This article was originally published in the Australian Financial Review.
According to the OECD’s most recent Consumer Confidence Index, Australian consumer confidence has taken a hit in the past six months.
This is no surprise considering the downturn basically coincides with the arrival of Covid’s Delta strain to our shores earlier this year and the subsequent rolling lockdowns.
Yet while confidence has taken a dip, the OECD figures reveal Australians remain relatively sanguine about our economic future. The numbers were mirrored by Commonwealth Bank Credit & Debit card spending data up to mid-September, as they highlight how lockdowns are detrimental to physical stores and a boom for online retail.
The big question for retailers, however, is whether the pandemic has changed retail forever? Are we going to see the decline of the physical store? The short answer is no. In fact, what the pandemic has done is provide businesses with an opportunity to really hone their retail offerings by utilising the power of data to hasten a whole new era of digital innovation.
Chief Executive of CommBank iQ, Ben Ashton, agrees the pandemic has accelerated the digital journey for many retailers and senior executives are “now open to a whole range of initiatives that are driven by data”.
He says consumers have experienced the best and worst of e-commerce over the past 18 months and they’ve learned to seek out the best digital experiences.
“Data is simply a summary of human behaviour and Commonwealth Bank transaction data provides extraordinary insights into what Australians want, need and how they consume,” Ashton says.
By analysing that data, CommBank iQ can assist retail clients develop future strategies to improve outcomes for their customers, he says.
For consumers, that future is simply about “getting better products and services more efficiently and with less waste”. On one level consumers are searching for the best digital experiences but they also hanker to return to stores and Ashton believes consumers are looking for a “blended mix of digital as well as bricks and mortar”.
Scentre Group’s Director of Strategic Analytics & Insights, David Lamond, says while transaction data provides a “wonderful lens on people’s behaviours”, it’s not much use unless it’s used as a tool for listening and understanding customers.
He says data is part of a toolkit where you’re “using everything you can to help learn about customers and what they want and turning that into improvements to every aspect of the customer experience”. And for Scentre Group, it’s about taking those learnings and sharing them with their business partners (retailers).
Lamond says Covid hasn’t so much changed the retail experience as it has interrupted its evolution when it comes to how consumers like to gather in shopping centres and share a sense of community.
“I don’t think it has created a structural change,” Lamond says.
“Throughout the pandemic we did primary research to try and understand people and what they wanted to do. What we discovered is people want to come back into centres as soon as possible.
“And that’s precisely what they did. As soon as restrictions lift, people come straight back and that’s been the pattern in every state because people want to connect with each other,” Lamond says.
As for understanding what the future “secret sauce” of a good retail experience contains, Lamond says it will be a blend of bricks and mortar and online with “physical stores still at the heart of that ecosystem”.
“Interestingly, what we’ve learned through the pandemic is the brands that are continuing to win are the ones who have invested in really good physical store networks,” Lamond says.
Bearing this in mind, he says what the data has shown is brands wanting to grow their online sales need to have a strong physical store presence and this presence works best if the stores are in large centres such as Westfield. Lamond says the data does indicate online customer numbers double for a retailer if they have a store in a Westfield compared to not having a physical store.
Moreover, Scentre Group have worked closely with CommBank iQ to better understand the interaction between the physical world and the online world and based on analysis of billions of transactions “you are twelve times more likely to make an online purchase in a fashion brand this week if you’ve been exposed to the physical store in the last week”.
The challenge for Scentre Group is to ensure they assist their retail partners to build out the most productive physical store network and that’s where data has another huge role to play as the retail property giant endeavours to better connect with customers by bringing each centre to life.
Ashton says there are a range of initiatives designed to build better connections with customers and they’re all based on a deep dive into consumer data. For example, data is used to formulate marketing offers as well as design better centre layouts with tenants located where they generate most value for all. It’s also being used to optimise the convergence of the physical and online shopping experience.
According to Lamond, a good example of data usage is Scentre Group gathers over 300,000 pieces of feedback from customers every year about their retail experiences and the group applies machine learning to try and understand the big themes behind what customers want and “we set ourselves KPIs to act on that data”.
A new aggregated click and collect platform soon to launch in Australia - Westfield Direct - will provide more opportunities for data analysis and a deeper understanding of customer needs.
As for how data will continue to drive the evolution of retail, Ashton says: “We’ll see things like dynamic pricing, cross-selling opportunities and enabling customers to view stock levels inside stores before they arrive.”
Importantly, this rich flow of data is completely de-identified and aggregated as consumers “expect the highest levels of trust and governance in privacy,” Ashton says.
It’s all about increasing the efficiency of the shopping experience for consumers and assisting CommBank iQ customers such as Scentre Group achieve this goal.
“We have the deepest and richest data set and the best AI and data science talent and it’s a combination of those two things that enables us to provide unrivalled insights and data support tools to our customers,” Ashton says.
“We’re able to identify the reasons why individuals come to a centre, work with the data to make the centre experience more attractive for customers so they stay longer, spend more and ultimately become better customers for the centre and retailers,” Ashton concludes.
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