Insights from industry experts — the future of personalization in retail

In today’s rapidly evolving retail landscape, the key to success lies in being able to deliver hyper-personalized experiences to every customer — on the scale of millions. Personalization helps retailers connect with shoppers on a deeper level, leading to higher conversion rates, increased engagement, greater customer lifetime value, and stronger customer loyalty. But with so many options available to consumers, it can be challenging to know how to approach personalization strategies effectively.

To get a better idea of how personalization affects retailers, Adobe sat down with Eric Gutoski, partner and global Adobe Commerce lead at IBM iX, and Pierre Charchaflian, vice president, senior partner, and marketing transformation and Adobe practice leader at IBM. Both brought a wealth of knowledge and industry experience to the conversation and offered compelling insights and responses to Personalization at Scale: Retail Industry Spotlight, a Forrester Consulting paper commissioned by Adobe. Read on to discover what Gutoski and Charchaflian had to say.

Could you start by telling us a bit about what you do and how you came to be at IBM?

Gutoski: I’m a partner at IBM within our interactive experience group, and my role here is as the global Adobe Commerce lead. I’ve been in some form of digital commerce and all the technologies that surround that for the better part of 25 years and have been involved in the Adobe sphere in one form or another as a partner since 2005–2006.

Charchaflian: I’ve been in the customer transformation domain for almost 30 years, and I’ve been at IBM for about seven. I lead Adobe’s practice for retail and CPG, and my entire career has been in the domain of data technology marketing.

What are some of the challenges to personalization at scale you think might be top of mind for the retail industry?

Charchaflian: Across industries, retailers are leading the way with customer personalization and experience. I think the reason why is that engagement in retail is a lot higher and more frequent than engagement in other industries — people repeatedly return to their favorite retailers. But retailers still struggle with implementing the right operating model that can evolve alongside the customer experience.

The reality is, to remain competitive you need to create an operating model that keeps the customer experience from becoming stale. It’s not set it and forget it. Someone needs to own the customer experience by putting a budget in place and defining the ROI for the personalization initiatives that drive that customer experience.

What advice would you give retailers looking to implement an operating model for personalization?

Charchaflian: I’d say break down that operating model into four pieces.

#1 — Ownership of the customer experience. Who is responsible for it?

#2 — Data. How is data flowing through your tech stack to enable personalization at scale?

#3 — Analytics. How do you combine and sift through thousands of product offer combinations? It’s impossible to do so without analytics.

#4 — Collaboration. You need alignment between technology, business, and analytics teams. Can you continuously work in an agile fashion and bring in diverse skills? Personalization is not so much a technology and strategic challenge as it is an execution challenge.

Are there any challenges that stood out to you in the Forrester spotlight report?

Gutoski: What stood out as a bit of a surprise to me in the report was the gap between consumer expectations and how well consumers think retailers are meeting them. While 73% of customers across industries want fantastic, personalized experiences, only 18% of retail consumers said that the retail companies they’ve interacted with recently have met that standard. It’s challenging because as a retailer, you’re not just competing with your direct competitors. Customers are measuring their experiences with your company against every other digital or omnichannel experience. For example, once Uber set the standard of pressing a button and getting a car to show up, the game changed for everybody, and the expectation became seamless digital experiences.

What would you say is the biggest challenge to bridging the gap between customer expectations and experiences?

Gutoski: The more progress that’s made with personalization, the more complex the problem becomes. You need to have quality content at the ready. If you don’t have something to entice a customer or prospect, it doesn’t matter how much you know about them and where they are on their journey.

Content used to be much more static. Now channels keep expanding, and it’s only going to get more complex. Retail media and advertising agencies are just one more channel to push content through. Not to mention all the other social channels, which don’t stay static either. What piques someone’s interest on Facebook or Instagram is different from what grabs their attention on TikTok.

Orchestration is another challenge, and that comes through in the report as well. One thing I’ve witnessed with the organizations I’ve worked closely with is that they’re well invested — if not overinvested — in point solutions, but they tend to be underinvested in the orchestration to make it all work together. These aren’t mysterious or new problems, but they’re persistent.

What advice would you give retailers looking to use data and insights with content and journeys to start delivering more personalized experiences?

Gutoski: I think the brands that have the most success are honest with themselves about the magnitude of the challenge. They put together strategies knowing that they’re going to have to connect customer data, product data, and transactional data. They think about a phased approach to get them to the North Star of where they want to be. A solid plan measures progress incrementally. I think the organizations that are less successful are ones that view personalization as a giant moonshot. These are multi-month, maybe even multi-year projects. Successful brands are also transparent with their leadership on what that effort is going to look like and what kind of results they can expect.

Do you have any basic advice for retailers, no matter where they are in their personalization journey?

Charchaflian: Even if you don’t have a customer experience point person within the organization, even if you don’t have your technology stack fully developed, you can still experiment with artificial intelligence (also known as AI) and analytics to create small wins. I believe that’s where companies will get the biggest bang for their buck.

Many companies are organized around marketing campaigns and don’t realize that a campaign can also be a personalized experience. For example, what if online grocery shopping customers land on a page that looks exactly like their fridge based on prior purchases? It’s as simple as clicking on the items that need replenishment. We need to put ourselves in the shoes of the shopper and start using data to predict what they want.

Gutoski: I’d add that you always want to make sure you have the C-level or board-level leadership support you need to sponsor your personalization programs. Best practices include cross-functional pilots — the kinds of things that you would do to achieve quick wins. There’s more transparency, and it’s easier to see these quick wins along the longer timeline.

What could be some of the main opportunities that retail companies enjoy when they prioritize the customer experience?

Charchaflian: I think it’s time for AI to start delivering on the promise of predicting customers’ needs. How can data be leveraged to optimize the variety of messages to put the most relevant, personalized, and value-added offer in front of the customer? I think that is the number one frontier opportunity that’s under-leveraged.

Gutoski:

In a world where customers are becoming more cost conscious as well, what do you do besides a race to the bottom on price to keep those relationships and keep them coming back? The answer is always going to be personalization and the value of service that you provide.

Charchaflian: Discount Tire is a great example of this type of personalization at scale. They’ve created a concept called Pit Pass to transform and personalize the tire-buying experience. With the help of AI, the customer can order the appropriate tires online, book an appointment, and simply drive into the bay where the tires are waiting. You don’t even need to get out of the car. They’ll put your new tires on, and you’re ready to go in 15 minutes or less.

What is your vision for the future of personalization in retail?

Gutoski: I think we’re already beginning to see it with retailers going beyond discrete transactions and instead deepening relationships with customers. In addition to products, maybe we start to offer products as services — so we move from transact to contract, from ownership to usership.

Charchaflian: You’ve got to knock your customers’ socks off with a personalized customer experience.

Look at retail media networks, which are the ability for retailers to monetize their websites with ads. Amazon generates $40 billion in ad revenue on its website. They’ve taken a customer relationship and monetized it beyond just the goods and services that they’re selling. How you build and personalize the customer relationship is a critical building block for that monetization. The other is trust, and with those two things a retailer can own their destiny.

Thrive in the future of retail

Whether it’s using AI and machine learning to analyze vast amounts of data to provide a more tailored shopping experience or using augmented reality and virtual reality to give customers a truly immersive experience, the retail industry will continue to focus on deepening relationships and creating emotional connections.

Together, Adobe and IBM are here to help you find new ways to connect your data, content, collaboration, and journey initiatives — all so you can deliver meaningful and engaging shopping experiences for your customers. Whether you’re trying to implement small changes to enhance customer loyalty or looking to transform your entire retail experience, our next-generation technology can help you take the first step toward success.

Check out how we help leading brands transform their experiences and succeed with personalization every day by visiting the retail industry webpage.

Get a closer look at industry trends and insights in the Forrester report Personalization at Scale: Retail Industry Spotlight.