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Serena Fallahi Tittl Head of Retail for The Gap Partnership has candid conversations with two retail experts about the commercial value of knowing and understanding what customers are thinking.
Socrates’ famous pronouncement about self-awareness – “To know thyself is the beginning of wisdom” – has been analyzed and critiqued by philosophers, economists, and thinkers past and present. While debate in such circles may continue for evermore about what precisely Socrates meant, and indeed how his advice can be implemented, a contemporary updating of the quote for negotiators could be argued to be, “The most skilled negotiators are those who understand their counterparty better than their counterparty understands themselves.” Because it’s only by truly getting inside the other party’s head (never mind their own!) that a negotiator can craft and offer the most value-creating proposals.
A lawyer friend of mine once recounted a story to me in which he was asked to assemble a case brief for a certain defendant. Being new in his career and eager to make an impression with his boss, he labored over the brief, spending late nights and weekends compiling it. Upon presenting the finished result to the chief counsel, his leader looked it over and commented, “This is good. Now that you so clearly understand the defendant’s view, you’re adequately prepared to write the case brief for our client, the plaintiff.” Since this encounter, my friend has never lost sight of the importance of getting inside the head of the other party.
This behavior and skillset are not limited to negotiation, however. They are also coveted in the sophisticated and modern area of consumer insights. As The Gap Partnership in their negotiation training is stating, there is a focus on interpreting the meaning behind the words and actions in order to understand consumer behavior. Keen for the opportunity to dig deeper into this fascinating area, I sat down with two leaders in the consumer insights field: Mindy Dempsey and Vaughan Ryan. Both provided me with expert analysis of how data impacts the consumer experience, predictions for the near-future, and also a reveal of how data insight and analysis share a core philosophy with the tenets of negotiation.
Mindy Dempsey is a business strategy consultant in the retail and entertainment industries. Mindy specializes in building long term, sustainable products and processes, using data and analytics to support merchandising teams and accelerate business growth.
Serena: Mindy, let’s start with common objectives and uses from a retail perspective. What are retailers looking to gain with consumer insights?
Mindy: Generally, the way in which retailers leverage insight data is, from my experience, from a more competitive landscape side. Essentially we are trying to identify areas of opportunity that align with company capabilities. There are all sorts of paths retailers and brands can take when it comes to building out a strategy, and what insights, data and analytics can do is to help build a roadmap by matching insights with capabilities – people, resources, ideas. There’s no shortage of data, so the challenge is figuring out what data is the most important. That’s where you have to look inward to try to think about where you have the right to win and how do those things align/match. It’s important to use competitive data to build out your strategy to figure out your niche, and how you’ll go after that.
Serena: Can you give some examples of what you mean by that?
Mindy: Well, from a competitive perspective, you have to assess your competition. SWOT analysis can be useful to build out strategy; some of that is data-driven, and some is really, truly understanding where you have strengths and opportunities. Then you have to ask yourself how that aligns with your competition, and is there a sweet spot in there for you to excel. What retailers are trying to do is use data to be more predictive, which is at the cutting edge of what a lot of companies are trying to think about. In a nutshell, the question they’re using data to help them figure out the answer to is, “How can I predict consumer behaviour?”
Serena: When it comes to building strategy from insights, what comes first: the data formulating the strategy, or the strategy and then finding the data to support it?
Mindy: The former is far more important than the latter, because the second is implying data bias. Although it could be both to an extent, if used appropriately. However, the challenge with your latter question is, if you build strategy first you might only look at the data that supports your idea. Inherent bias is something all companies have and is why unbiased third parties responsible for the data are so important. They have an impartial view and are able to present data to say, “Here’s what the data says the landscape looks like. You won here, but you missed here. You did this but you didn’t do that,” and so on.
Serena: How do retailers use data for behavioral insights?
Mindy: Consumer data is two-fold: there are quantitative and qualitive consumer insights. Both are imperative to really understanding the “Why”. The quantitative information can tell us what happened in a finite way – for example when something was purchased, but the qualitative data is what tells us why the consumer purchased when they did.
Serena: You’ve been in a unique position of having been privy to multiple third party insights, as well as the insights generated internally by a retailer. Given all you know, what is exciting you in regards to consumer behavior and the future of retail?
Mindy: As I’m an industrial engineer by trade, what excites me the most is something I think about all the time – efficiency. We are on the brink of finding so many more efficiencies from the insights and operationalizing them. Finally we are seeing the full digital shift, and after times of ebbing and flowing out of it, it’s here to stay. We have arrived at the digital age through this pandemic and are seeing everyone embrace a digital world. This is clearly the future of retail, and how we live in general. Some retailers were far more prepared than others when the pandemic hit, and so some have thrived through embracing a multifaceted omni approach. That excites me, seeing how so many factors come together.
Serena: On the subject of omni and its implications, there had been a mindset that the digital and in-person experiences were secular. Now however there is broader recognition that they are unified and complementary. What trends are you seeing with this united omnichannel view?
Mindy: For one, a tremendous increase in in-store pick up; buying online and picking up in store for a unified experience. The consumer is looking at their experience in terms of convenience, as in “What’s more convenient for me?”. Avoiding the extra time from shipping and risk of packages going missing, versus ordering online and picking up in store in a timely manner, on the same day or within hours – which is almost instant gratification. This is a great example of removing part of the friction to create a more seamless model for the consumer. Retailers are striving towards this in all aspects of how they reach the consumer, and that’s the exciting way in which digital and brick-and-mortar are creating an experience that is timely and convenient. Consumer insights coupled with omnichannel approaches brings us a broader perspective, with a broader set of assets and assortment, making anything, at any time, available.
Vaughan Ryan is Managing Director of Consumer Intelligence at NielsenIQ Asia, helping companies understand consumers’ full shopping journey across both the offline and online environments and using data, analytics and insights to do so.
Serena: In the early days of shopping online there was a differentiated view on shopping; it occurred online or it occurred in store. However, particularly in light of living through a pandemic, the concept of treating omnichannel as a value driver and looking at instore and online as a unified and immersive experience seems to be winning in the marketplace. What other effects are you seeing in consumer behavior over the last year?
Vaughan: We sort of joked in the early days of the crisis that whatever you do, just make sure you do something. A need for innovation is even more critical, especially now that we’re home shopping 24/7. When you sit back and have lunch you’ve got your smartphone in front of you checking out what’s going on; a deal pops up and you jump on that. So, the need to innovate has never been more important, not just in terms of the retailing element, but also the products that are being developed.
One of the things that has been interesting has been this do-it-yourself mentality. For example, a number of friends have taken up cooking because they’re at home. Or taking on home renovations: repainting, doing projects that had previously been put off. The categories that were traditionally all about convenience have been thrown on their head to a certain extent. It’s not that consumers don’t want convenience, but they want convenience that suits them, when it suits them.
Serena: What are other innovations that you are seeing in the retail experience?
Vaughan: From a retailing view point we’re seeing a lot more educational elements to the do-it-yourself elements – so again, baking at home is a great example. I know that sounds like something that has been around forever, but the experience has changed because we’re spending significantly more time in the house. It’s not just in store or online; they’re working in tandem for a total experience.
There has also been a shift in the way we as consumers feel about promotions – we simply don’t get as excited about them as we did in the past, because we’ve been conditioned to know they’ll be there next week. So now, consumers shop in store to compare the best prices, using multiple sources to “price check”. So, stores have to be more creative on how they impact the consumer’s omni-experience; from logistics management to loyalty programs. In fact, loyalty is probably the next angle to watch.
Serena: Thinking about the macro trend of loyalty, what are the generational impacts or shifts to preferences in loyalty?
Vaughan: I think loyalty is being challenged, and that’s why the importance of loyalty programs has never been more important to create that stickiness with your consumer. You’ve got to find a reason to keep bringing them back. We’re all at home, looking around, shopping all the time, and that shopping voice is louder than ever before, so I don’t think it’s the case of a demographic profile being more loyal than another. In fact, if anything, we’re terribly disloyal, unless you give me a reason to be loyal. It’s all about convenience, the biggest driver for a long time. Now convenience is, “I can order online whenever I want and from wherever I want…and I’ll trial everything unless I get a loyalty that helps me out and offers me something the competition doesn’t.” While this is undoubtedly a challenge, it’s also given retailers an enormous opportunity through Covid to expand their reach.
Serena: Looking ahead, what are some prospects that are exciting you about the retail landscape?
Vaughan: I just think the whole omni approach is fascinating. The biggest challenge for any company in the past has been creating trial, but now consumers are willing to try anything because they are desperate for an alternative. Whether it’s based on price, comfort, the do – it – yourself mentality – they’re all there for the consumers to try. So, we’re going to see some really fascinating retail stores and offerings in the next few years, and that’s something that really excites me.
I’m also really engaged with the importance of communication in all its different formats. We’re consuming and downloading more media than ever before, whether reading papers or watching the news or reading online, so from a retail perspective trying to figure out where advertising makes the most sense is a challenge, as well as at the same time looking for alternatives like never.
The new format of communication is going to be wild in an omni approach. Just think about a particular item that you have bought recently: the amount of shopping you do online and how much information you gather before you purchase a big-ticket item is so much more than you would have done in the past if you had to go store to physical store. Now the consumer might be looking at 30-40 websites and reading all the reviews to inform their purchase.
By contrast, ten years ago they’d have gone to a store and listened to the guy in the store, maybe talked to one other store, and got the view of some mates. Consumers are so much more educated now and so communicating to them has never been more fragmented, yet also never a more important part of the omnichannel experience.