Is the new “pretzel-shaped” consumer journey tying your retail strategy in knots?

John Squire

By John Squire, CEO, DynamicAction

The retail industry has been turned on its head in today’s digitally enabled, omnichannel world. High-street names such as Debenhams, LK Bennett and Bathstore are entering administration while online giants plot physical growth by being faster, more convenient, and offering a completely new experience for consumers. aims to open 1,000 stores per day in China and Amazon Go stores are tipped for vast US expansion.

These seemingly contradictory changes in retail fortunes reflect a shift in consumer behaviour that leaves many retailers struggling to react fast enough to accommodate. Clearly, remaining in this industry hinges on a complete understanding of consumers’ desires and the ability to nimbly respond to rapidly evolving shopping trends.

However, the pretzel-shaped customer journey that flows from digital to physical and back again isn’t easy to follow and act on when trying to reach every consumer with a distinctly relevant experience.

So, what can business leaders do to prevent a digitally and physically intertwined customer journey from tying their retail strategy in knots?

Rapid adaptation is the only option

Greater choice and accessibility are transforming the shopping experience; empowering consumers to research, buy, and return at every interaction – whether in store or via a multitude of digital devices and channels. With 3.9 million companies vying for consumer attention and wallets in Europe alone, ambitious leaders know that establishing what shoppers actually want, delivering truly customer-centric experiences, and still operating profitably is vital to staying in business.

Data is, of course, essential to feeding the immediate insight needed to operate the business in this way. Consumers now create a vast and incredibly complex digital trail with every click, purchase, loyalty credit, impression and basket addition.

With a thoughtful approach to collating and analysing this data, retailers can quickly identify how to boost engagement and profits, pinpointing the best way to match individuals with relevant products across their journey – whatever twisted route they take. In doing so, retailers boost the value opportunity of every purchase – that is, as long as they deploy the right insight generation systems and metrics to guide better decisions.

New habits, new metrics

Traditionally, two core factors have driven retail decisions: build great stores and fill them with amazing products. Tracking customers has always mattered, but in-store measures — such as foot traffic and product sales — have typically acted as a proxy for customer trends, needs and behaviours.

However, in the era of the Retail Pretzel, store like-for-likes are not enough to accurately decipher organisation-wide performance and promotional relevance. The new interwoven retail dynamic requires more precision and speed to respond to competitors’ always on, always open, always present shopping experiences.

Firstly, retailers need to narrow their focus when it comes to acquisition and retention efforts by relentlessly evaluating customer profitability. Not all customers are equal — the top 10% can often make up 50% or more of a retailer’s profit, while new customer acquisition can cost up to five times more than keeping loyal customers.

To optimise the business cost of returns and minimise wasted funds, retailers must leverage metrics that help calculate long-term customer profit — instead of short-term revenue gains — to determine who they should strive to acquire and retain. For example, this might involve tracing the total number of orders versus item returns made by a specific customer to assess their lifetime profitability, and whether they are worth including in exclusive offers to foster loyalty.

Secondly, it’s vital to ensure those carefully selected prospects and VIP customers are effectively engaged over the long term, and that requires a consistent emphasis on customer-centric experiences. Retailers need a detailed view of how individuals are exposed to their products and brands, as well as the impact of each interaction online and in-store. Only with an accurate picture of what is working and what isn’t at the unique consumer level, can a retailer take precise action to deliver meaningful results.

Using new metrics that are at the intersection of the product and customer experience – like views availability, which measures how many of the products customers view are actually in stock – enables retailers to decrease online shopping friction. Meanwhile, tracking products frequently bought by high-value customers provides essential insight into interests and product line requirements, helping retailers deliver tailored offers that drive both results and knowledge of the items that drive profits.

Today’s consumers are demanding and their interactions with retailers and brands are increasingly complex. But there is a light at the end of the tunnel: the means to unravel the knot and understand how best to serve the modern customer is at every retailer’s fingertips.

By using connected data with retail-oriented prescriptive analytics, retailers can go beyond conventional averages and simple metrics to focus on the core elements that impact profit and consumer lifetime value. In doing so, retailers can use the extensive pool of intertwined data to their advantage, ultimately overcoming the pretzel-shaped consumer journey.