Retail-Tech Landscape: Personalization in Retail

The Covid-19 crisis has seen increasing numbers of shoppers turn to e-commerce—as we highlight in our weekly surveys of US consumers—so the need for retailers to employ the right personalization solution has become even more important. By offering a consistent and relevant personalized experience through digital channels, retailers can look to retain online customers in the long run. In order to do this effectively, brands and retailers should leverage AI, ML and other technologies that collect and analyze customer data points from multiple sources—thus allowing them to build a unified holistic view of each consumer.

This retail-tech landscape comprises selected companies that could help retailers to provide a consistent, seamless and personalized experience to their customers. Each company listed has less than $120 million in total funding. Over 90% of the companies mentioned in the landscape are under 10 years old.

In this landscape, we have identified 43 companies across the following categories:

• Targeted promotions
• Product recommendations
• Location-based recommendations
• Assistive product discovery
• Personalized experience

Personalization Trends in Retail

Consumer demand for personalization is growing, and businesses will have to implement the required talent and technology in order to keep up with demand, meet consumer expectations and remain competitive. Due to the pace of change, large enterprises will likely look externally for innovation, via startup partnerships or acquisitions. As competition intensifies across e-commerce operations, businesses will be looking to accelerate their personalization offerings.

Below, we highlight some of the key industry trends in the retail personalization space.

• Brands and retailers understand the importance of personalization: Brands and retailers have continued to invest in improving their personalization capabilities.
  • In August 2019, sportswear brand NIKE acquired Boston-based AI startup Celect to serve consumers personally at scale.
  • In February 2019, supermarket retailer Walmart acquired Israel-based AI startup Aspectiva. The startup offers personalized product recommendations based on reviews and shopper browsing behavior.
• Personalization is yet to reach its true potential: Although most companies understand the importance of personalization, many have not been able to implement it effectively. Only 12% of marketers were “very” or “extremely” satisfied with the level of personalization in their marketing efforts, according to a 2018 survey of 300 global marketers conducted by software company Evergage. Poor data is one of the key obstacles to implementing effective personalization: Although data is generated through many sources, organizations often lack the adequate data infrastructure to interpret it, which leads to ineffective personalization.
• Personalization boosts revenue: Personalization is the key to increasing sales, engagement and retention, and it therefore has a direct impact on revenue and profitability. Four in 10 executives reported that their personalization initiatives impacted their overall sales, according to a 2019 survey of 200 global marketing executives by Forbes Insights and Arm Treasure Data.
• Consumers are willing to share their data: Although there is still some reluctance to share data, the success of Amazon, Netflix and other major online players in providing personalized experiences to consumers has built consumer trust. Consumers are realizing that by sharing their data, they can receive enhanced services, products and offers. In fact, more than 90% of consumers say they are willing to share their behavioral data if it results in a cheaper and easier shopping experience, according to a recent survey of over 1,000 consumers conducted by omnichannel personalization platform SmarterHQ. Furthermore, 72% of consumers say they will only engage with marketing messages that are personalized and tailored to their interests.
• Shoppers’ omnichannel journey impedes personalization: In order to serve customers with effective personalization, retailers need to address the gaps in implementation that primarily arise due to lack of data unification. In fact, according to a 2019 survey of 57 retailers conducted by Forrester Research, 42% of all respondents cited an inability to track targeted customers throughout the entire shopping journey as the top challenge in implementing or evolving their personalization strategy. The rise in omnichannel commerce has created an opportunity for retailers to leverage data across all customer touchpoints, including apps, websites and in stores.

Retail-Tech Landscape: Personalization in Retail—Infographic

 

Personalization in Retail, by Category

Targeted Promotions: Allowing retailers to send only relevant promotions to their shoppers

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Product Recommendations: Leveraging AI and ML to offer the most relevant and personalized product recommendations to shoppers

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Location-Based Recommendations: Allowing retailers to send personalized product recommendations to shoppers based on their physical location

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Assistive Product Discovery: Enabling shoppers to find information about products and receive personalized recommendations

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Personalized Experience: Leveraging mixed reality to deliver a more engaging, intuitive and personalized experience to shoppers

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