Personalization Deconstructed

The grocery business is an intricate arena. Not all retail trends are easy to adopt or can deliver value in the context of grocery. Regional grocers want to adopt technologies that don’t just generate revenue today, but are also long-term investments for the future.

An Evolving Trend

A shopper walking into a store is informed via smartphone of items on sale linked to her preferences and purchase behavior. Her coupons automatically organize by the aisle she’s in. This may sound like personalization, but what’s really happening here is contextualization within the domain of personalization.

To understand the difference, let’s step back to the mid-2000s: Smartphone technology was taking off — BlackBerry was in its heyday, and Steve Jobs was at San Francisco’s Moscone Center announcing the first iPhone, generating a bit of fanfare, if not out-right hysteria. The launch also created an opportunity for retailers to reach consumers anytime, anywhere, and so a great idea was born: tailoring marketing outreach based on preferences shoppers have shared.

As a result, along came a series of buzzwords still known today, including the scary-sounding “Big Data” — large datasets that can be analyzed to reveal trends.

Personalization Meets Contextualization

Personalization took marketing to the next level. It involved looking at data points, such as shopper demographics, transactions and behavior; analyzing these; and dynamically delivering results in near real time through web, mobile, social media and email. An example is leveraging loyalty and transactional data, and running a query across the system for names of consumers who’ve bought a specific product across locations. The retailer would then prescribe what, when and how to market dynamic content through various channels. More data points mean more opportunities to spot patterns and offer personalization.

Now we’re moving into the age of contextualization — bringing situational data, such as time, location and device being used, into the realm of personalization. Google demonstrates this: You’ve landed for a connecting flight at Chicago’s O’Hare Airport. Suddenly, your mobile device alerts you that you’ve missed your flight, but it has booked you on the next one. That’s contextualized — in the moment, while it’s happening — and it’s personalized — happening to you as an individual.

Merging personalization with contextualization is a powerful and truly immersive user experience providing a far greater chance of purchasing. The value is the ability to create “stickiness” with shoppers to increase loyalty and generate additional revenue.

Should a grocer consider contextualized personalization? Retail technologies offered by other retailers such as Amazon and Staples have led consumers to expect advanced personalized interactions. Household spend on groceries isn’t increasing, and the sheer number of competitors means fighting for percentage of the basket. So certainly today, advanced personalization is becoming grocery retail table stakes.

Key Factors

Data fuels personalization through data sets such as customer data, active digital channels, product data and transactional data, and access to an alogrithm. Probably most important is to have in place a system — call it a calculation engine — that goes through the data sets to seek out and correlate patterns. This then allows the ability to prescribe recommendations for messages delivered though various channels, to deliver results.

Contextualized personalization in grocery, if done right, can mean additional revenue, greater basket size, better margins and — equally as important as those other results— increased, lasting shopper loyalty.

The value is the ability to create “stickiness” with shoppers to increase loyalty and generate additional revenue.