Although the South African retail sphere is currently hindered by a slow economy and weak consumer confidence, technology is presenting opportunities to radically transform the customer experience and boost bottom line sales. Much of the opportunity lies in the ability to collect, analyse and harness data.
By Gareth Hawkey, group CEO of redPanda Software
With this ability, retailers can eliminate tedious on-boarding processes, streamline the customer experience and provide personalised product offerings and services. Yet in order to leverage the many opportunities that technology is presenting, retailers must overcome existing challenges and position themselves for a digitally driven future.
In South Africa, the retail, financial and insurance ecosystems are uniquely integrated like nowhere else in the world. Here, retailers also act as financial services providers – enabling access to credit, insurance, funeral cover and more. Indeed, when buying big-ticket items such as furniture and home appliances, credit is often part of the point of sale (POS).
Notably, South African consumers have become very dependent on credit for clothing and food accounts, and many of the larger retailers even have their own credit houses. From a technology and software point of view, this has required retailers to adopt state-of-the-art financial systems and mobile technology that enables integration of the physical and digital shopping journey.
For retailers, however, meeting this requirement has proven to be difficult. Many local companies are still using legacy IT systems and infrastructure, which do not have the capabilities to integrate new software and to leverage consumer data. With that in mind, retailers have to invest in new technology systems in order to achieve integration and provide a seamless customer experience across all touch points.
Moreover, data security and data management have to become key priorities in light of legislation such as GDPR and PoPIA. Without investment into professional data management, retailers become vulnerable to data breaches, identity fraud and reputational damage – in addition to falling foul of the law.
Once retailers have made the decision to invest in new technology that speaks to the integrated customer experience, the next major step is to gather data from alternative sources and develop a secure database. This process should begin as soon as possible, because data mining takes many, many years to become truly effective.
Once the retailer is able to start gathering data from alternative sources such as mobile phone accounts and social media accounts, retailers can begin to build their own consumer profiles from which to develop personalised credit and product offerings.
With regards to the data collection process, it is imperative that customer insights are fed back into the system to make the data richer – and personalisation more accurate. By gathering and analysing key consumer data, retailers are thus able to gain a better view of the customer (creditworthiness, location, product preferences, etc) and ultimately provide a radically improved customer experience based on accurate individual scorecards.
Ahead of the innovation curve
In addition to building up a database of accurate consumer insights and information, retailers should also be looking to emerging technologies that are beginning to enter the consumer landscape. Within mobile payments, for example, there are currently various options available for consumers.
The challenge for retailers will be around consolidation – and integrating various payment platforms back into the physical POS, mobile and web interfaces. Arguably, retailers should choose a preferred payments provider early on, and gain a head start with regards to integration and achieving a smooth customer experience.
Looking ahead, another emerging area of interest for retailers will be smart contracts. Essentially, smart contracts are self-executing contracts with the terms of the agreement between buyer and seller being directly written into lines of code.
According to Investopedia, ‘the code and the agreements contained therein exist across a distributed, decentralised blockchain network.’ As data security becomes paramount, retailers can leverage smart contracts to enable secure integration and to consolidate various data sources.
As with any major shift within an industry or sector, these changes cannot be achieved in isolation – with only one department or team driving the innovation. Moving to the next level of technology integration will require buy-in and motivation from leadership, as well as a desire to embrace innovation and move outside of existing comfort zones.