Engagement Strategies for Millennials in the Middle East

Engagement Strategies for Millennials in the Middle East

The New Lost Generation, The Disruptive Generation,  The Loneliest Generation, The Burnout Generation….

The above monikers have been tagged to Millenials at various points in the last few years. The veracity of the above terms are subjective but one thing we can collectively agree on is that they are the ‘Most Researched Generation’.

But why are the millennials in the Middle East and around the world so intensely scrutinized?

On the surface, it’s easy to attach straightforward and templatized personas to this segment – they are born between 1981 and 1996, they don’t leave their homes without their smartphones, they’re obsessed with social platforms like Snapchat and Instagram, and they’re more vocal when it comes to issues like social inequality, climate change and oppression of freedom.

So why are brands and research agencies spending millions of dollars to study their psychographics and behaviors?

There are many, but these two are the biggest reasons :

First is their sheer spending potential – In 2018, the global millennial spending power was calculated at a whopping $2.5 trillion!

And secondly –  their familiarity with technology is at once disrupting and shaping the future of everything from media, manufacturing, education, retail and transportation. 

How are millennials in the Middle East different from their global peers?

Numbering around 108 million, millennials account for about 60% of the population in the Middle East. And while they share a lot of common behavioural and ideological traits with their counterparts in the rest of the world, there are certain areas where they deviate considerably from their peers.

Here are a few of them :

Higher Spending Power: According to Visa, when concerning travel-related spend, millennials in the Middle East are the highest spenders globally, typically spending twice as much as their European counterparts.  As the Middle East’s largest consumer base, brands need to be asking themselves: ‘How do we attract and engage this market?’

Wider Generation Gap:  Due to widespread online connectivity which has opened visibility to a diverse world, the gap between millennials and the previous Arab generation is considerably wider than is the generation gap in most other cultures. 

Juan Cole in his book  “The New Arabs: How the Millennial Generation is Changing the Middle East” shares that millennials in the Arab world are universally less religious and observant than generations that have preceded them. Cole adds that many millennials in the Arab world also tend to be more liberal than older generations.

Greater Brand Loyalty: According to a Google study, millennials in the Middle East have more brand loyalty than their peers in the US, UK and Japan. A significant number of millennials in Saudi Arabia and UAE considered only one brand when they buy.

More Entrepreneurial: A report by HSBC states that UAE and Saudi Arabia are home to the highest number of millennial entrepreneurs globally, outpacing China and Hong Kong. The average age of Middle Eastern entrepreneurs is around 26 years and they also seem to work the hardest – clocking 12.5 hours average workday which is 2.5 hours more than the global average.

Middle Eastern Millennials: Brand Preferences, Life Priorities & Personality Traits

 

  • Not Afraid to Challenge the Status Quo

Most of the Millenials in the Middle East were brought up with a strong sense of the region’s tradition and culture. This has fostered a strong sense of identity and pride amongst this segment which they intend to pass down to the next generation. However, they are not the ones to follow traditions blindly and being an increasingly global generation, they are open to change and question certain ideologies that are a hindrance to the progress of the country. In a nutshell, millennials in the region are an empowered generation who are vocal about their feelings and not afraid to express themselves even if it goes against societal norms.

  • Always Connected & Extremely Digital-savvy

According to the 11th annual Arab Youth Survey, 9 of every 10 millennials in the Middle East use at least one social media channel every day, and more often than before. The specific platforms usage differ greatly by country.  

Facebook continues to find a large, growing audience. With 38 million users each day, Egypt is the MENA region’s largest Facebook market. Visual social networks like YouTube and Instagram have seen rapid growth in the region. Instagram has 63 million users in the Middle East and Turkey is the sixth largest Instagram market in the world, while Kuwait, Bahrain and Israel also have a large percentage of Instagram users.

Saudi Arabia leads the pack when it comes to YouTube – the country contributes 90 million views every day, 50% of which comes from smartphones. The rise of video consumption and content creation via YouTube has made online video the weapon of choice for marketers targeting millennials in the region. Other popular social networks are WhatsApp (75% penetration), Snapchat (large user base in Saudi Arabia and Turkey) and Viber.

  • Aversion to Politics

Millennials in the Middle East are generally less interested in traditional forms of democracy and showed little to no interest in political parties. Only 36% of young people in the Middle East believe that the situation in Arab countries has improved after the Arab Spring. 

According to the Burson-Marsteller Arab Youth Survey, 53% of Arab millennials believe it’s more important to have stability than democracy and 67% think that Arab leaders must work harder to improve citizens’ human and privacy rights in the region, as well as women’s rights. Millennials in the Middle East are also generally less religious than previous generations with 52% stating that they believe religion plays too central a role in the Middle East.

  • Conscious Consumers

Millennials in the region care about the world they live in and want to make it a better place. The digital explosion has armed them with instant access to information and they keep a close tab on CSR initiatives undertaken by brands and the overall behaviour of a business.  48% of the millennials in the region said they only buy from socially responsible brands and 45% of them recognize and support local emerging brands as long as they resonate with their ideals. 

  • Anxious Yet Determined

This generation has a lot on their minds – increasing cost of living, unemployment, loans/financial burdens and a wide range of social and political issues within their country. A survey by IPSOS revealed that only 6 in 10 millennials are optimistic about their future, especially under the current economic conditions and they are spending even more cautiously than they have in the past. However, many of the millennials enter the workforce with high aspirations of climbing the career ladder or setting up their own business. 

Engagement Strategies for Connecting with Millennials in the Middle East

The key to being successful is to create an engagement strategy that incorporates the above insights while being mindful of the socio-economic backdrop of the region. 

Here are a few tips to help you get started :

  • Personalized, Cross-channel Engagement across Social Media

As evident from the above stats, Arab millennials rely heavily on social media for their daily dose of news, entertainment, product discovery, and of course, catching up with friends and family. So it’s no surprise that getting social right can make or break your engagement strategy in the region. 

Brands will need to step away from creating siloed, disconnected and generic social media content and create a connected, holistic and personalized engagement across multiple channels like Facebook, Instagram, YouTube, Viber, WhatsApp and Snapchat. 

The key to achieving this is through investments in two emerging technologies: Customer Data Platforms to create a Single View of customers and intelligent customer engagement platforms with cross-channel capabilities, like X-Engage. 

  • Authentic, Story-driven Approach

In the Middle East, millennials have significantly more brand loyalty as compared to their global peers. A large majority of them believe that the brands and products they use reveal a lot about their lifestyle and personality. Therefore it becomes doubly important to clarify what your brand stands for and its core values.

Be authentic in your tone and try not to think of social media as another “sale-sy” advertising outlet. While this rings true for any audience, it is especially relevant when it comes to millennials. Make your content story-driven, especially when showcasing your products or how it positively impacts the lives of customers. According to an analysis conducted by the Institute of Practitioners in Advertising (IPA), emotional storytelling outperformed their rational counterparts with almost double effectiveness.

  • Video & Visual Content Focussed

It’s no surprise that brands with great visual and video content garner massive engagement in the region. Millennials in the Middle East spend over three hours per day on online video – that’s more than both messaging apps and games combined. They are also twice as likely as their global peers to post content online and show others how to do things online. We recommend a mix of educational, entertaining, engagement-provoking and promotional visual content across Facebook Live, Instagram stories, YouTube and TikTok to maximize your engagement in the region.

  • Mobile-first

Brands and marketers will need to think of mobile as more than just a medium or channel. It’s going to be a critical entity in almost all future digital experiences like AI, VR, AR, IoT etc.  Millennials in the Middle East have a higher propensity for smartphone usage compared to their global counterparts. More than a third of millennials in Saudi Arabia use ONLY mobile phones as their internet access device and 34% of youngsters in the UAE watch videos on their smartphones several times a day. This makes them less-forgiving while encountering accessibility issues and other rendering glitches on the mobile.

Wrapping Up

Millennials are fidgety, distracted and want to get a lot done in less time. They want digital experiences that revolve around their lifestyle. Brands will need to adopt agile marketing strategies and technology solutions to keep up with their constantly evolving interests, needs and behaviour. While it might seem like a whole lot of effort to capture the attention of this audience, their massive spending power and strong brand loyalty more than makes up for it in the long run.

How to Stay Ready for India’s Next Wave of eCommerce

How to Stay Ready for India’s Next Wave of eCommerce

The future looks good.

Despite the bleakness, we see at the moment. Or…may be, to some extent, because of it.

India is all set to exhibit a very organic and real boom in the eCommerce space in the next 5-7 years. 

Tier-II and Tier-III cities will propel this boom, ably supported by public policy and private investment to fuel the adoption of the internet, smartphones, and digital wallets. PwC’s report, ‘Propelling India towards global leadership in eCommerce,’ highlights that the Indian eCommerce market will exceed 100 billion USD by 2022. 

That is huge!

‘Retail & E-commerce. Shaping New India’s Economy’, a report by Invest India, National Investment Promotion and Facilitation Agency illustrates that by 2025, internet penetration is likely to reach 55% or more of the entire population of the sub-continent. And the number of online shoppers is estimated to multiply from the current 15% to 50% of the online population by 2026. 

Interestingly, this next set of eCommerce users in India, coming from the semi-urban and rural societies, will be very different from those today. 

With newfound purchasing power and generations of unmet aspirations, coupled with attractive avenues for consuming glocal products and services, today’s business assumptions, strategies, and technology will not suffice in the fast arriving tomorrow. 

Paradigms will break.

Stereotypes will shatter.

And newer opportunities will manifest themselves in manifold ways. 

Retailers in India and abroad, looking to co-write this Indian growth story will need to be mindful of various ecommerce solutions along with the softer aspects of this new Indian online shopper.

We’ll also take a more in-depth look at everything from demographic changes to the social-economic impact of the COVID pandemic.

…and, of course, the not-so-silently spreading digital footprint in this multi-lingual, multi-ethnic, multi-cultural phenomenon that we call Bharat.

Factors Spurring India’s Ecommerce Growth Story

  • Young and ambitious

By 2030, India will have nearly ninety million (90 million) new households headed by millennials. And, with a median age of thirty-one (31) years, India will remain one of the youngest nations in the world. This demographic dividend will not only provide a healthy and dependable workforce to the manufacturing and service sectors but also set in motion the network effect from faster and more widespread technology usage and innovation. 

  • Online via Smartphones

By 2021, India will likely have more internet users (846 million) than the entire population of ‘six G7’ countries. Roughly 80% of these users will be on mobile. The ‘Digital India’ thrust by the government, and the success-in-making of Jio’s affordable smartphone and incoming 5G revolution, are achieving just that. It is only evident that these ‘late adopters’ and the ‘late majority’ will look for novel ways to get things done at their fingertips. 

  • The COVID effect

Almost overnight, more Indians than ever before have started buying day-to-day essentials and non-essentials online, triggered by the fear of catching the COVID infection in crowded public places, even the neighborhood stores. This dramatic attitudinal shift is likely to continue and become the status quo post the pandemic as well. As parts of India open up their economy and relax the lockdown, more and more Indians will shop online, discarding decades of inertia in months or even weeks!

  • Have money will spend

By 2022, the Indian middle class (with annual income between 7.5k-37k USD) will be the largest segment of the population. The new entrants into the consuming class will also include rural India, where per capita consumption will grow by 4.3 times compared to 3.5 times for urban Indians. Thus, easy access to basic amenities and high disposable income will increase their’ ability’ to purchase products and services hitherto unexperienced by them.

How Brands Can Stay Ready for the Next Wave of E-commerce in India

With roughly 40% of the population estimated to be unexposed to the internet by 2022, India has a lot of headroom for eCommerce growth, but not without some challenges. 

For instance, the new eCommerce regulation policy which was redrafted, but put on hold, given the COVID situation. 

Corollary to this is the Personal Data Protection Bill, which proposes to localize data storage. 

These policies, coupled with the general economic slowdown, create a ‘not-so-straight’ way forward for the eCommerce sector in India. 

Hence, we have put together some strategies in the eCommerce space, which will help you secure your market presence and dynamically adapt to the changing equations:

  • Social Commerce

The upcoming big Indian eCommerce blast will be ‘social commerce.’ Success stories from giants like Facebook and Instagram and start-ups like Mall91 and Meesho have set the stage. Embracing social commerce – with video selling, chatbots, and group shopping for discounts – will help sustain in the new normal.

  • Personalization

Personalized communication is to eCommerce what face-to-face interaction is to brick-and-mortar. Capturing data will be necessary to link disconnected bits of information (across devices and omnichannel) into a coherent consumer understanding – unique for each individual. 

  • Assisted Shopping

The new e-shoppers will prefer simple conversations to website interfaces. With more app installs for WhatsApp than for Amazon or Flipkart, semi-urban India is already well primed for something like ‘WhatsApp for Business,’ or simply referred to as WhatsApp Commerce which facilitates catalogs, customer engagement, checkout, and payments, all via chat.

  • Omnichannel Experiences

Consumers will shop on different devices, from different locations, online and offline. Tying it all together will be extremely important to identify, analyze, and influence purchases. eCommerce players will need to use cross-channel integration platforms like Customer Data Platforms (CDPs) to unify data across email, mobile, digital wallets and in-store POS systems.

  • Artificial Intelligence (AI) and Augmented Reality (AR)

Adopting AI and AR will remove various eCommerce limitations. AI will enable chatbot based commerce over apps like Facebook Messenger, using Natural Language Processing; AR will digitize the brick-and-mortar experience for enhanced sensorial appeal and seamless data capture.

  • Direct-to-Consumer

Getting your own website ‘eCommerce ready’ by investing in ecommerce platforms will be necessary. It will help reduce dependency on marketplaces like Amazon and Flipkart to enable transactions. You will not only increase your bottom-line but also get complete ownership of your shopper conversion cycle and access to rich consumer data.

  • Mobile First

To bridge the app-browser divide and integrate mobile in their digital strategy from the very first steps, eCommerce brands can utilize Progressive Web Apps to offer app-like experience and even send push notifications via mobile browsers. This will be critical for a country like India where the majority of smartphone users own a mid-segment device which has limitations in terms of memory and storage.

  • Last Mile Deliveries

Amazon’s drone-based delivery and DMart’s ‘Pick up Points’ are both inspired by the need for on-time, hassle-free product delivery. Similarly, brands may need to automate their logistics and partner with hyper-local courier services to walk that extra mile for every consumer. 

To sum it all up, we would like to conclude with this thought: When the bad times are over, good times will come. Prepare yourself, enhance your capabilities!

Covid-19’s Impact on Asia & Middle East Apparel Industry

Covid-19’s Impact on Asia & Middle East Apparel Industry

We had previously covered how retailers can successfully deal with the Covid pandemic and chart out a road to recovery based on our learnings from China.

Southeast Asia, India & the Middle East are now 3-4 months into the pandemic and the crisis has impacted each of these regions in different ways; depending on the socio-economic factors, lockdown extensions and how the government in each region responded to the crisis.  

While there have been spikes in online commerce, especially around essentials in all of these regions, we wanted to dissect the in-store data of the 50+ brands across 10,000 stores in these regions to : 

  • Understand the overall retail impact of Covid-19 in Southeast Asia, India, China & the Middle East from March 2020 to May 2020
  • Do a deep dive on the current state of Apparel & Fashion industry in these regions
  • Analyse how consumers are shopping in these uncertain times

Impact of Covid on Southeast Asia’s Retail Market

At a broader level, the restaurant and hospitality segments in Southeast Asia have been badly hit. The Sales-Per-Store has been on a steady decline across retail over the last 3 months and plunged to more than 80% in the first week of May.
SEA Retail Drop

Surprisingly, the Apparel & Fashion sector in SEA has a relatively lower dip in sales and store footfalls are at 50% of pre-Covid levels. 

  • Covid Impact on Southeast Asia’s Apparel & Fashion Industry 

Apparel sales in SEA tanked during the peak of lockdown and the highest dip of 66% was observed at the end of March.  Overall, sales have been hovering around the 30% mark until the first week of May.

SEA Apparel Peak Dip

Finding 1 :

Within the Apparel segment, the footwear category is worst hit, with sales still lower by 65% as compared to last year

SEA Footwear Sales

Finding 2 : 

The second week of May saw a surge in Apparel sales (+6%), possibly due to a shift in Ramadan dates this year. 

SEA Apparel Retail Sales

Finding 3 : 

Customer footfall is still at approx 50% as compared to January and has remained stable from Mid-April to Mid-May.

SEA Retail Footfall

  • Key Insight

Correlating Finding 2 & 3, we predict that the worst may be over for the Apparel & Fashion industry (excluding footwear segment) in SEA and sales will continue to increase steadily over the next few weeks.

SEA Apparel Sales

Impact of Covid on India’s Retail Market

Channel-wise data indicate severe disruption for Indian retail brands with a sharp 60%+ drop in sales and footfalls have been at 36% of January even after the easing of lockdowns.

India Retail Sales

While grocery and essential sales are relatively less affected and should recover soon; food, hospitality and apparel brands may have to wait a while for sales to reach pre-Covid levels.

  • Covid Impact on India’s Apparel & Fashion Industry 

The apparel sector in India saw a severe slump during the lockdown, with sales grinding to zero for most of the brands. 

Finding 1 :

There has been a revival in apparel sales from Single Brand Outlets in the first two weeks of May

India Single Brand Retail Sales

Finding 2 : 

Sales data from the first two weeks of May indicate people are purchasing more number of lower-priced products, possibly in bulk quantities 

  • (+) Average Transaction Value, (+) Average Basket Size, (-) Average Product Price
    India Apparel Sales Drop
  • Key Insight

There have been some positive signals in terms of sales & customer footfalls in the first two weeks of May.  We expect it to sustain and improve as the lockdown restrictions are further eased.

Impact of Covid on Middle East Retail Market

The online food & grocery retail is experiencing a major surge in the Middle East with average sales increasing by 200% and Order Values increasing by 50%. However, the closure of malls resulted in almost 50-60% slump in sales across  F&B, Jewelry, Fashion & Luxury categories.

Amongst these worst-hit categories, the Luxury segment has seen a massive slump with sales dropping by 90% from the 1st week of April and footfalls hovering around 9% of what it was in the first week of January.
Middle East Luxury Retail

Middle East Luxury Retail Footfall

  • Covid Impact on Middle East Apparel & Fashion Industry 

The apparel market in the Middle East has shown a decline of -65% during the peak but there has been an uptick in sales during the first two weeks of May.

Middle East Apparel Sales

Finding 1 

Compared to January 1st week, store footfall levels are currently at 38% after hitting a peak slump of 20%.

Middle East Apparel Footfall

  • Key Insight : 

The surge in apparel sales during the first two weeks of May could be attributed to malls gradually reopening with reduced hours, and partial reduction in restrictions in the region. While it’s too early to make a conclusive prediction, our data hints at the early stages of a revival.

Impact of Covid on China’s Retail Market

Overall retail sales in China plunged 20% in March as it struggled to contain the pandemic. Our data revealed a drop of over 65% in Average Sales per Store between January & March.

Two months later, the country has seen a sharp drop in new coronavirus cases and consumers have started venturing back into malls and restaurants. Restaurants that have rolled out plans for curbing the risk of infection are now allowed to open and most of the stores have reopened, though big brands like IKEA and Apple Inc have restrictions on crowds.

  • Covid Impact on China’s Apparel & Fashion Industry 

From mid-April onwards, the sales per store which took a big hit during the lockdown are slowly coming back to pre-Covid levels. However, this differs from retailer to retailer – some have healthier sales than last year while others have fared worse.

China Apparel Sales

Finding 1 : 

Customer numbers (compared to the 1st week of Jan) indicate that around 70% of customers have come back to the store in the first two weeks of May.

China Retail Footfalls Covid

  • Key Insight : 

China seems closest to pre-Covid levels of sales and consumption amongst all countries. However, there have been shifts in consumer behaviour that brands will have to be cognizant of as they prepare for the new normal. 

The Way Ahead

While the worst may be over for retailers and brands, it will take some time for normalcy to set in. Until then, the key to surviving this crisis lies in sharing insights and learnings while adopting best practises from peers and partners across the globe. We would love to hear your thoughts and comments on how your brand is gearing up to face this challenge; do write to us at hello@capillarytech.com.

Build Emotional Connect with Consumers during the Covid-19 Crisis

Build Emotional Connect with Consumers during the Covid-19 Crisis

For most of us, Covid-19 is the first time we have lived through a globally traumatic and emotion-inducing event, in real-time, with the whole world connected. From a brand’s perspective,  Covid-19 has reminded us, rather dramatically, that emotions are a big part of our decision-making process and how fear, anxiety and panic can impact sales. 

Based on our interactions with 400+ brands, Thought Leaders and Retail Experts, we’ve compiled some strategies focussed on enhancing engagement, maintaining top of mind recall and creating long-term emotional connect with your customers during these tough times. 

Key Strategies to Build Emotional Connect

  • Lead with Empathy

One of the easiest ways to connect with your customers is to empathize with the challenges and struggles that they are undergoing due to the crisis. There has been a massive shift amongst consumers preferring socially conscious and sustainable brands in recent years and this is a good time to showcase your brand as socially responsible and empathic when the times are tough. 

Campaign Ideas : 

The core idea should be to replace sales-oriented marketing campaigns and promotions with human stories centred around your staff, your customers and the larger community. This positions the brand as someone who cares about what consumers truly value rather than what sells. And by creating content that evokes empathy, consumers are more likely to take action – sharing, responding, and even prompting change within their own communities.

  • First and foremost, remind your customers that you are there for them in any which way you can be.  
  • Your customers are your community – let them know how you’re responding to the crisis, how you’re conducting business, and what health precautions you’re taking.
  • Ask your customers how you can support them during this time, and let them know how they can support your brand as well.
  • Share stories that reiterate your commitment towards your frontline staff like paying their salaries in advance or setting up an emergency fund through SMS and on social media. Most importantly, encourage your employees to comment and share these posts to ensure maximum reach. 
  • Send a community wellness mailer on what your brand is doing for the community – for instance,  opening up warehouses for providing refuge during quarantine, increase health care or basic pay for employees who are unable to make it to work etc.
Example:  Store Closure Communication by Reformation

Sustainable fashion brand, Reformation, sent out this email to its customers that addressed how they’re responding to the crisis along with a note at the end asking them what they should be talking and posting about. By being candidly vulnerable about not being sure as to what they should talk about, they have been able to create empathy for themselves with their consumers. This small detail shows that they care about their consumers and are open to ideas (in the process elevating them to collaborators rather than just end users).

  • Align your message with ongoing health & safety protocols

Brands can echo or amplify government and health organization guidelines by serving as PSA disseminators during this crisis. By rallying your customers around a larger and pertinent cause, your brand gains a dual advantage – you cultivate the team spirit and tribe-like mindset amongst your brand audience, and more importantly, you position the brand as sensitive to the realities of life; thereby making it more humane and relatable.

Campaign Ideas : 

These campaigns are great for apparel and sportswear brands where there is a strong brand preference and following amongst their customers. The key is to get the overlap between your brand story and the overarching PSA message right. 

  • Explore ways to weave your brand story into the ongoing narrative around safety and hygiene
  • Use your Brand Heart (purpose, vision, mission, and values) as your North Star to remind yourself what your brand stands for, and how it relates to the current crisis
  • Build a community activity around this, fostering a feeling of “we all are in this together”, and hence a large extended family. 
Example : ‘Play Inside’ by Nike 

The apparel giant put out a great campaign that encouraged people to ‘play inside’ to comply with the ongoing social-distancing measures enforced by governments. With the campaign, Nike managed to stay true to its inspirational branding while communicating a timely and relevant message. The brand encouraged customers to share home workout and fitness snaps on Twitter and Instagram to maximize brand reach and foster a feeling of community-   online challenges are a great way to drive the cohesive mantra.

  • Focus on value-driven content

With the majority of the world’s population being home-bound, digital content consumption is at an all time high during the crisis. This is a great opportunity for brands to build stronger emotional connect with their customers by going beyond the usual transaction-based promotions and communications. Research in behavioural science and consumer behaviour has proven that these non-transactional engagements serve as building blocks for long term brand loyalty. 

Campaign Ideas : 

These campaigns are heavily context and content-driven so don’t worry too much about getting the technicalities right. A simple video shot on a mobile phone will do the trick if the story and content is engaging. Just be mindful of toning down the sales pitch and instead, focus on delivering helpful content.

  • DIY videos and webinars are a great place to start – brands can communicate a range of useful and educational content around upcycling (Fashion & Apparel), repairs (Appliance & Electronics), recipes (QSR & Hypermarkets), beauty tutorials (Cosmetics) etc  
  • Curate ideas on optimizing WFH schedules, staying fit and other styling advice
  • Gaming has also become a viable medium for brands to connect with their customers
  • Offer free home trials of products, or leverage immersive technologies like AR to help customers visualise a look once they enter their basic body size parameters like chest, waist etc.
  • Serve as a source of trustworthy information and even inspiration amid widespread uncertainties about public health and the pandemic’s economic consequences
Example  : B Bounce by Burberry

Burberry has launched an engaging and playful game in which players race a deer-shaped character to the moon, using supercharged Thomas Burberry monogram puffer jackets. Players compete for special B Bounce prizes, and winners are awarded custom made GIFs and virtual Burberry puffer jackets edited onto a digital picture of their choice. With this campaign, the British fashion house intends to maximize digital share around its latest collection of down jackets.

  • Support a cause and provide an avenue for your consumers to engage with the community

Cause Marketing creates a win-win situation for the brand, the consumer and the charity. Across the world, consumers increasingly expect the companies they buy from to act responsibly and stand up for issues that matter. A survey by Havas found that meaningful brands that take a stand more than double the performance of stock indices on average.

Campaign Ideas : 

If your finances permit, consider giving a percentage of each sale to an organization working to fight the Covid-19 crisis. This allows consumers to support the brand they love while also supporting those working to alleviate the impact of the epidemic. Here are some other ways to run a Covid-19 support campaign

  • Make donations shoppable – select a charity helping those affected by the virus, then add an option to ‘buy’ the donation in your catalog.
  • When customers “purchase” the donation, you can reward them with exclusive loyalty program perks
  • Allow customers to use their loyalty points/birthday vouchers to donate to a specific fundraiser with brand matching the donation amount
  • If financial contributions are not an option, consider letting out warehouses to host vulnerable sections of the society, or repurposing factories to produce hand sanitisers and face masks.

Example : Feed the Daily Wager by Zomato

Zomato

Zomato launched the campaign to support the 450 million daily wage workers in India who have lost their livelihoods due to the lockdown. The brand has managed to raise USD 3 Million through donations and has distributed more than 100,000 ration kits. The campaign was widely circulated on various social media by Zomato employees and consumers and raked massive engagement in the digital universe. The Covid-19 clearly showed that customers prefer connecting with brands that go beyond their business model and work towards the larger good of the community. It’s notable to see that Zomato as a brand simply served as a platform for this campaign while all the donations have come from consumers and employees. 

Wrapping Up

As you go about using these strategies, it’s important to remember that while business stability might be the primary focus for you, your customers are facing physical, emotional and financial strains during this time. In such troubled times, it is best to over-communicate rather than under-communicate. Much of the problem in the current crisis is uncertainty and the associated anxiety. Try to alleviate it by being in touch with your customers on social media and other communication channels. Send personalized messages to your customers to check in on them and share any uplifting or inspirational news about your brand as and when it happens.

Most of all, stay safe, and please feel free to reach out for anything.

Lessons & Business Recovery Strategies for Retail from China

Lessons & Business Recovery Strategies for Retail from China

*Note: This article was first published on March 30, 2020, and it has been updated on May 19, 2020

Predicting the Road to Recovery: Key Findings & Insights for Retailers on tackling the impact of Covid-19 *across China, Singapore, India and the Middle East

Roughly 50 days later after the initial lockdown, China has successfully stunted the spread of the virus, and the country is not only witnessing the recovery of economic fundamentals but showing signs of upward momentum.
China’s economic scale, strong resilience, digital penetration and flexible macro policies are among the major factors which led to the rapid recovery. We believe there are some important lessons to be learned from China on how to successfully deal with this epidemic and chart out a road to recovery in the coming months.

Our position as a leading omnichannel retail solutions provider for more than 400 retail brands in China, India, SEA and the Middle East has offered us a ringside view of how the epidemic unfolded. We collated data for 50+ brands across 10,000 stores in these three regions to understand the impact on retailers, the timeline as it unfolded and measures that can be taken to minimize the negative impacts of the epidemic.

We are happy to share with you these insights as you go about strategizing and planning your road to recovery during this crisis

TL-DR:  In this article, we have tracked and analysed :

  • Covid-19’s category-wise impact on China’s retail sector
  • Key findings and insights on Covid-19’s impact in China before, during and after the lockdown period in Wuhan
  • Key findings and insights on Covid-19’s impact in Singapore before and after the Dorscon Orange Alert + expected recovery timeline for Singapore’s retailers
  • Key findings and insights on Covid-19’s impact in India + expected recovery timeline for India’s retailers
  • Key findings and insights on Covid-19’s impact in the Middle East after the nationwide lockdown + expected recovery timeline for retailers
  • Recommendations on charting a road to recovery for retailers

Covid-19’s Impact on China Retail

Recovery Period: 6th March 2020 to 15th March 2020

Overall, the epidemic has had a large short-term impact on the Chinese consumer market, and retail sales of goods have fallen sharply. From January to February, the total retail sales of consumer goods fell by 20.5% (YOY) while the retail sales of automobile and petroleum goods fell by 37% and 26.2% respectively; catering revenues fell sharply by 43.1%, and room revenue of accommodation businesses fell by nearly 50%.

Finding 1: Over 65% Drop in Average Sales per Store and a 79% decrease in Customers per Store

Finding 2: There was an increase in retail sales starting from March 6th,2020

After just 8 weeks since the initial lockdown, the retail market in China appears to be in the early stages of recovery. This is indicated by the surge in two key metrics: Sales Per Store & Customers Per Store in the past few weeks. 

Pre-lockdown : 1st Dec 2019 to 25th Jan 2020
Lockdown Period: 26th Jan 2020 to 5th March 2020
Probable Recovery Period: 6th March Onwards

Compared to the lockdown period, in the “Probable Recovery Period”-starting from March 6th (we are calling it PRP as we see a surge in related metrics, need to see if this is sustained) retailers witnessed 22% increase in sales and 43% increase in customers.
*Update as of 19th May 2020
Finding 3:  Store footfalls have reached 65-70% of base levels (1st week of January) starting from the first week of May

China Footfalls

Finding 4: Sales per store which took a big hit during the lockdown is slowly coming back to similar levels as last year

China Last Year vs Current Year

Key Insight
  • We are seeing an uptick in sales and customers after 6th March 2020. If we consider this date as a cutoff period, it has taken around 1.5 months for recovery to start after the Wuhan Lockdown (25th Jan to 5th March).
  • It took around 3 months for sales and store footfalls to reach pre-COVID levels in China.

Covid-19’s Impact on Singapore Retail

Expected Recovery Period: Ongoing

*Timeline Reference :
Prior to Dorscon Orange Alert : From Jan 1st-Jan 23rd,2020
Post Dorscon Orange Alert : From Jan 24th-27th Feb,2020
Probable Recovery Period : Ongoing

Singapore witnessed a perceptible drop in retail sales but not as significant as that of China. A possible reason could be that Singapore has managed to contain the infection fairly well and avoided a lockdown. Our analysis of sales and customers per store data of  10 leading brands across 1000 stores also reiterates the positive outlook for the Singapore retail market. 

The Findings 

  • Prior to Dorscon Orange Alert: From Jan 1st-Jan 23rd,2020 sales per store was 18% lower and the number of customers per store was 8.5% lower compared to the same time period in 2019
  • Since Dorscon Orange Alert: From Jan 24th-27th Feb,2020 sales slumped by 45% and the number of customers per store was 26% lower compared to the same time period last year.
  • Currently: From 28th Feb to 1st March, we saw a sudden surge in sales and customers per store. Post 1st march,2020, we are observing 34% decline in sales per store compared to the previous year (compared to 45% drop during Orange Alert), and 10% decline in the number of customers per store(compared to 26% drop during Orange Alert) 
Key Insight 
  • We have been getting reports of the retail market being back to normal (even though tourism is severely impacted), with footfall in malls is now 95% of what it was before.
  • Although the number of customers per store has increased post the Orange Alert, we have not noticed a significant jump in sales indicating customer reluctance in spending
*Update on 6th April 2020
  1. With the impending lockdown, the recovery period is predicted to be delayed further, at least until the end of May/Mid-June.
Business Recovery Prediction for Singapore

The retail sales recovery period for Singapore seems to have started and expected to be ongoing. However, with the ever-increasing restrictions imposed on the movement of people in malls and restaurants, the recovery trends may be inconsistent and could deviate till the end of April.

*Update on 6th April 2020
  1. The business recovery prediction in Singapore is expected to be delayed until the end of May/Mid-June due to the recent announcement of the nation-wide lockdown indicate, however, we foresee a faster recovery period of 1 -1.5 months in Singapore compared to the 2.5 months in China.

Covid-19’s Impact on India Retail

Expected Recovery Period: First Week of May

*Timeline Reference :
Prior to lockdown: From Jan 1st-March 25th,2020
Lockdown Period:Ongoing
Probable Recovery Period:1st week of May

India seems to have entered  Stage 3 of the Covid-19 outbreak, however, the government has stepped up its effort and is leaving no stone unturned in fighting the epidemic. The epidemic broke out when the Indian economy was already reeling under a slowdown in consumption for everything from cars to confectionaries.

Lifestyle and fashion retailers are likely to be impacted most due to the restrictions and lockdowns, resulting in demand squeeze in the short-term. However, we expect the combination of young demographics, rising disposable income and the positive headroom growth for organised retail to mitigate many of these challenges in the long term.

Finding 1 

  • Until 16th March, the consumer retail sales and walk-ins did not see many dips compared to last year, this could be due to festive shopping (Ugadi, Gudi Padwa, Navratri etc).
  • However, the India consumer retail witnessed a big drop in sales by 46% and 55% fall in the number of customers per store from 17th to 25th March, which is expected to drop further in the coming weeks due to the ongoing nation-wide lockdown.
*Update as of 19th May 2020
Finding 2: Multi-brand Supermarkets witnessed ~70% drop in YoY sales

Multi-brand Supermarket Covid

Finding 3: Single Brand Apparel Outlets have witnessed a spike in sales from 1st week of May

India Single Brand

Business Recovery Prediction for India

Considering the ongoing recovery trends observed across China and Singapore, and provided that there is no further extension on the lockdown, the retail sales recovery period for India might kickstart from the first week of May.

Covid-19’s Impact on Middle East Retail

Expected Recovery Period: Third Week of May

*Timeline Reference :
Prior to lockdown: From Jan 1st – March 25th,2020
Lockdown Period: Ongoing
Probable Recovery Period: 3rd week of May

The first case of coronavirus in the Middle East was reported on January 23rd in the UAE. Since then, the outbreak has spread to Saudi Arabia, Iran, Syria, and Iraq, with Iran being the worst hit. The epidemic is expected to have a severe impact on the region’s retail market since tourists, especially Chinese shoppers, account for a significant chunk of sales to the Middle East’s luxury goods market. Governments in the Middle East have put in place a series of measures to contain the highly contagious outbreak with several nations going into indefinite lockdown mode.

Finding 1

Our data shows a steep decline in sales and customers per store post-March 15th, which is expected to deepen after UAE’s announcement of lockdown on malls and stores.

*Update as of 19th May 2020

Finding 2:  The luxury retail sector is badly hit with sales dropping by 90% compared to last year

Middle East Covid

Finding 3:  There has been an uptick in Apparel sales from the first week of May

Middle East Covid

Business Recovery Prediction for the Middle East

Although the governments continue to impose lockdown, trends and experts indicate that retailers in the Middle East may start observing an uptick in their retail sales from the third week of May 2020 provided there are no further lockdowns imposed by the end of April.

Key recommendations for Retailers on Charting their Road to Recovery

Let’s admit it, the short term impact of COVID-19 on retailers will be severe. Few Offline retailers may have to temporarily or permanently shut down stores, few may face cash flow challenges, almost all of them may have to cut costs and reduce overheads. Even online businesses are likely to face delivery restrictions, delays and supply chain disruptions during this time. From our findings, below are a few takeaways on how retailers can tackle this crisis.

  • Being Omnichannel = Being resilient

From our findings, the most resilient retailers surviving this epidemic are the omnichannel retailers. Brands who invested in enabling a personalized omnichannel shopping experience are experiencing the fruits of their labour. For instance, Chinese apparel brands like Peacebird, Gloria and Youngor who had started their omnichannel digital transformation journeys (through the integration of online and offline channels) experienced a consistent increase in their online sales despite the uncertain in-store sales.

  • Live commerce as an emerging trend

China has become the epi-centre for live stream commerce. Chinese e-commerce platforms Taobao and JD.com are leading the live commerce world by enabling the live stream viewers to purchase items while they watch. Live commerce as they term it, has become an emerging trend to bank upon amidst the COVID-19 sales slump.

  • Merging the offline and the online data to upgrade online selling

At a company level, offline teams should coordinate with the online team to divert the traffic to their ecommerce website/app and clear out the inventory. Brands can also improve the quality of customer engagement across relevant channels by merging store behaviour data with CRM data to communicate and notify its customers about store operating hours, delivery timelines or to send any form of notifications. Integrating data across online, social and offline channels can improve the micro-segmentation of customers and enhance the relevance of personalised communication.

The Covid-19 epidemic is a crisis unlike anything we have faced in the recent past. We are still on the tip of the iceberg when it comes to uncovering the impact of the coronavirus. However, as the events unfold, retailers should be prepared to accelerate their omnichannel engagement and technology initiatives. Until then, stay indoors, practice social distancing and do your part to stop the spread of COVID-19.

The Rise of Engagement Based Loyalty Programs

The Rise of Engagement Based Loyalty Programs

Your customers don’t buy your product. 

They buy your promise.

In today’s world of infinite brand options and glocal markets, product differentiation is tough to keep up with, market domination is short-lived, and share of voice ever diminishing. So, how does a brand increase its sales? By transforming its relationship with its customers and making it worth their time and money to become lifetime loyalists. 

The Changing Loyalty Scenario

Some time ago, customer loyalty was measured merely by transactional metrics, such as the share-of-wallet, and the value of lifetime purchases. That was an era of transaction-based loyalty marketing. Brands incentivized customers to spend more in less time through points-for-purchase programs, use-before-it-expires vouchers, and buy-two-get-three offers. It did help in fetching more revenue, but it lacked a holistic approach. Mostly, it saw customer value in the moments of purchase, which looked more like dots across the customer lifecycle and thereby missed the arc of engagement where multiple moments-of-truth existed, and if managed well, could lead to a virtuous cycle of wealth creation.

Today, the paradigm of customer loyalty marketing has shifted from one with a rational, transactional focus to one based on emotional engagement.

It has been necessitated in part by the new generation of ‘connected’ shoppers – those highly conscious and vocal about their persona and their ideologies concerning purchase decisions. These digitally connected shoppers have enormous power to influence new purchases – by posting a product review on Amazon, referring the brand to a friend over Messenger, or recommending it proudly through Instagram. And they exert this power not because they want to buy something but because they want to engage, express and emote feelings. 

Thus, engagement-based brand loyalty programs that build emotional bonds with your consumers and nurture a relationship of trust and joy become far more relevant in today’s world where every consumer is a potential influencer.

Introduction to Emotional Brand Loyalty

When customers are emotionally loyal towards a brand, they keep coming back, to meet specific emotional needs (as opposed to merely transactional needs) – which may be ideological or social. Take the case of Dove’s ‘real beauty’ philosophy; it doesn’t only sell a bar of soap but reinforces the idea that ‘natural is beautiful.’ Thus it creates emotional bonds with women who ‘like to feel’ the same way. Or take the case of TOMS Shoes, which donates a pair to a child in need for every pair of shoes it sells. Customers who want to make a difference keep coming back to TOMS and ‘feel’ good about it!

There are three shades or ways of emotionally connecting with a brand, better known as the three components of emotional loyalty – Affinity, Attachment, and Trust

Affinity means ‘I like the brand,’ and is the first step towards a deeper emotional connection. It doesn’t, however, guarantee brand loyalty when given cheaper, or more convenient options. 

The second level of emotional loyalty is ‘Attachment.’ The customer feels cared for, and brand interaction is personalized and relevant. There may even be special privileges that keep the customer coming back.

The third and the most potent shade of emotional loyalty is ‘Trust.’ When the brand consistently fulfils its promise time and again, through every touchpoint, it earns emotional loyalty in the real sense.

Benefits of Engagement-Based Loyalty

According to Forrester Research, emotion is the #1 driver of loyalty. A study by Capgemini further reveals that ‘Consumers with high emotional engagement’ buy the brand 82% of the time whereas ‘Consumers with low emotional engagement’ buy it only 38% of the time. That’s interesting to know for marketers. But how is emotional brand engagement superior to transactional incentives in achieving brand loyalty? Let’s delve into the unique benefits of building engagement-based loyalty among your customers:

  • Encourage Positive Brand Conversations

By associating a reward for non-purchase actions by their customers, such as referrals, reviews, shares, or blogging, a brand can connect with many more customers as opposed to only those who end up making a repeat purchase. Thus, a brand can generate rich conversations around the product, which are long-lasting and serve as an asset for brand image. 

  • Unearth Hidden Customer Insights

When a brand offers its customers a safe and comfortable space to emote and engage, irrespective of whether they ultimately buy a product, it can observe otherwise unknown facts about their behaviour, preferences, aspirations, and find interesting sweet spots for meeting customer needs that are ever-evolving. 

  • Earn Friends, Not Just Customers

A friend in need is a friend indeed. Here we are talking about emotional needs. A customer may want to know more about an item from other users, may wish to speak to the brand representatives, or try a product for free. These behaviors may stem from a need to get assurance, feel secure, or allay any fears about using the product. An engagement-based loyalty program appreciates these needs and thus forges lasting friendships. And not surprisingly, purchases naturally follow, soon after.

Thus, engagement-based loyalty programs facilitate an emotional connection between the brand and its customers. They help you cultivate champions who wear your brand on their sleeve and make it a trusted name among their peers.

Best Practices for Engagement-based Loyalty Programs

While emotional engagement is much more holistic than a transactional one, building a loyalty program based on customer engagement is also much more complicated. Brands have to think about the indirect bottom-line impact of the various ways in which customers may engage with them. It requires a smart approach with the ability to connect the dots between customer interactions and future purchase actions. Let’s discuss some best practices to adopt when formulating your engagement-based loyalty program!

  • THINK TOMORROW

Engagement-based loyalty programs are for the long haul. Hence, the program specifics and execution must fit in with the brand’s vision, long-term goals, and personality. Right from the start, even the timelines to measure the impact of these programs must be longer. A monthly sales target, for example, is a bad idea when assigning objectives to your emotional-loyalty marketing initiatives. Positive word-of-mouth, say over six months or a year, makes much better sense.

  • KEEP IT SPECIFIC AND MEASURABLE

It is vital to gauge the performance of engagement-based loyalty marketing to assess the effectiveness and fill any gaps. Each program must have specific goals attached to it – say for advocacy program, it could be the number of positive reviews and impressions received (for those reviews). Similarly, for referral programs, the goals could be ‘the number of referrals generated’ and ‘the monetary value of referral purchases’ that follow.

  • COMMUNICATE THE REWARDS CLEARLY

What’s in it for your customers? While yes, a happy customer would willingly engage with your brand, there is always a cost associated with that for every customer. Some may be hard-pressed for time; others may not have enough motivation. It is, therefore, essential to stimulate them to act by clearly telling them about what they stand to gain on engaging with the brand in specific, meaningful ways.

  • MAKE IT ACHIEVABLE BUT NOT TOO EASILY

Meeting the engagement criteria to be eligible for the rewards must require a healthy degree of effort from your customers. Something too easy to do may attract less than sufficiently motivated customers and something too complicated, may discourage most of them. Also, there must be different levels of engagement achievable gradually, i.e., over some time. It will ensure that your customers do not end up exhausting the various engagement options too soon, and will keep them interested for months if not years.  

  • LIVE UP TO THE BRAND IDENTITY

Last but not least, your engagement loyalty program must have your brand DNA in it. Every customer touchpoint, when rolling out the plan, onboarding the customers, or rewarding them for positive and meaningful engagement, must reflect the promised brand personality, values, and philosophy. Together these will strengthen trust, which itself will further reinforce loyalty.

Together, the above principles will help you design a winning brand loyalty program that has a healthy mix of transactional and non-transactional components and treats your customers as people and not just wallets.

To conclude, as Philip Kotler says – satisfied customers do the best advertising.

How Dark Stores are Revolutionizing Grocery eCommerce

How Dark Stores are Revolutionizing Grocery eCommerce

Let’s accept it.

It is a chore.

Yes, we are talking about grocery shopping – one of those unavoidable duties that millennials call part of adulting, and not in a fond way!

So, what do they do about it?

Often, they put it off till they no longer can. But once they decide to get things in order, research suggests, they are starting to look online, increasingly.

While grocery eCommerce is still miles behind electronics and apparel eCommerce, it is fast picking up, primarily driven by the need for convenience among the new age working individuals.

International researcher IGD Asia expects sales across the continent’s top 12 online grocery markets to grow from US$99bn in 2019 to US$295bn in 2023, making it 7.6% of the total grocery retail sales in these markets.

Shirley Zhu, program director at IGD Asia, predicts South Korea will lead this phenomenon propelled by the rise of single-person households and mobile shopping in the country. She also adds that India and Indonesia will become increasingly important due to their scale.

Zhu concludes that suppliers need to consider several things in gearing themselves up for this fast-paced growth in Asia’s online grocery market. And one of the factors she mentions is ‘supply-chain’! While partnering with brick-and-mortar retailers is certainly a way forward, newer supply chain formats like Dark Stores are offering a much more advanced model of fulfilling electronic grocery orders.

The Rise of Dark Stores

As the name suggests, a Dark Store practically exists in the dark for the shopper. It is not one of those stores with an impressive customer-facing shop front or lighting.

Dark stores were initiated in the UK and meant to serve a focussed purpose – to offer click-and-collect fulfilment for online orders. As such, these stores do not exist in prime real-estate spots such as high streets or shopping malls. They are instead tucked away in relatively nondescript establishments strategically at locations with great road connectivity.

Inside, you have pickers scurrying to collect ordered items for online shoppers and send them off for delivery. Outside, you have vehicles shuttling in and out, picking one order after another for delivery to addresses in the earmarked pin codes.

If the store is highly mechanized, you may even see robots picking groceries and items, requiring, of course, higher inventory accuracy, but ensuring in return much greater efficiency.

Why are dark stores rising in popularity for grocery eCommerce?

Grocery has its unique category level challenges, such as the need for a high number of SKUs and, of course, item perishability. Moreover, online grocery stores are much more dispensable, with the ‘good old’ street-side vendors and marts readily available and now also offering near-real-time doorstep delivery to their hyper-local customers.  All this means that the challenge in grocery eCommerce lies not in getting the online order alone, but in fulfilling the same and getting customers to keep coming back week after week, or day after day! While everyone from heavily-funded startups to ecommerce mammoths like Amazon and Flipkart have taken a shot at hyperlocal commerce for grocery, none of them are yet to get it totally right. With brands like Spar and Reliance Smart investing in hypermarket ecommerce solutions and joining the fray, the segment has become even more competitive.

Here, Dark Stores come into the picture. They work especially well for groceries by addressing some specific challenges. Let’s see how:

  • The SKU Challenge

Someone needs a 6-loaves pack of gluten-free bread, and someone else needs a multi-grain, full-size pack of chemical-free and preservative-free home-made bread. When it comes to grocery, there could be as many SKUs for practically the same item as the number of consumers, simply because when it comes to food, everyone likes to have it their way.

By focusing on storage and click-and-collect functionality, Dark Stores can optimize SKU management in many ways. One, they save real-estate costs by steering clear of high traffic zones in the towns. Two, they can cater to multiple online grocery stores at once, so real-estate costs get shared. Three, they also save space because they do not have to bother about the shopping experience and display or in-store advertising. Thus, dark stores can accommodate much more variety per item at a much lesser space cost. What’s more, the scope for better SKU management increases fulfillment accuracy and reduces mix-ups, which are otherwise commonplace in the delivery of groceries ordered online.

  • ·The Perishability Challenge

There’s yogurt, there are pulses, and there’s the fresh spinach, all within the same order. Grocery involves items with all kinds of expiry windows. And they are all to be delivered together in their ideal states. Crackers mustn’t crack, liquids mustn’t spill, and what’s airtight must remain so. It is not easy to achieve this at scale. Unless there are dedicated places and processes designed to serve this very purpose – to retain item freshness not just for the duration of its storage but also till it reaches the consumer’s plate! That means fulfilling online grocery orders is not as simple as picking the item off the shelf (if it exists in stock that is!) and dropping it into the cart to be delivered whenever.

It requires impeccable inventory management, stock replenishment and order fulfilment – all of which needs to work seamlessly so that the window between off-the-store-fridge and in-the-home-fridge is as short as possible. Long story short, grocery fulfillment requires pickers to work at SPEED – not easily afforded in your average retail grocer where aisles are full of leisurely shoppers gliding around with their shopping carts.

Dark stores come to rescue by dedicating the much-needed time, space, and visibility for stock managers and pickers to manage order fulfillment while maintaining desired freshness levels for all items in the order. Brands will also need to invest in omnichannel ecommerce solutions that support hyperlocal capabilities like geo-fencing and localization.

  • The Fulfilment Window Challenge

Online grocery shoppers do not think beyond a few days. Orders happen not so much in foresight, as out of emergency. And delivery is expected the same day, at the most the very next day – adding to the speed challenge. Consider a situation where online orders may flood in at midnight, and delivery may be expected in time for the next day’s breakfast preparation, i.e., in the wee hours of the morning. Quite obviously, the brick-and-mortar grocery retailers are a bad site for the fulfillment of such an order. Hence, another grocery eCommerce challenge, that dark stores can address much better.

Benefits of dark stores

By addressing such challenges specific to grocery eCommerce, dark stores promise multiple benefits for the online storer as well as for the end consumers:

Easier to serve larger areas: Dark stores can serve multiple locations with high order density, unlike grocery retail stores, which come with space and volume limitations.

Greater product availability: Being dedicated to online order fulfillment, dark stores offer better visibility into stock availability and help e-tailers plan smarter.

Reduced cost of operations: Real-time visibility, space and time optimization, and efficient supply chain together make dark stores a much wiser choice from a financial angle, considering the volatility in the grocery market.

Better customer service: Whether it is 24×7 order fulfillment, picking accuracy, or living up to the quality promise, dark stores are in a much better position to make it possible.

 Future of Grocery eCommerce

 Indeed, there are umpteen challenges with Asian grocery eCommerce. The consumers depend highly on the neighborhood stores, they like to touch and feel products in the before purchase, and they think of shopping mostly when the next meal is due!

Yet, the overall picture looks good, given the market size. South Korea, China, and Japan are fast establishing themselves in terms of market share and scale. And Singapore and Taiwan will have more advanced channels by 2023. However, apart from size and growth, the different markets vary also in terms of grocery purchase habits and cultures. As a suggestion to marketers, IGD program director, Zhu points out, they will need a strategy for where to invest first. Overall, in terms of the online share in the total grocery market, Asia appears to be not far behind (7.6% by 2023), compared to the US (10% by 2022) And now, with Amazon entering this market, it is difficult for grocery retailers to shut their eyes to eCommerce.

Top Customer Loyalty Trends for 2020

Top Customer Loyalty Trends for 2020

While gaining customer loyalty has always been a priority for brands, it will become even more critical in the next few years. This is largely due to the shift of power from brand to consumer-driven by digitization, competitive marketplace and commodification. Moreover, rising customer acquisition and overheads costs will further prompt brands to double down on maximizing Customer Lifetime Value (CLV) by retaining existing customers. An uncertain global economy and higher focus on profitability by ecommerce businesses are further expected to fuel this trend.

This is apparent from the renewed focus by almost all major brands in either upgrading or completely revamping their loyalty program. Another factor fueling this trend is the realization by retailers that traditional spend/earn point loyalty models won’t cut it anymore and they need a more engagement focussed reward program to entice today’s spoilt-for-choice, attention-deprived customer. 

As a result, most of the traditional programs are now being replaced by behavioural-based, highly personalized omnichannel reward models which recognize customers for diverse actions/interactions like store check-ins, social shares, reviews and referrals. This makes good sense simply because brand loyalty, or loyalty in any context for that matter, is an emotional derivative, and rarely determined by logic or rationale. Here are the other top loyalty trends we expect to prevail in 2020 and beyond. 

  • The rise of emotional and behavioural based loyalty programs

By far, this has been the biggest shift in loyalty programs in recent years. Customer loyalty is a combination of behavioural, emotional and rational factors. Until now, most of the loyalty programs were driven by a combination of rational (points/transactions based) and behavioural models (these are mostly paid/subscription programs; Amazon Prime is a great example of behavioural loyalty). However emotional loyalty has been proven to have higher longevity and stronger connection compared to the other two.

The role of emotional loyalty is to answer the ‘Why’ for a customer. Why did they choose the more expensive coffee that got him/her more points (it was made with sustainably grown coffee beans?). According to research by Gallup, customers with strong emotional connections to retailers will visit their stores 32% more often and spend 46% more money than those without emotional bonds. A truly great loyalty program will be the right blend of rational, behavioural and emotional loyalty such that it wins both the heart and the mind.  

 

Key Takeaway:  Traditional loyalty programs were limited in the sense that they only rewarded customers during a transaction. This placed limitations on the brand’s ability to deliver an emotional experience. Brands are therefore switching to advanced, engagement-based loyalty platforms that allows them to greater flexibility like rewarding customers for signing for a wine-tasting session or going for a run in their IoT connected smart shoes.

  • Hyperpersonalization will separate the leaders & laggards

One-size-fits-all rewards will not work anymore, and the ability to customize rewards and communications based on individual customer behaviour, interests and preferences will become a critical factor in deciding the success of a loyalty program. Thankfully, the maturing of AI-related technologies has allowed brands to automatically predict the best channels, reward types, creative and format for individual customers at scale.

While loyalty programs can use data sets to personalize the customer experience, they also generate a  trove of customer insights around purchase history, product preferences and reward redemption which can be leveraged to power the entire marketing automation engine.

Key Takeaway: Invest in a loyalty platform that seamlessly syncs with your Customer Data Platform and CRM to create highly personalized rewards. 

  • Omnichannel reward programs will become the norm

The omnichannel model has been proven to be a win-win for both customers as well as businesses. While customers enjoy the enhanced convenience and seamless experience, brands have benefited from higher conversion, sales and customer retention.

Omnichannel

With the rise in the number of connected devices in the coming years, think IoT devices, Voice Assistants etc., we expect more brands to jump on the omnichannel loyalty wagon. For brands, the biggest challenge in enabling omnichannel loyalty has been capturing data from multiple sources like in-store, app, social and website into a single data pool. However recent advancements like CDPs have solved many of these challenges.

Key Takeaway: Digitize your loyalty programs so that you blend offers and rewards across in-store and online channels, thereby allowing shoppers to choose the channel that’s most convenient to them and get more value for their money.

  • Paid loyalty programs will rise in numbers

The success of Amazon Prime proved that customers are willing to pay for a loyalty program if they are offered additional perks and benefits. Paid loyalty customers typically have higher purchase frequency and Average Order Values, making them a no brainer for brands. In a customer study, a whopping 62% of respondents were willing to join a paid rewards program if their favourite retailer offered one.

Key Takeaway: The success of a paid loyalty program hinges on having compelling, unique and high-value benefits 

  • Integration of ML, Big Data & Blockchain in loyalty programs

Big Data and ML have been increasingly used in loyalty programs to enhance personalization and predictive insight. The first use case is fairly straightforward – when a customer engages with a loyalty program, the system analyzes the information and segment members based on demographics, rewards preferences etc. This allows brands to personalize engagement over a period of time. For predictive insights, the system can create alerts for specific use cases, like the risk of customer churn, propensity to purchase, tier-upgrade probability etc. 

Blockchain-based loyalty programs aim to fix what has been a major pain point for brands: low redemption rates. The technology allows a customer to store all points in a single wallet rather than trying to manage multiple programs. There will not be separate rules for acquiring and redeeming points from different loyalty programs which will remove a lot of the friction and improve redemption rates. While blockchain programs are still in their infancy and there are questions around scalability, they nevertheless hold a lot of promise.

Key Takeaway : These emerging technologies typically have multiple use-cases. However, it’s advised to pick a specific problem to solve and run a pilot on a limited audience before scaling up.

  • Mobile loyalty apps will see continued increase in adoption

Mobile is becoming a critical component of brand’s engagement and sales strategy, with nearly a third of consumers saying it’s their favourite way to show membership in stores. Last year a slew of major brands like Target, Nike and Victoria’s Secret refreshed and revamped their loyalty apps to offer a more connected experience. The reason for this increased focus on mobile loyalty is simple:  it creates opportunities for better targeting and rewards delivery. In fact, no other channel can use information (like a customer’s exact location) to deliver highly personalized, real-time offers and rewards that can be seen and acted on quickly.

While brands are recognizing the need for loyalty apps, the experience part of it still falls short. In fact, while 84% of retailers now offer a mobile loyalty experience, only 22% of them allowed users to view their rewards on the home screen. Mobile loyalty is the critical bridge between online and offline experience and if it doesn’t portray the all-channel view of the customer, it risks being ignored.  While the last few years have been focussed on acquisition and adoption, the next 5-10 years will be focussed around enhancing and optimizing the mobile loyalty experience to be at par or better than the desktop.

Key Takeaway : Focus on improving the mobile loyalty experience and ensure it offers an integrated view of customer purchases, points and redemptions across all channels.

  • The preference for coalition loyalty programs

While the trend was mostly limited to travel and hospitality, it is expected to be adopted across diverse industries like apparel and footwear, automotive and manufacturing. The biggest draw of coalition loyalty programs is the flexibility and freedom of choice it offers to the customers. For brands, these programs are a great way to extend the reach and overall base of customers. In addition to the extra eyeballs, these programs enhance the credibility of your brand since it will be placed alongside other reputable brands. While multi-company loyalty programs are a clear step in the right direction, there are chinks to be ironed out, especially when it comes to restrictive point redemption policies.

Key Takeaway: Explore potential coalition loyalty partnerships with a win-win mindset for your brand as well as the customer. The key to success lies in understanding the persona of your customer in terms of their lifestyle and preferences. This will help you figure out the right set of brands to partner with.  

The Future

In the next few years, we expect more brands to switch to experiential loyalty programs that will be powered with emerging technologies like AI, Big Data and blockchain. In a nutshell, loyalty programs will evolve from being impersonal, static and transactional to one that is emotional, human-centric and dynamic.

Hottest Ecommerce Trends for 2020 & Beyond

Hottest Ecommerce Trends for 2020 & Beyond

With global sales set to hit $6 trillion by 2022, the ecommerce industry is a juggernaut that shows no signs of slowing down. 

While it presents a massive opportunity for retailers, the industry has been characterized by rapid transformation in terms of product innovations, new channels and augmentation of emerging technologies.

To stay ahead and win the sector, retailers will need to :

  • Be agile and forward-thinking in adopting new technologies and channels.
  • Be cognizant of the business and user experience impact of emerging technologies
  • Understand how the changing customer behaviour and preferences will shape the future of the industry

With this report, we aim to uncover the technological and customer trends that are likely to make the biggest impact on ecommerce in 2020 and beyond. To offer you a truer perspective, we have listed four  attributes for each of the trend based on their predicted : 

  • Longevity – Will it  be relevant in the next 5-10 years or is it just a passing fad that will soon be forgotten
  • The scale of Adoption – Will it achieve mass adoption or will it be relegated to a niche section
  • Business Impact: How the trend is likely to contribute to a brand’s overall revenue, sales and conversion
  • Customer Experience Impact: How the trend is likely to contribute to increasing the overall user experience in terms of ease, convenience and speed

1. API-driven commerce architecture will increase in popularity

Traditional monolithic commerce frameworks served well for desktop-based commerce. But newer engagement and commerce channels like voice assistants, wearables, PWAs and IoT-based devices like Amazon Dash, exposed the limitations of these straightjacketed frameworks when it comes to supporting new customer experiences, business models and ecosystem partners.

With User Experience and customer journeys gaining greater prominence, several enterprise brands are expected to migrate to an API-based, headless commerce framework to decouple the front end visual layer from the back end core commerce functionalities to seamlessly integrate new capabilities and systems.

Key Takeaway for Brands: Headless commerce solutions offer several benefits like faster time to market, greater security, easy integrations and superior customer experience. If you’re still stuck with a legacy ecommerce platform, this might be the best time to migrate to a cloud-based headless commerce solution. 

Longevity : ⧫⧫⧫⧫⧫
Scale of Adoption : ⧫⧫⧫⧫⧫ 
Business Impact : ⧫⧫⧫⧫⧫
Customer Experience Impact : ⧫⧫⧫⧫⧫

2. Rise of Hyperlocal Commerce

While the initial ecommerce momentum was spurred by books, fashion/apparel and electronics, the next phase of growth – especially in emerging economies in Asia and the Middle East – is expected to be fueled by hyperlocal-based SKUs like grocery, personal care, beauty services, food and FMCG product sets. And for a good reason – Asian consumers prefer to shop at their local neighbourhood stores, due to multiple factors, mostly related to trust and emotional reasons. 

For instance, in India, 96% of the commerce still happens at mom and pop stores and in the coming years, India and China are poised for explosive growth in the hyperlocal space. Several hyperlocal startups (BigBasket, Zopper, Swiggy, Dunzo) along with ecommerce giants like Amazon and Flipkart are investing heavily in logistics and mobile technology to capture this massive opportunity.

Key Takeaway for Brands: While hyperlocal platforms can get you the initial eyeballs and sales, it will be prudent to start investing in your own ordering platform and logistics to ensure long term customer loyalty.

Longevity : ⧫⧫⧫⧫
Scale of Adoption : ⧫⧫⧫⧫⧫
Business Impact : ⧫⧫⧫⧫
Customer Experience Impact : ⧫⧫⧫⧫⧫

3. Innovations in Mobile Commerce

Mobile Commerce or mcommerce is merely a natural subset ecommerce. However, it’s turning out to be a significant extension with the potential to outgrow its parent in terms of sales, engagement levels and conversions.

By 2021, mobile ecommerce sales are expected to account for 54% of total ecommerce sales, accounting for a staggering $659 billion in sales. And this year, conversion rates on mobile is expected to outpace desktop on Black Friday. 

Here are the major mcommerce trends and innovations that will gain traction in 2020 and beyond : 

  • The Need for Speed: Mobile users expect sites to load almost instantly, if not they will move on to the next one. Brands will need to think mobile-first and adopt newer technologies like PWAs and server-side compression to reduce bounce rates and improve conversion rates
  • Deeper AI Integrations: From automated chatbots to image recognition and personalization, Artificial Intelligence is expected to play a larger role in mcommerce.
  • Focus on User Experience: Msites and apps will continue to be optimized for a better experience on the small screen through simpler navigation, dynamic product pages, autocomplete features and one-click checkouts.
  • Hyperpersonalization : While personalization in the desktop realm has seen some traction, the trend is likely to cascade to mcommerce as well in the form of personalized product recommendations, dynamic content, offers, and loyalty rewards.
  • Geo-targeting: As much as privacy is a major discussion point today, 88 percent of consumers are okay with sharing their location if they get something of value in return. Retailers with physical stores are likely to invest in beacons and other proximity-based marketing technologies to target customers who are within a certain radius of their stores.
  • Augmented Reality : While AR technology has existed for some years, its likely to mature in the coming year and more brands will start embracing the technology to help customers to virtually try out and interact with products using AR-capable apps.

Key Takeaway for Brands: Brands and retailers will need to invest in mobile-first ecommerce platforms and PWAs to improve responsiveness, page load times and overall user experience. Chinese ecommerce giant Aliexpress saw a conversion rate increase of 104% by deploying their PWA. Additionally, brands will need to start considering their msite and mobile app as key components in their omnichannel strategy.

Longevity : ⧫⧫⧫⧫⧫

Scale of Adoption : ⧫⧫⧫⧫

Business Impact : ⧫⧫⧫⧫⧫

Customer Experience Impact : ⧫⧫⧫⧫⧫

4. AI and ML will see a greater play in Ecommerce

What made Amazon the successful ecommerce giant it is today? One of the best loyalty programs? Superior logistics?  Obsessive-levels of customer service? Maybe all of the above. But one thing that has helped Amazon gain a competitive edge above other ecommerce businesses is their ability to leverage AI and other cutting-edge technologies to enhance and improve all aspects of their business. From using Natural Language Processing to power Alexa to leveraging Collaborative Filtering to personalize recommendations and enhancing its logistics using predictive rerouting, Amazon has managed to expand the use cases for AI and ML. As computing power gets cheaper (Moore’s Law), and advancements in GPU technologies enables processing of complex neural queries, expect AI and ML adoption and applications to grow exponentially in the coming years. 

Here are top expected applications of AI in Ecommerce :

  • Personalized User Journeys
  • Predictive Product Recommendations
  • In-store Insights & Customer Engagement
  • Dynamic Pricing
  • Predictive Behavior Modeling.
  • Visual Search

Key Takeaway for Brands : Investment in emerging technologies can be daunting but take the opportunity to evaluate and analyze the business and customer benefits of these technologies and try to implement them in a staged manner. The User Experience and Customer Engagement is a great place to start. 

Longevity : ⧫⧫⧫⧫

Scale of Adoption : ⧫⧫⧫⧫⧫

Business Impact : ⧫⧫⧫⧫

Customer Experience Impact : ⧫⧫⧫⧫

5. The evolution from Omnichannel to Unified Commerce

For several years, omnichannel synced various digital and physical channels to deliver a seamless customer experience. However, omnichannel wasn’t without its share of limitations. In fact, 78% of retailers admitted that they were not successful in enabling a true omnichannel experience due to limitations in data sharing and real-time, personalized engagement. 

This is where ‘Unified Commerce’ gains an advantage over Omnichannel. In essence, Unified Commerce is an advanced form of  Omnichannel Commerce which essentially negates a lot of the limitations of the latter. For instance, rather than connecting multiple channels and platforms, you deploy a single, centralized platform that serves as a universal truth. With this, you can deliver a personalized and seamless customer experience every time, regardless of the channel.

Key Takeaway for Brands : Centralize data and transactions on a unified platform to get a single source of truth. Invest in API-driven ecommerce platforms to integrate and connect apps, channels and devices.

Longevity : ⧫⧫⧫⧫

Scale of Adoption : ⧫⧫⧫⧫

Business Impact : ⧫⧫⧫⧫⧫

Customer Experience Impact : ⧫⧫⧫⧫⧫

6. Social Commerce will become a key revenue channel

Social commerce has been slowly gathering momentum in the last few years, and 2020 is expected to be its ‘flywheel’ moment. It’s a great way for brands to acquire more customers at a lesser cost besides simplifying the purchase journey. In the coming years, it’s expected to become the third major sales channel, taking its place alongside ecommerce and traditional retail. 

The percentage of brands in the US that use social media as an ecommerce sales channel nearly doubled in a year’s time—from 17% in 2017 to 33% in 2018.

The major factors that will fuel its rise are spike in video/visual content, Progressive Web Applications, cheaper data, greater smartphone penetration, improvement in user experience in terms of native checkouts and payment security and the continually increasing amount of time spent by millennials and the younger generations, on social media apps.

Longevity : ⧫⧫⧫

Scale of Adoption : ⧫⧫

Business Impact : ⧫⧫⧫

Customer Experience Impact : ⧫⧫⧫⧫⧫

7. Payment innovations will get a boost

Payment innovations like digital wallets, in-app purchasing,  peer-to-peer lending and new payment models like Venmo and even Facebook cash were significant factors that contributed to the rapid growth of ecommerce. 

Paypal paved the way for cross-border ecommerce by enabling ecommerce brands to reach a wider customer base through global transactions. From then on, companies like Payoneer and Stripe have followed the footsteps of PayPal but discovered their potential products and business models. For instance, Payoneer lets users pull funds from cancellations/returns to their card without the wait, unlike PayPal. This is a huge advantage for ecommerce shoppers, plus it’s much more accessible in developing countries. 

Another fintech company, Paysera offers its users payment services, easy currency conversion, and seamless checkout services for e-commerce companies, thereby removing many of the barriers towards success for e-commerce businesses. Yet another fintech innovation that has seen a lot of buzz of late is the cashierless payment system with a host of startups like Caper, Standard Cognition and Trigo Vision already launching a working prototype.

The innovations in payment and fintech is showing no signs of slowing down, and therefore its likely to further fuel the evolution of the ecommerce industry. 

Longevity : ⧫⧫⧫⧫

Scale of Adoption : ⧫⧫

Business Impact : ⧫⧫⧫

Customer Experience Impact : ⧫⧫⧫⧫⧫

8. Cross-border commerce will see continual growth

Cross-border commerce has gained significant momentum in the last few years primarily due to the rise of distributed commerce channels like social commerce and conversational commerce. 

The phenomenon is likely to have the biggest traction in China and the Middle East. In China, TMall Global has emerged as the biggest cross-border commerce engine with hundreds of US and European merchants setting up storefront marketplaces. The platform doesn’t require the seller to have a legal entity in China which is a major advantage for retailers. In the Middle East, Namshi, Souq and The Modist are the biggest cross-border commerce platforms. Amongst these, Souq requires an in-country partner to show the support documents that allow selling in each specific country. The emergence of a high-spending, brand-conscious consumers in parts of Asia and the Middle East is further expected to fuel cross-border commerce in the coming years.

Key Takeaway for Brands : Cross-border ecommerce is here to stay and brands will need to evaluate it as a growth strategy for an ecommerce business. It needs significant investments in payment processing, staffing and logistics, and therefore should be done in a phased manner for maximum effectiveness.

Longevity : ⧫⧫⧫⧫

Scale of Adoption : ⧫⧫⧫

Business Impact : ⧫⧫⧫⧫

Customer Experience Impact : ⧫⧫⧫

9. Dark stores will gain greater prominence

The proliferation of dark stores is a direct consequence of two factors: the rise of hyperlocal commerce and the rapid growth of the online grocery market. In fact, the surge in online grocery sales and dark store penetration share a symbiotic growth relationship; with each of them fueling the growth of the other. 

Dark stores are essentially retail distribution centers that resemble a typical supermarket but is used primarily to fulfill online orders. While the concept started out as a way to fulfill grocery orders, several brands are testing out the dark store concept for apparel and food deliveries. 

For several brands, dark stores have become strategically important in matching the ever-shrinking shipping time and superior customer service levels of major etailers like Amazon, Alibaba and Souq. They also fuel the growth of cross-border commerce by making it easier for retailers to expand their operations into new regions and markets.

Key Takeaway for Brands : Supermarket and F&B brands should consider leveraging dark stores in their fulfilment strategy. It can offer several benefits like higher capacity, increased efficiency, wider product assortment, centralized routing, faster shipping etc.

Longevity : ⧫⧫⧫⧫

Scale of Adoption : ⧫⧫⧫

Business Impact : ⧫⧫⧫⧫

Customer Experience Impact : ⧫⧫⧫⧫

10. Cross-migration of innovations between Ecommerce & In-store retail

As more brands realize the benefits and advantages of physical and digital retailing, expect the divide to further break down in the coming years.  Once pegged as rivals, ecommerce & brick and mortar stores will become closely intertwined to create a collaborative, integrated and interconnected retailing. The last few years saw traditional retailers adopt innovations and best practice from ecommerce counterparts like interactive websites, PWAs, and mobile point-of-sale solutions.

Going forward, expect the migration of advanced ecommerce innovations into the brick and mortar realm like highly personalized recommendations and customer engagement using AI-powered computer vision technologies and staff enablement apps, Endless Aisle solutions and smarter fulfilment/inventory management technologies.

On the other side, pure play ecommerce brands are expected to continue their offline expansion in the form of pop up stores, experience centers, dark stores and other O2O innovations like order-online-pickup in-store.

Key Takeaway for Brands : Pick a focus area (eg:- staff enablement, customer engagement, store insights, fulfilment etc.). Explore the solutions, start slow and analyze the results before scaling into full-fledged deployment.

Longevity : ⧫⧫⧫⧫⧫

Scale of Adoption : ⧫⧫⧫⧫⧫

Business Impact : ⧫⧫⧫⧫⧫

Customer Experience Impact : ⧫⧫⧫⧫⧫

How AI is Revolutionizing the Fashion Industry

How AI is Revolutionizing the Fashion Industry

AI & Fashion: An Unlikely yet Perfect Pair

At first glance, fashion – which is primarily driven by art, intuition and creativity- seems like an unlikely match for a clinical, analytical and logic-driven technology like Artificial Intelligence. 

However,  AI holds incredible promise for the fashion industry due to the massive data sets  around historical style trends, sales patterns, market swings and customer preferences. For instance, did the global recession in 2009 impact people’s fashion sense and purchase behaviour? How about the Cold War? These are analysis that could yield interesting results and better yet, predict future behaviour and sales in response to global events. 

Brands like H&M, Nike and Tommy Hilfiger are leading the way in leveraging AI-powered technologies to optimize the supply chain, enhance the in-store experience, and improve the overall customer experience. Merchandising teams are increasingly relying on data from stores, websites, mobile apps and loyalty programs to tweak designs and layer it with insights from social media, customer reviews and fashion forums to refresh the entire stock every few weeks.

According to Mckinsey, while AI in fashion is yet to hit critical mass it’s on its way there and likely to impact everything from design to manufacturing to customer engagement.

In fact, the implications for AI in Fashion is so much that even tech giants like Google & Facebook are recognizing the massive opportunity. Facebook recently launched ‘Fashion++, an AI-powered fashion companion that helps you tweak your look. And Google teamed up with Versace to reinvent the famed JLo dress. 

AI-driven Innovations in Fashion Retail

With annual spending in AI expected to hit $7.3 billion by 2022, it’s no surprise that AI is set to become an integral part of the apparel industry. Here are top impact areas that AI will likely have on the fashion industry :

  • Smarter Demand Forecasting & Inventory Management

In the last 20 years, fast-fashion brands like Zara and H&M disrupted traditional apparel market by shortening the design-to-store time from a few months to a few weeks and trading quality for lower prices and fresh stocks. However, this model requisites a deep understanding of current fashion trends, customer preferences, and the ability to predict where the market is headed. If not, they run the risk of unwanted inventory, discount sales and profit loss.

According to Capgemini, using AI across procurement, supply chain, logistics, returns and in-store “pilferage” could generate $340 billion in cost savings across the industry by 2022

While demand forecasting techniques have been used to minimize the revenue loss, it was not always accurate as it solely relied on historical sales data and limited data sets. Machine Learning and AI technologies can incorporate learning from multiple sources and compute millions of data points to reduce demand forecasting errors by up to 50%.

  • Automated Manufacturing

The challenge so far in automating apparel manufacturing has been the inability of the robot to handle limp and flexible fabrics. However, Sewbo Inc., a Seattle-based startup found a fix by stiffening the fabric, thereby rendering it easier for the robots to handle the clothes. The startup recently launched its first robotically-sewn garment, which was crafted by a generic robotic system that was taught by Machine Learning algorithm on how to use a sewing machine. When coupled with accurate demand forecasting techniques, automated manufacturing has the potential to further shorten the design-store lifecycle down to a few hours!

  • Conversational Virtual Assistants

One of the major concerns for fashion brands is helping customers choose the right fit and style without having to sift through thousands of products. Enter chatbots and digital stylists  – customers can now chat/converse with these virtual assistants for getting style tips, finding the perfect dress for an occasion, getting the right fit/fabric based on their personal preferences or choosing a preferred delivery method. Expect this trend is set to take off, considering the rapid growth of smartphone and app adoption where the smaller real estate necessitates a more intuitive and faster product discovery.

  • On-demand Designs

Bombsheller, another Seattle-based apparel brand has started on-demand designing and manufacturing of clothes to a market of just one person. The company relies on a community of artists to submit designs using 3D modeling tools that create a photorealistic picture of how the finished product would look. The brand uses powerful software borrowed from video game engines to render the exact product as it will look even before a single stitch has been sewn.  These ‘virtual’ leggings get uploaded to brand’s online catalogue. Once a customer hits “Buy,” the printer inks on the graphic design, and a seamstress cuts and sews the leggings. The finished product is then shipped out the next day. What makes Bombsheller unique is that they don’t spend a dime until a pair of leggings is sold. That translates to no dead inventory, no guessing market trends, no warehouse clearance and no loss of profits.

  • In-Store Analytics & Engagement 

Using deep learning, Natural Language Processing and in-store analytics, the Smart Stores of the future will offer superior in-store experience by borrowing the best of personalization, customer engagement and CX practises from their online counterparts. Smart cameras and people counters powered by learning algorithms will offer accurate store insights about visitor demography, persona, sizing, product preferences, and online behaviour to help retailers stitch together a rich customer profile and hyperpersonalize the entire store experience.  Several retail brands are experimenting with algorithms that predicts the most valuable customers who are likely to make repeat purchases based on previous in-store behaviour, loyalty earn/redemption rates and number of store visits. Other in-store applications of AI include identifying customer’s current fashion sense to make personalized recommendations , cashierless stores, monitoring shelf-life and freshness of perishables and interactive displays.

  • Quality Control & Counterfeit Screening

The Hong Kong Polytechnic University (PolyU) recently developed a smart fabric defect detection system, called “WiseEye”, which uses advanced AI and Deep Learning algorithms to help manufacturers instantly detect defects and anomalies in the production line. The system has been proven to reduce the chance of producing defective fabric by 90%, thus significantly reducing loss and wastage in the production. 

Several brands are also experimenting with Machine Learning algorithms to find and filter fakes and counterfeit products. This technology is also used by customs and law enforcement officers to verify the validity of premium products like sunglasses and purses which are frequently counterfeited

  • Visual Commerce

Another trend that has been picking up steam of late is visual commerce. It essentially allows customers to take pictures of clothing they like or styles they want to imitate and find the exact items for sale.  Additionally, AI-enabled shopping apps allow customers to take screenshots of clothes they see online, identify shoppable apparels and accessories in that photo, and then find the same outfit and shop for similar styles. For instance, if you have a specific patterned dress in your mind that your friend had worn at an event, AI can enable you to locate it. You can click a photo of your friend, upload it on a fashion site, and the AI algorithms will do the rest.

Fashion Brands Spearheading Artificial Intelligence Adoption

  • Nike

Nike has been the frontrunner in adopting technology to keep up with the changing times and stay ahead of the competition. In the last 5 years, the sports apparel giant spend millions on an acquisition spree of digital media, Ecommerce and analytics startups like Celect, Zodiac and Virgin MEGA to transform itself into a tech and data company that also sells fashion and apparel. When visitors walk into Nike Inc flagship store in New York and log into the app, the brand knows who they are,  their shoe/apparel sizes, what sports they play and their favourite colours. Nike has reaped the benefits of its technology investments by reducing product defects, returns, shorter lead times, and most importantly, higher customer engagement and brand loyalty. The brand recently launched an app – Nike Fit  – that offers  “hyper-accurate” sizing recommendations for its shoes by scanning your feet with a smartphone camera.

  • H&M

H&M was one of the many brands whose sales took a severe wallop due to the retail apocalypse. The brand is now leveraging AI and Machine Learning to claw its way out of the slump and transform its business by spotting upcoming fashion trends, reduce unsold stock, optimize logistics and improve sales. The world’s second largest fashion group has started full-scale implementation of several pilot projects that were aimed at using data to match supply and demand as closely as possible. H&M is also harvesting data from loyalty cards and sales receipt to customize merchandise for an individual store. The brand recently teamed up with Google to create ‘Coded Couture’ , a cool app that creates a personalized design for every individual by analyzing their activities and interests over a period of one week.

  • Tommy Hilfiger

Tommy Hilfiger partnered with IBM and  Fashion Institute of Technology to help designers create new clothing line by analyzing customer sentiment around the brand’s apparel and imagery. The project was aimed at identifying key trends in silhouettes, cuts, patterns and styles that evoked positive customer sentiments by analyzing 15,000 images of Tommy Hilfiger products, 600,000 runway images that were publicly available and 100,000 patterns. Going forward, the brand plans to augment its design process with AI-powered insights to alleviates the pressure on the designer around creating a mass appealing creation.

  • ASOS

In 2018, the UK-based online retailer developed an AI system to help customers find the right size of garment when shopping online. The smart fitting tool personalizes sizing suggestions based on multiple data sets like customer’s previous purchases and returns, as well as an optional set of questions based on height, weight and fit preferences. The online retailer rolled out the Fit Assistant across 200 markets and is available across ASOS collections, exclusive labels and fashion favourites. This year, the brand partnered with an AR startup to launch an augmented reality catwalk for users of its fashion app. The technology allows customers to view models as if they are walking in front of them by simply pointing their smartphone camera at any suitable flat surface and clicking the ‘AR’ button on the app.

  • Stitch Fix

Stitch Fix is a San Francisco-based fashion startup with a unique sales model. It combines the expertise of personal stylists with insights of an artificial intelligence system to analyze data on style trends, body measurements, customer feedback and preferences to deliver personalized apparel right to their customer’s doorsteps on a regular basis. Once the delivery is done, the customer can choose to keep all of the products or return what they don’t like or need. This input is fed into the company’s AI-powered data vaults to make the algorithms even better at determining the preferred style for each person and current trends. The brand also uses data to create its own designs known as Hybrid Designs. The system works by disassembling attributes of style such as color, arm length and neckline, etc. It then analyzes the feedback and customer sentiments available for each of these attributes and mutates them slightly to create new designs to share with human stylists.

Way Forward

While AI has proven its effectiveness in improving all aspects of fashion retailing, it’s impossible to remove the human factor from the equation.  When they work together, the results are supercharged productivity, better customer engagement and higher profits. This trend clearly indicates the evolution of AI as an Augmented Intelligence rather than an Artificial one.