“Increased customer insights can improve efficiency, sales, and customer satisfaction”

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“More customer insights, can improve stores efficiency, increase sales, customer satisfaction, and loyalty”, says Annelie Gullström, business development manager at AMF Fastigheter in this interview.

How do you see the future of physical stores in competition with the growing e-commerce?

“The reports give a consistent picture, namely that the physical store will survive, albeit in a changed role. Many even claim that it will become even more important as we become increasingly digital. Historically the physical store was primarily a distribution and sales channel, while it is now more moving towards the focus on strengthening the brand, and acts as a marketing channel where brands can interact with their customers. However, one does not despise the other. We will see a mix of different types of stores.

Furthermore, studies show that the so-called Halo effect, the connection between the physical and digital store, is strong. A physical store can lead to increased traffic to the web with around 30–40 percent. Studies also show that the physical store affects brand awareness positively and also that the closure of a store both reduces traffic to the web and brand awareness.”

Do physical stores have a future in the city centers?

“Many argue that the role of the mall will change from being a place for shopping to a meeting place, given digitization, changed customer- and buying behaviors. Like above we see that the store is increasingly changing shape. The store will also be incredibly important for creating vibrant neighborhoods, where you offer inspiration, experiences, and new types of service/services.

Thus, I am convinced that physical stores will be a very important element in the mix in our cities and city centers also in the future. 

There are certainly differences depending on where in the country you are. Where people work will of course also have some impact on this. During the Corona crisis, more employees have worked from home, and retail outside the city has thus gained an upswing.”

How does the Corona crisis affect the viability of retail?

“In the wake of the pandemic, the natural flow of visitors to city centers malls and stores has changed. As a result, many physical stores have experienced reduced sales while e-commerce clearly got a boost. Consumers of older age, who previously did not shop online, have done so now which added a new audience. Above all, we see this in groceries. In some places, there is a reported increase of 700 percent in the older segment.

At the same time, there has been a break in shopping in general during the crisis, many are waiting to shop at all, which means that several e-retailers have also been affected negatively by the Corona crisis. 

In addition, many have shopped cheaper in general, so we shop not only less but differently during the crisis. In parallel with that, many brands are challenged and have problems with liquidity. We also see that new creativity is born. Many come together and find new ways to collaborate. We can see new digital solutions, where online and offline are woven together.

At AMF Fastigheter we, for example, were quick to set up a physical service for everyone at our shopping centers, where consumers can call for help and have the purchased foods sent home to the door. This has been much appreciated in these times. We also see stores that move parts of their supply and sales outside the store.

Even though it is now extremely tough for many retailers, I also think that something good can be born out of this. We will see new exciting creative solutions and new types of services, but also new consumer behaviors.”

What measures need to be taken to make the physical stores flourish again?

“We naturally hope that the infection curve continues to fall so that the visitor flows can return to a more normal degree. But when it comes to development going forward, there is no one-sided solution to lean on. It will rather be about a combination of different things. What everyone is talking about today is that the focus on the experience is becoming increasingly important to attract visitors to shopping centers. Many people talked about this before Corona, but I think it will be accentuated even more when we so slowly return to some form of normalization. The very purpose of the store and why visitors should go there are changing.

I also believe that many will realize the value of a well-functioning and developed e-commerce and that online and offline can reinforce each other. But it is also about building an increased understanding of different types of customer behavior by working more data-driven to learn more about the customers and their needs. This has been done for a long time in terms of web development when it comes to e-commerce, where most companies have an iron grip on how customers behave. Their preferences, various frequencies, who they are (demographics), and more. Here you do not have to the same extent the same control in the physical store. This is because physical stores have not had the same technical support for it. Plus the fact that it has traditionally simply not worked that way.”

What is stopping them?

“The challenges can, for example, be time, money, and knowledge. The challenges are probably different depending on the type of retailer we are talking about. The small brands with one or a few individual stores probably have not the same power and muscle that the large chains have, when it comes to investing in technology and working with analysis.

On the other hand, they may find it easier to test and experiment with different types of events and exciting collaborations. So there are many ifs and buts here depending on the company and what we are talking about implementing – everything from experience-driven activities, marketing, technology investments, the use of new technology, digitization in general and payment systems, and more. We must not forget that everything is more complex and less predictable today. None of this is simple.”

How do you view the stores’ need for increased insights into visitor behavior?

“I think it also varies. But it goes without saying that the more you know about the customers, who they are, what they do, how often they visit the site or store, and what they think, the better you can adapt your offer. Without knowing exactly, I guess you have a greater value in understanding this if you are a larger chain with many stores and well-developed e-commerce. There, the leverage will be larger if you make small adjustments that increase sales or other conversions. It will also be more complex for these companies as more data needs to be analyzed. If you are a small company with only one store, then maybe it is easier to keep track since you meet all the customers in a different way.

We can draw a parallel to how e-commerce has developed. About 20 years ago, people mainly looked at the number of visitors and judged success after that. Then you started adding more and more metrics, such as bounce rate (how many came in but bounced out immediately), the time you were on the site, what links or tabs you clicked on (interest), conversion rates (buy/sign up) and so on. After this, they started working more and more with so-called A / B tests to understand different messages against the customers and see which one was most interesting and gave the best results. They started by constantly optimizing the site to facilitate and simplify every click for the customers.

The important thing is that it is about making it easier for customers to do what they want. Making it easy for customers increases the chance of better results. 

The large well-established e-retailers today are complete stars in this. Much of these types of analysis and working method lays the foundation for success. This is where the physical stores lag behind. Here you traditionally measure the visitor flows, ie how many visitors enter the store and how they walk around. The rest is unknown.

We are not really there yet, but more and more people are saying that it would be valuable to understand more about the customers in the physical stores. I am convinced that we will see new types of technologies and system support that support this development.”

Which insights are most important?

“Based on my role, I think you can get a lot of inspiration from how they work in e-commerce. It is largely about understanding who the customers are and how they behave. That is, how often they visit a store, if they always go to the same store, or if they switch between different stores.

It is possible to measure indefinitely, but it is important to be clear about why you are measuring and what to do with the insights. All data must be analyzed if you are looking for value. Then there must be a receiver acting on it the insights, changing something, measuring again, and see if there was a difference. It is about a new way of working and many times about a new skill that is needed.”

What gains could new and more insights bring?

“Broadly speaking, I would say that it is about becoming more efficient and increasing sales, customer satisfaction, and loyalty. You increase the chance of higher satisfaction if you do the right things for your customers, understand what they want, and how to simplify the store visit.”

How do you view Indivd’s anonymization technology?

“It seems very interesting. At the same time, for natural reasons, facial recognition is a sensitive area. It is easy to draw parallels to the surveillance system in China, where the purpose of the technology is very different and does not rhyme with our values ​​in the West.

There is a great fear of being monitored and uncertainty about how the information is used. Since Indivd’s technology has now been tested and approved by the Swedish Data Protection Authority, then it can be the start for an improved and more sophisticated measurement for many brands with physical stores, and maybe even more for those with both physical and digital stores.”

With the Data Protection Authority’s approval and a green light for Indivd’s anonymization technology – are you yourself interested in this technology?

“It has been a prerequisite for us that bodies such as the Data Protection Authority, and others, first approves the technology and its application. It is also important for us that the technology is regulated so that companies cannot use it for other purposes. When this now has clarified, it may be interesting to explore how the technology can contribute to improving the customer experience and the development of physical retail.”

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