-time low, cross-border eCommerce should be considered a low hanging fruit.
5) The continued growth of mCommerce and wallet payments will win out over form filling
Mobile shopping has grown exponentially in popularity over recent years, with retailers scrambling to adopt a ‘mobile first’ strategy in response to changing customer behaviour.
With consumers becoming more mobile in all aspects of life, mobile traffic, ordering and conversion rates are all still growing. As a result, retailers are seeing mobile overtake traditional desktop and tablet for the first time.
Wallet payment systems that allow one-touch pay and hassle-free checkouts are crucial for success. PayPal and Alipay will account for approximately 40% of global mobile sales, and WorldPay estimates that as much as 59% of mCommerce transactions will include app or wallet payments.
Brand loyalty will further benefit from increased app-based shopping, as the convenience and one-touch payment win over the time to browse and form fill when shopping with new retailers. Expect mobile abandonment rates above 80% when asking for customers to fill in payment card details.
The challenge remains that mobile average order values and conversion rates are typically lower than on tablet and desktop. Marketing budgets and traffic are therefore still likely to be skewed towards the latter devices.
Understanding the role of mobile as part of the full customer journey (through cross device attribution and offline sales measurement, for example) will be key to taking advantage of the growing mobile customer.
Discover more with Summit Scorecard 2018
Despite often astronomical budgets and revenue numbers, even the biggest retailers have room for improvement.
The above represents just some of the ways in which businesses can excel in the ever-changing world of retail. To improve your offering, the key is making it easier for consumers to find and buy from your business, whilst offering a great experience throughout the entire journey.
For more insights into the UK retail market, download the Scorecard 2018 report here.