Technology
The new retail map: Utilizing contextual intelligence to meet consumers where they are
Mark Lawrence, solutions director, analytics and enterprise, Oracle Retail, explains that as shoppers return to stores, brick-and-mortars may no longer be as convenient, new competition may have appeared, and unexpected changes may impact the customer journey. Retailers that fail to take action may risk losing sales, customers, and loyalty.
August 12, 2021 by Mark Lawrence
Millions of Americans have moved since the onset of the pandemic — and those numbers are continuing to increase. Last year, from February to July, over 15.9 million people moved, according to USPS data. For another perspective, consider that a recent Zillow survey revealed 11% of all Americans have moved since April 2020. As Americans move to more suburban areas and cross state lines, customers are no longer where they once were, proving to be a somewhat complex challenge for retailers.
Consider a brand's core customer, whose buying habits were already changed by the past year's events. As this retail shopper considers heading into the office, they might opt to swing by their local mall or high street for a new outfit. After a volatile year, what will they find? A revamped store format? A shuttered store? Or is it a new set of shops closer to their home with an emotional tug to shop local?
As shoppers return to stores, brick-and-mortars may no longer be as close or convenient, new competition may have appeared, and unexpected changes may impact the customer journey. Retailers that fail to take action may risk losing sales, customers, and loyalty as a result. With the recovery underway, retailers need to utilize this contextual intelligence, data, and retail technology to understand where their existing customers have moved and cater to their new locales.
Driving retail strategy with contextual data
Retailers have to evolve to more detailed location planning that includes both product mix and weekly sales plans. With an abundance of inventory piled up, a detailed location plan can provide retailer leaders the intelligence and agility to react county-by-county and understand the impact of their decisions.
Additionally, where are my loyal customers moving? How are my competitors winning over consumers? What will shoppers buy in the new normal? While questions may abound, retailers can look to contextual data, in particular, for answers. Beyond first-party data such as their own sales records, retailers need to utilize contextual intelligence from third-party sources to drive their strategies, starting with understanding where their customers are. Addresses from recent online orders, catalogs, and direct mail delivery can reveal part of the picture, but retailers will need to look beyond their sales for a full view of their customer base. A range of external data sources — credit card transactions, third-party ad interactions, or 2020 census records — can provide context and reveal new insight about where recently inactive customers have moved, as well as where to find new ones.
Expanding the retail footprint
Once retailers know where customers have moved, they must determine how to reach them. Reports have shown that the vast majority of individuals who moved during the pandemic left largely populated cities in favor of smaller towns or suburbs. As a result, the primary strategy would be to open new locations in places where customers are moving. With the shift toward remote working, fewer consumers travel to major cities for work, leaving massive opportunities for retailers to open up shops closer to home. And, with convenience being a priority for consumers, proximity may win retailers extra points in shoppers' eyes, according to an Oracle Retail study.
However, before staking a claim in new store locations, retailers should again look to gather contextual intelligence to make the most informed decisions about where to open up next. Average traffic times nearby, pre-pandemic foot traffic patterns, and transaction data from a location's previous tenants can offer clues into how a potential new store will fair.
Meeting local consumer needs
Finding the right spot is just the beginning; retailers still need to be forward-thinking and consider what new locations will entail and how they will win over local consumers. A recent New York Times article explored how former NYC commuters who are now working from homes are committed to supporting local businesses, as they now spend most of their time in the neighborhoods where they live. This shows that retailers moving in may need to be more rooted in their communities and take more active listening to localized needs.
The same is true of store formats; Starbucks announced it would be opening stores in more suburban areas in response to Americans' desire for more drive-thru options. Using contextual intelligence to cater to new consumer needs can improve sales and attract new and existing customers and grow loyalty.
Retailers' next step
More comes with a reworked location strategy than building a new brick-and-mortar shop in a more convenient spot. Truly pivoting to the customer means not just following the new map but asking why and how the borders were drawn.
Retailers should consider what pushed their customers toward the new locations they chose to call home, what demographic and customer profile takeaways they can infer, and what each new or relocated store's locale will call for. Ultimately, retailers must focus on their customers' wants, using internal data and contextual intelligence to guide the way.
Mark Lawrence is solutions director, analytics and enterprise at Oracle Retail
About Mark Lawrence
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