You Can Too Use Loyalty Card Info to Help Consumers

I just got an automated phone call from Costco, alerting me to the fact that the Detour energy bars in my cupboard have been impacted by the peanut recall/salmonella alert. We had actually already scoured our pantry for peanut things, but for some reason it just didn't compute that those bars might be impacted - we were looking mostly for kid snacks with peanut butter in them.

Not only was it great that Costco actually used my purchase history to do something useful for me, but they did it literally just in time - I called my husband to let him know, and he had one of those bars in his briefcase. Costco even gave me the website info I needed to get replacements from Detour (since those things are pretty pricey).

So, don't tell me you can't do useful things for consumers with the information you collect on them. Do you know how much I appreciate Costco right now? That call was worth at least another year on the membership...

How Will Consumers Respond to Suddenly Targeted Ads?

This week, RetailWire posted a story on Infosys' new "ShopperTrip360" for comment, and got back a lot of negative comments (myself included, I guess). You can read the description on RetailWire for what it is and what it does (registration is required). But the topic got me thinking, because a lot of the negative reaction came from people worried about privacy and consumer reaction to an invasion of privacy. Someone commented to me that if people only knew how much data is collected about them already, they would probably freak out about it - let alone the degree of tracking that the ShopperTrip360 proposes.

But the thing is, no one really does anything with the data - so no one REALLY notices how much data is collected. So what would happen if retailers really started earnestly using the masses of information they collect about consumers? For example, I get coupons in the mail from Target. For a long time, I just tossed them. 90% of what was in there didn't appeal to me. Then all of a sudden I got a coupon book that I thought was just great - about 2/3 of the offers were for things I buy. I was pleased - "They're paying attention to me!" I thought. But I also realized that it probably meant that Target was actually mining my purchase history to determine what offers to send me.

That's not too disturbing. Anyone who doesn't realize that this is what that loyalty card is really for is only fooling themselves. But if retailers started acting on data that customers didn't really realize they were collecting. If, for example, Target suddenly started sending me offers based on my online browsing history, the suddenness of that relevance might come off as creepy.

Am I really going anywhere with this? Only to say that despite an overwhelming desire to get more relevant with consumers, it probably doesn't hurt that we seem to be moving at incremental speed. Moving from mass to 1:1 overnight would probably just scare everyone away.

Cart Observations

A Canadian newspaper ran an article on smart shopping carts titled "High Tech Shopping: Smart carts assist in purchases but raise surveillance concerns". I hate these kinds of articles, where they trot out Krazy Katherine Albrecht to spout some paranoia about all the insidious ways that retailers and technology companies are conspiring to tag you and track you. It's almost irresponsible reporting.

This is a stronger stance than I usually take on the topic, but I just completed a new survey on customer data and loyalty programs, and when I compare reality to Albrecht's fantasies, the gap is planetary (as in, she must be living on a different planet). The standout statistic from the CRM report? Barely 20% of retailers who took our survey (out of a total of 90 respondents) strongly agree that they know who their best shoppers are - let alone any of them at all. And retailers are less concerned about collecting more microscopic details about their consumers than they are with getting any kind of insights from the data they already have. (By the way, the study results will be available on RSR's homepage Wednesday morning.)

But I take issue with several other fundamental concepts that came up in the article. First of all, retailers don't have to offer shopping carts. A shopping cart is not one of our "inalienable rights" as consumers. Retailers offer them as a service, and believe me, after looking at what putting a small computer on top of a shopping cart can do to a cart (like knock them over in the wind, bending the frame), or all the ways that companies have come up with to try to corral carts, or all the door dings on my car from carts - they are pretty close to being more trouble than they're worth. If a retailer uses a tracking device of any sort on a shopping cart, they should absolutely disclose it, but if you don't like it, then don't use the cart.

Second of all, retail stores are only semi-public spaces. They're not like the park down the street. They are owned and operated by a company. Again, the retailer should disclose how and where they track consumers in stores (if you're sniffing cell phones and using triangulation to track location and you're not being up front about it, you deserve all the wrath that people like Albrecht can bring on you).

But if consumers don't like what the retailer is doing, they can take their purchases elsewhere. If the market for anonymous shopping gets big enough, then there will be some kind of entreprenuerial retailer who steps up to fill the need. Because for the most part, consumers seem more than willing to trade some personal information if it gets them better deals and relevant offers. I'm sure there's a study out there somewhere that supports it, but even if there isn't, the continued persistance of club cards and loyalty programs is evidence enough. If consumers didn't like them on at least some level, they wouldn't sign up for them.

The Re-convergence of Media Brands and Retail

In May, Disney quietly reacquired the Disney stores from Children's Place - the company it had sold them to in the first place. This was after a wild ride in the '90's for media brands - who rushed into the world of retail amidst the emergence of trends like "retailtainment" and "experiential retailing". You couldn't go to a mall without hitting a Warner Brothers store or a Disney Store, and there were several other media companies that tried - Paramount and Nickelodeon come to mind.

The idea was to build a local place where consumers could experience some of their favorite characters, build a closer affinity to the media properties, and in turn spend a lot of money on merchandise. I happened to see this evolution first-hand while I was a consultant at PwC - I was working on an IT Strategy for the Nickelodeon stores when they made their attempt at retailing in the late 1990's. The sad truth, at the time, was that the 20-30% in licensing fees that the studio could get were a heck of a lot more - and with a heck of a lot less capital invested - than the 3-6% the retail stores would return. The stores team argued in vain that there was a lot more at stake than just the return - there was an untold return when you looked at it from a marketing and brand engagement perspective. The problem was that at the time they weren't sophisticated enough to get a lot of customer data or market basket analysis out of their customer purchase history - so they couldn't prove it.

Times have changed, and I think Disney's reacquisition of the retail arm of the brand demonstrates that. With the combination of online and in-store, you can get an enormous wealth of customer information, and the analytics tools are strong enough (they almost always have been, actually) and user-friendly enough (something they haven't always been) that you can get a lot of insights about your customers these days. Disney has shown signs of understanding that it's about more than just sales - I read somewhere about their strategy in the UK, and how they are much more willing to deal on content distribution because they know it helps drive the merchandise, and all the derivative forms of content that go with it - like live shows and special events.

However, I will say that I think the stint that the Disney Stores did with Children's Place was good for the stores. Children's Place ran those stores not as a brand extension of a media property, but as a place to get great clothes and fun toys, which all happen to be coated with the characters that your kids love. And that's the challenge for all of these media companies as they rethink their retail strategies - how to balance the function with the brand, while ensuring that they are measuring the primary strategy behind stores: increase brand engagement.

As a famous media property once said, "We have the technology." The time is ripe for these stores and this strategy to pay off.