Steph Thomas, Business Lead, Retail Experience at VCCP, delineates the opportunities for brand affinity and loyalty that lie in Emotional Intelligence Commerce and creating empathetic customer journeys.
In your opinion, what has been the catalyst for this explosive growth of retail media?
For shoppers, personalization has played a vital role in the evolution of retail media. The pandemic triggered the first burst of this change as people spent more time online, pushing retailers to deliver simpler, more refined shopping experiences. Shoppers now expect seamless, speedy and hyper-relevant comms, contributing to this ongoing focus and growth.
The second driver of this change is the investment in retail media technology and channels. A recent study by Criteo found that the majority of brands (88%) and retailers (89%) surveyed said that retail media had a positive impact on their bottom line in 2023, and plan to invest further in 2024. The profit generated from retail media is further accelerating investment, trial and the development of new retail media, both in-store and online.
Arguably the most valuable catalyst in the retail media boom, is the richer, more measurable data that brands now have access to, allowing them to understand and target shoppers in a far more detailed and focused way, improving their ability to build brand affinity and loyalty.
Retailers are becoming media owners. How will this impact brand strategy and media planning?
With retailers now building their own media and data ecosystems, there has been a shift in power from brands to retailers, leaving traditional brand agencies scrambling to keep up. Agencies need to deep-dive into the world of retail media and understand these platforms inside-out if they hope to remain successful in campaign planning and broader brand strategy. The pressure from some brand clients is already being felt, as targets and KPIs swing from traditional brand to more sales-focused metrics.
Traditional media planners are also having to develop new strategies for targeting, reporting, and budgeting to ensure that retail media gets the share of voice that it demands. Agencies entrenched in traditional brand and media strategies quickly need to embrace the new reality of retail media and adapt if they want to keep their place at the table.
What opportunities do AI and CX data offer brands in the customer journey?
We already know that AI and CX data can be used for more accurate targeting and measurement of campaigns, but there is a wider opportunity in EQ commerce (Emotional Intelligence Commerce), that can help bridge the gap between personalized and functional comms, resulting in more empathetic customer journeys. Innovative retailers are now using EQ as a predictive analysis tool to predict intent and sentiment. With these capabilities, retailers can prepare for potential customer challenges before they even happen, leading to enriched and more memorable experiences.
There’s a balance to be had though; there’s still a tech resistant consumer to consider, and multiple studies show that people want human interaction - Mintel’s 2024 Global Consumer Report recently stated that 47% of UK consumers surveyed are concerned about AI replacing human interaction. So, a cautious approach must be taken amongst a mountain of opportunity. Brands must apply this in a way that enhances the shoppers experience and cuts certain logistical and operational costs perhaps, but to keep the customer content and engaged longer term, don’t use it to replace real staff!
What kind of retail experiences do GenZ and GenA value?
Somewhat unexpected from the GenZ generation is that they like physical shopping. They make up the majority of TikTok users in the UK and 75%+ of their product research starts here, but the shopping center remains a place to socialize and shop. Similarly, for GenA, as reported recently by Forbes, this demographic ‘May Be the Mall’s Best Future Bet’, and this demographic looks up to GenZ. Both generations value community and want sustainable and environmentally conscious brands. It is this need for authenticity and concern for humanity that will keep them seeking in-person experiences in the future.
How can brick and mortar locations evolve so that they remain relevant in a digital world?
When I read titles along the lines of ‘the high street is dead’, it’s not that people aren’t physically shopping, because they are, it is more often that those who haven’t evolved their ecosystems to offer integrated and hyper-personalized communications, are letting the side down. There’s no ease or experience in their customer journeys, so it is easier to ignore the reality that physical shopping is never going away.
In fashion and beauty, there have been success stories for those who have experimented and learned from technologies such as virtual try-ons, AR product visualizations, smart mirrors, and AI-assisted personalized recommendations. Only through embracing both the physical and the digital, the AI and the human, will brick and mortar stores find their feet in this new hybrid world.
Take Co-op for example, recently launched the UK’s first retail media network to help brands reach new audiences while improving relevancy and measurability. Shoppers benefit from an improved customer journey, brands get a 360 view of analytics to prove ROI (return on investment) and form a greater understanding of how people shop. Retailers get an additional revenue stream and closer business relationships with their suppliers and shoppers. The growth in retail media benefits everyone.
Brands and retailers who understand the essence of EQ commerce and recognize the role of emotion and human interaction in commerce are most likely to succeed in this brave new world.