Retailers are looking to diversify revenue streams. Brands are looking to engage with target customers. Combining retailer 1st party data with consumer marketing brand activations and promotions has the power to achieve both these ends, all while delivering a second-to-none shopper marketing experience. Here’s how:
You’d be forgiven for thinking that today’s retailers are still in the business of selling consumables. Or that you, as a consumer, are still their primary customer.
Leading retailers today recognise that their hottest commodity isn’t doughnuts, it’s data. And their primary customers aren’t consumers, but the brands on the shelves.
Where brands used to supply stock to retailers to sell to consumers, now retailers collect data from consumers to sell to brands. With this shift, the retail model’s been turned on its head.
Life imitating the internet
Google isn’t a search engine. It’s a media company trading in consumer attention and behavioural data. Google’s search engine exists to facilitate the collection of consumer data.
Like Google provides a platform for consumers to search for goods and services, so retailers provide spaces where consumers go to browse and buy. The big difference has always been the digital breadcrumbs consumers leave behind online, and the degree to which digital advertisers and media networks have been able to track and collect those breadcrumbs.
Cookies, particularly 3rd party cookies, allowed digital advertisers to track consumer behaviour across domains and, more importantly, target according to demographics and retarget according to behaviour.
But all this is changing.
3rd party data is set to become a thing of the past as online cookie’s crumble in the face of increasingly rigorous privacy legislation (Google’s phase out of 3rd party cookies will come into effect in 2024). Once effected, advertisers will have to settle for 1st party data (opt-ins), or tracking limited to their own domains.
This puts retailers who’ve been collecting 1st party data from customers for years firmly in the data pound seat. A fact that hasn’t escaped them.
‘Retail audience monetisation’ is taking shape in a couple of ways. Forbes reports that some retailers are offering new data products and services to their partners and suppliers. Others are launching their own advertising products and media networks for brands that want to target their unique shopper audience more directly and accurately.
A Case in Point: Shoprite Checkers
Although somewhat slow off the mark launching their shopper rewards programme, Xtra Savings, in 2020, they quickly overtook both Woolworths and Pick ‘n Pay and today boast over 20 million members (more than twice that of Pick ‘n Pay at last count).
The success of the program can be attributed in part to the group’s considerable footprint (a reported 80% of South African’s live within a 5km radius of one of its stores). But it’s also a reflection of the group’s commitment to building a smarter Shoprite Checkers and growing its ecosystem of value for consumers.
This is evident in the launch of ShopriteX – a dedicated division that includes data science, e-commerce and personalisation experts who work alongside the group’s 1000-strong IT team to create and implement new innovations.
In conversation with BusinessTech, chief executive Pieter Engelbrecht said that ShopriteX forms part of the group’s strategy to “grow and monetise its ecosystem of value for consumers”.
Key to note here is the dual benefit of leveraging data – not only are consumer experiences enhanced through personalisation, securing loyalty and market share, but the opportunity to monetise data hasn’t gone unnoticed.
The Shoprite Group is taking this concept further with the introduction of an e-wallet Money Market Account that can be linked to Xtra Savings cards. Punted as SA’s lowest cost bank account, consumers can deposit, withdraw and transact in store as well as send money and pay. This is a great value add for consumers but also (and in exchange) allows for greater insight into consumer spending habits.
Win-win for Consumers, Retailers and Brands
Brand managers may be apprehensive about the perceived shift in power dynamics between retailers and brands, and the impact on their ability to target new markets with accuracy, but this new paradigm offers benefits for all concerned:
For consumers, not only is privacy enhanced, but their shopper experience at preferred retailers is hyper-personalised for convenience. In exchange for consent, consumers access promotions that translate into savings.
Complying with privacy legislation means risk mitigation for retailers, but more than that, wins consumer trust and loyalty. In exchange, retailers access invaluable consumer data that can be used to tailor shopper experiences in partnership with brands to maximise margin and revenue.
Greater reliance on retailers for consumer data enhances partnerships and strengthens channels. 1st party data is also far more accurate than 3rd party data, so the trade off between reach and accuracy is often justified by results in terms of conversion and sales.
Retailers as Media Moguls
In order to make the most of this partnership, stakeholders must take into account the following:
Privacy over Profit
At the core of these benefits is trust. Retailers should be uncompromising when it comes to complying with legislation and with their own commitments to consumers when processing and leveraging data.
Digital Transformation at the Core
One of the biggest stumbling blocks for retailers is disparate legacy tech that keeps customer data siloed. Investing in a solid digital transformation strategy purpose-built for seamless data integration is key to generating actionable insights.
The Power of Partnerships
The missing piece of the puzzle in this model is the executional experts who design and deploy campaigns on behalf of brands, in partnership with Retailers-as-media houses. Real-time data demands speed-to-market and responsiveness that’s often best left to the experts. Retailers can look to build this competency in-house, but partnering with specialist advertising agencies is often a wiser move in terms of speed, efficiency and accountability.
For instance, Tradeway Promotions has invested over 2 decades building the competencies and infrastructure necessary to support end-to-end BTL brand activations. From design, to manufacturing and procurement, to warehousing and logistics on the collateral front, to recruitment, training and supervision of brand ambassadors.
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As the boundaries between the physical and digital continue to erode, so retailers will have to adjust their operating models to be increasingly personalised and data-led, if they are to meet consumers’ evolving expectations and win trust and loyalty.
Innovative and responsible data strategies are how leading retailers will meet and exceed those expectations, as well as how they will diversify revenue streams. Partnership is the name of the game in this new paradigm – between brands, retailers and agencies, with consumers at the centre.