Technology-Enabled Personalization in Retail


Share on LinkedIn

Augmenting Retail space with intelligent technologies that can create an interactive and context-specific personalization experience.

Technology-driven innovations ranging from one-click ordering to personalized recommendations to smart speakers to anticipatory shipping are redefining shopping. Modern technologies like AI, VR, IoT are enhancing the intelligence of the products and services. And the outbreak of the pandemic has just added to it, technology has taken a dramatic leap in retail and to contain the spread of coronavirus many retailers have been forced to move rapidly toward technology-based solutions such as online ordering and fulfillment, click and collect, and robot-assisted operations.

In this fiercely competitive retail landscape, the brands that will win are the ones that can connect with their customers at an emotional level along with identifying the intent and the emotional needs of its customer. Seeking out smart technologies that support personalization can force consumers to focus their attention specifically on content that appears to be highly relevant.

The digital native customers expect personalized experiences; however, are the retailers equipped with the capabilities that truly create a personalized experience? Certainly NO. A recent McKinsey survey of senior marketing leaders finds that only 15 percent of CMOs believe their company is on the right track with personalization.

Technologies that Enable Personalization

Many emerging technologies are influencing retailing and will likely continue to affect it in the future. Here are the top ones.

1. Consumer-Facing Technologies: Technologies that are used by customers and facilitated by retailers to enhance customer engagement includes Product experience wall, Interactive fitting rooms, Smart mirrors, Smart shelves, Mobile apps, Facial recognition, Mobile Augmented Reality (MAR). Virtual Reality (VR), Service Robots, Chatbots, Wearables, and Payment technologies.

2. Employee-Facing Technologies: These technologies are primarily used by employees to carry out their activities and highly impact employee-consumer relationships by extending new tools to interact in a live environment. Mobile devices, Handheld scanners, Price scanners, IoT, RFID, AR technologies, Smart mirrors, Digital assistants, Screen sharing, are some of the top examples.

3. Supplier-Facing Technologies: These technologies are used by manufacturers who supply to retailers. Examples include IoT, RFID, Payment, and Blockchain technologies.

Significant Benefits from Personalization

According to BCG, companies that use advanced personalization methods can realize an improvement of 20% or more in their net promoter scores, and retailers can see productivity gains of 6% to 10% and incremental revenue growth of 10% or more. While, as per McKinsey & Co., personalization at scale has the potential to create $1.7 trillion to $3 trillion in new value

  • Personalization improves the customer experience as the interaction with your brand becomes more relevant and the messages you deliver are meaningful.
  • By targeting existing customers with personalized offers, one can increase the average transaction value and conversion rate.
  • Personalization makes your customer feel recognized and valued, which results in a high customer retention rate.
  • Crafting a personalized experience helps you convey to your customers that you care about meeting their individual needs and this, in turn, strengthens brand loyalty.
  • Greater personalization boosts customer spending as when the shopping experience is highly personalized, customers are 110% more likely to add additional items to their baskets and 40% more likely to spend more than they had planned (BCG).
  • A recent survey by Forbes Insights reveals, 40% of marketing leaders think their customer personalization efforts have had a direct impact on maximizing sales, basket size, and profits in direct-to-consumer channels.

Challenges in Getting Personalization Off the Ground

  • Personalization is as effective as the data it acts upon, often it is observed that such data is trapped in silos and complex organizational models. Integrating and centralizing the data using data platforms can help resolve this challenge.
  • Poor decision capabilities creating inconsistent experiences. This can be resolved using micro-segmentation and developing a multi-channel decision engine powered by AI to avoid conflicting messages.
  • Brands often find it difficult to match the volume of content and pace of experimentation demanded by personalization. Designing and creating the content strategically can mitigate this challenge.
  • Uncoordinated communication and slow response to consumer actions arise out of a lack of real-time collaboration between various channels. However, integrating all channels can enhance communication and enable retailers to respond quickly to changing customer expectations.

What Drives Personalization?

As said, earlier, personalization strategy depends on the data. Devising a strategy that uses this data to its fullest potential can make a difference.

  • Integrating the data available from external sources as well internal sources (i.e data collected from various customer touchpoints) can help identify future buying trends, and preferences based on history to make relevant suggestions and recommendations, to personalize the experience.
  • Looking beyond the traditional channels is another differentiator. Channels like customer loyalty programs and mobile applications should be leveraged to dive deep into the data.
  • AI and ML have shown a promising effect on personalization efforts, as these technologies can evolve and adapt to the changing customer interactions.
  • Personalization is providing superior customer service, it is for humans by humans, so it is essential to equip the employees with the latest and most insightful information.

Developing the capabilities to deliver a hyper-personalized and connected shopping experience is daunting and cannot be done overnight, applying design thinking, and a solution-based approach can be the key. Retailers need to act now or they will be left behind and lose the customer to a rival. Personalization is now not just a way to win the retail race but critical for survival. Content personalization is also gaining significant importance in this space which holds key importance in customers’ retail journey.


Please enter your comment!
Please enter your name here