How Retail Brands are Adapting to the Dual Forces of Disruption and Accelerated Transformation

Future-proof your business so you can thrive in this new frontier of consumer interaction and expectations.

PUBLISHED: 8/4/2022

2022 is not over yet, but with the amount of disruption retailers have experienced this past year (really, the past two years) coupled with the stress felt by consumers, we would all like to find ourselves in a better future state soon. However, the only way out is through. So let’s tackle it together.

 

The three key disruptions hitting the retail industry are:

 

1. Changing privacy regulations and growing consumer distrust

2. Inflation and the looming threat of a recession

3. Supply chain and sustainability issues

 

Despite barriers to overcome, these disruptions have forced brands to accelerate their digital transformation.

Below are various tactics to solve these three challenges so brands can future-proof their businesses and create a foundation to take them into this new frontier of consumer interaction and expectations. 

Plus, make sure you get on our list! Sign up to receive MERGE’s latest insights for retail brands—and acquire our upcoming white paper “Top 22 Must Do’s for 2022: How to Future Proof Your Retail Business.”

#1. Changing privacy regulations and growing consumer distrust

Shift from reliance on third-party data to true ownership of first-party data through connected products.

The effects of the COVID-19 pandemic have led to the fast-pace ushering of QR codes and connected products into the hands of manufactured brands. It’s important for these  brands to invest into this next owned media channel because it will not only sell their product, but will also create a direct line of communication between their brand and customers. 

“A significant amount of both apparel and CPG brands are already testing or have already jumped in with both feet,” says Keith Turco, Chief Growth Officer at MERGE. “Brands that incorporate connected products into their organization are more likely to succeed in this new era of privacy restrictions and hybrid shopping experiences.”

For example: if a manufactured brand utilizes QR codes on their physical products, they will immediately receive all downstream information the customer provides through the purchase of the specific, serialized QR code. Then, with the customer’s permission, the brand receives the customer’s unique preferences (and more depending on what data is collected at the moment of purchase. This allows retailers to build an up-to-date, 360-degree picture of their customer over time. 

Previously, this information would come together through the use of multiple marketing technology stacks and channel integrations – however this is an outdated strategy and, in a world where third-party data is becoming stricter to attain, connected products offer you first-party data for free. Even better, they offer you first-party data with a profit. 

Foster trust between your brand and customers through email personalization.

Email marketing is one of the oldest running digital marketing channels and is fully capable of adapting to the new “Mail Privacy Protection,” introduced by Apple in 2021.

The safety feature was created to address security concerns for users and, as a consequence of this change, email marketers are no longer able to optimize for open rate metrics. However, this has since become  a blessing in disguise for marketers who now must truly focus on the experience they are designing and delivering to their customers—rather than simply trying to achieve a gold star with high open rate KPIs.

This has proven valuable for retailers and marketers alike as  email is the most trusted form of communication, with 77% of consumers choosing it over other online channels. If you’re a retailer or a manufactured brand  looking to grow your subscriber base, begin by designing a personal experience immediately at the opt-in step. Ensure this process is simple and allow users the ability to choose what information they want to disclose. Then, use the first-party data you’ve acquired to create personalized, dynamic experiences that offer rewards to your subscribers. 

Through this exchange of trust, not only does your subscriber give you valuable data, but their life-time customer value grows exponentially.

Plan for the Google Analytics 4 (GA4) migration and use advanced analytics to combat data privacy.

GA4 is a major upgrade that allows brands to collect and enrich their 1P (first-party data) in a safe way. Google Analytics 360 is the enterprise version and has a license fee, meaning GA4 will be the only free option from Google beginning July 2023.

GA4 does not collect personally identifiable information and Google prohibits marketers from sending or storing information in the database that could be used to directly identify an individual. This includes names, usernames, email addresses, mailing addresses, phone numbers and GPS coordinates. GA4 even goes a step further by refusing to collect or store IP addresses.

However, GA4 allows brands to find the right  balance of user privacy and convenience based on your customers’ desires and Google’s regulations. With just under a year before GA4 becomes the only available option for Google Analytics users, retailers need to begin planning their migration now. Check out our GA4 webinar to understand your privacy options in advance and prepare for a successful migration. 

#2. Inflation and the looming threat of a recession

Employ instant offers and authentication with connected products.

Retailers should always look for ways to delight their customers. One intuitive way to do this is instant offers included through connected products. Imagine an in-store customer debating over the purchase of  a new product that they love. Should I spend this much in today’s economy? By employing an instant offer, the shopper can scan the product’s QR code and discover an offer for 20% off the specific product on the landing page.

Not only are customers more likely to purchase through this process, but the gamification of an offer definitely inspires delight and customers will remember this the next time they go to make a purchase with your brand.

Additionally, connected products offer brand protection and authentication. As customers become more discretionary with their spending, they want to ensure they don’t waste time or money on a product that isn’t authentic. Currently, many manufactured brands are marketing vintage items (refurbished or used items) and featuring capsule, limited edition collections (perhaps to offset inflation prices of creating new products). Through the use of QR codes, brands have credibility that consumers won’t find elsewhere. 

Loyalty, loyalty, loyalty. Generate an email subscriber base of loyal customers.

Create an email loyalty program that rewards your subscriber every time they engage with your brand and every time they convert. Both components are important to reward—especially during challenging economic times. Your loyal customers will be less likely to purchase as frequently, but consider the impact towards brand awareness by adding points to consumer accounts when they repost on Instagram, leave a review or join a livestream shopping event. Make sure to encourage this through an email drip series. 

Use GA4 to uncover your best audiences.

During the last recession, brands who leaned in and continued advertising in an efficient manner rose to the top and emerged as winners. Through GA4, retailers can finally understand incrementally and answer the age-old question, will customers actually buy this? GA4 analytics provides you with  better media mix modeling so you can target efficiently and not waste advertising dollars. 

For example, you can determine if users who saw a YouTube ad then searched Google had an exponentially higher conversion lift versus those who didn’t perform a search. From there, you can target your high-value audiences and avoid putting money towards those who won’t convert.
 
#3. Supply chain and sustainability issues



Connect to where your customers are—and give them what they want. 

In-person and online shopping are blurring into hybrid experiences with customers who are exponentially more digitally savvy. Brands no longer need to struggle with understanding ‘What do users want? What’s the right message, at the right time?’ because consumers can tell them directly through a rich database of supply chain and connected products. This supply chain data turns into content that is highly valuable and authentic to marketers and consumers alike.

 There are many more benefits to utilizing connected products in your brand aside from the mere mutual exchange of data and marketing. For example, if companies are promoting through the lens of sustainability and can actually prove relevance in this space, not only is their content richer and the consumer pleased, but there are enormous tax benefits and discounts the company will receive via the supply chain transparency aspect of the manufacturing process. 

Additionally, consumers can immediately scan the QR product code and discover where the product was made, confirm it was made in a factory that’s compliant with labor law regulations and verify that the brand adheres to EPA sustainability laws. All of this happens in mere seconds, if not real time, while the customer is standing in the store aisle. Connected products ensure your brand is situated at the precipice of decision-making, turning your potential customer into a repeat customer. 

“Connected products are changing the face of our business. It's actually been in our architecture that we have had since launch that every single product has its own unique digital identity. That’s incredibly powerful to create an authentic connection to the customer,” says Vanessa Barboni Hallik, Founder + CEO, Another Tomorrow.

Adhere to radical transparency and use email as your mode of communication.

If you’re worried about losing customers due to shipping delays or out-of-stock products, then you will definitely lose them if you do not communicate. Remember how email marketing is the one channel users aren’t growing distrustful of? Use that to your advantage and communicate any changes that impact the customer experience of your brand. It is better to have customers that are simply disappointed instead of customers that are both disappointed AND shocked, left to wonder why their product didn’t arrive on time. 

Finally, share the achievements of your sustainability efforts through email marketing. Highlight different sustainable products in a well-designed email that shares specific details, such as water consumption and energy reduction used when compared to competitors. Or, send an email campaign that discusses how your brand is utilizing sustainable raw materials and share products that have accomplished this. 

Reduce inventory risk by relying on predictive modeling.

Determine revenue, product favorability, inventory status and more through predictive modeling so you can properly forecast and prepare your budget for upcoming months. 

Additionally, make sure you set up inventory levels to alert. Whether you have three products left, 10 products in cart, or 20 people looking, by tagging these events on your site, your customers will be notified and perhaps even pushed to purchase so they can snag the product before anyone else. And on the flipside? You’ll be aware of what product you have and can create campaigns without fear of running out of stock. 

It’s time to get smart and use these key disruptions as a way to augment your retail business. At MERGE, we deploy over 2 billion emails a month, implement analytics and modeling strategies for multiple retailers. We’re on the cutting-edge research for connected products with manufactured brands and if you’re interested in accelerating your digital transformation, let’s connect.