Two hot trends, personalization and frictionless retailing, are at odds with each other

Discussion
Sep 24, 2019
Ron Margulis

After e-commerce and AI, perhaps the phrases getting the most airtime at Groceryshop 2019 in Las Vegas last week were personalization and frictionless retailing — more so than robots or even mobile. 

Personalization has been the talk of the industry for the last few years, an evolution of the targeted shopper marketing we’ve been trying to get to since before e-commerce was even a thing. But personalization has recently taken on a new and more comprehensive role as the go-to-market strategy for nearly all digital-only and many traditional retailers.

“The amazing computational power we have today is fascinating. You can get personalized so fast,” said Rucha Nanavati, group vice president of information technologies for Albertsons.

Frictionless retailing, to a large degree a spinoff of frictionless commerce, is defined in several different ways — a trademark of a trend in its infancy. It can mean everything from cashierless/Amazon Go-like stores to low-touch processes like scan-based trading. For the purposes of Groceryshop 2019, vendors and practitioners used the term as a bit of a catch-all that includes mobile, digital payment systems and practically any solution that improves supply chain performance, especially in the last mile to the consumer.

At Groceryshop, Ron Bonacci, vice president of marketing & advertising at Weis Markets, explained that Weis tries to get as granular as possible with its supplier and product data to ensure that the right product gets to the right store as efficiently as possible. For instance, he said Weis is “looking for CPG companies to provide 200 or more attributes to help deliver the best actionable insights possible.” 

“Friction is a massive threat to all of our businesses,” added Carlos Garcia, CPG-retail, industry leader at Facebook. “We can’t have loyalty unless we deliver on convenience.” 

On the face of it, these two concepts are at direct odds with each other — almost by definition the more products, promotions or prices are customized, the more friction is created in the extended supply and demand chain. But the bottom-line fact is that this is what the shopper now demands — more for less — and woe be to the retailer or brand that can’t deliver.

DISCUSSION QUESTIONS: How can retailers and their trading partners best reduce friction in the extended supply chain while simultaneously increasing the personalization of offers and merchandising to shoppers?

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Braintrust
"Both terms “frictionless” and “personalization” are tossed around like M&Ms with very little reality behind them."
"To think that personalization and frictionless retail are at odds with each other completely overlooks the customer at the center of it all."
"In most cases we’re not really there with true personalisation — it’s more of a spin on classic segmentation — but this will increase."

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20 Comments on "Two hot trends, personalization and frictionless retailing, are at odds with each other"


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David Weinand
BrainTrust

I don’t necessarily see it that way. Frictionless retail is not a term designed for the retailer, it is designed for the customer. Being able to offer more personalized, curated offers and products will reduce friction for the customer. It most certainly adds complexity for the retailer but that is where technology, training and better processes must be instituted to meet the challenge.

Ricardo Belmar
BrainTrust
Friction in grocery for shoppers is about more than just checkout technology. Sure, an Amazon Go-like checkout experience is highly desirable for shoppers who have experienced it, but perhaps more significant is addressing inventory issues and out-of-stocks. Much of the talk at GroceryShop around robotics and AI focused on leveraging both of these technologies for shelf counts and then using that knowledge to improve substitution rates for picking of online orders. While this makes for great data points in presentations, does it really solve a problem for the shopper who clearly would rather never encounter a substitution in their order at all? The real problem is inventory management of so many tens of thousands of SKUs in the store. Robots and AI applied after the fact once the merchandise is on the shelf is only a partial solution that ignores the real issue – forecasting and overall inventory management. This also has an impact on food waste which received some attention at the show, too, especially after Ocado claimed they have their waste levels down… Read more »
Rob Gallo
BrainTrust

I don’t see this being an “either/or” situation. It’s just another challenge in the evolution of retailing and meeting consumer demands. When consumers wanted more choice, brands and retailers pivoted to take advantage. We saw dramatic increases in flavors, shapes, sizes, etc. This also caused friction in the supply chain and SKU proliferation at retail. In some cases that proliferation has gone too far and curation and personalization are now desired, while also keeping the offer fresh and convenient.

Brandon Rael
BrainTrust

Removing all friction is not necessarily a good thing. However, when it pertains to the grocery and convenience store experience, frictionless — or as close as possible as you can get to it — is an ideal state. It is challenging to drive a personalized experience when your main objectives are to remove all the friction from the shopping experience.

For the rest of the retail shopping experience, there is very much a friction/reward principle in play, and customers actually enjoy the thrill of the hunt, as long as there is a clearly defined path to a reward. For true connections and personalization to take place, companies have to focus all their strategies around how to improve the customer experience across all shopping channels.

With the advantages of the friction/reward metric, retailers and brands could quickly identify those areas of friction and reward that most need their attention, as opposed to the ones that they may wrongly assume need addressing.

Ralph Jacobson
BrainTrust

Today, this discussion is all around technology. I still see organizations of all sizes trying to figure this out relatively manually. There are tools available today that can work seamlessly and without conflict to address these facets of the business.

Ryan Mathews
BrainTrust
I don’t necessarily see these concepts at odds at all — at least in theory. Personalization addresses what is offered for sale to whom while frictionless commerce addresses the seamless physical delivery of those goods and services. Looked at from this perspective, the notions are actually complimentary rather than at odds. Yes, personalization would require more complex systems but — at least from the consumer’s point of view — there is no need for that complexity to be visible. Nobody goes to a freezer case and selects their favorite brand of ice cream based on their intimate understanding of cold chain logistics. Both frictionless commerce and personalization are driven by algorithms, data feeds, and systems. Getting them together is a technological problem. That said, I think it is far easier make transactions more frictionless than it is, at least for mass retailers, to create truly personalized offerings in the old CRM understanding of personalization, i.e., markets of one. That would make the system totally unwieldy. So maybe what we should be rethinking is how we… Read more »
Ken Wyker
Guest

They key to both concepts is to build everything from the customer level up. Personalization is most effective when it is at the individual customer level and supply chain analytics will also benefit from more granular data based on each customer’s purchase activity.

Once you look at things at a more granular level, it dramatically changes the perspective that the data provides. Retailers that adopt an analytic and personalization approach that focuses on each household individually see the underlying dynamics that drive customer purchase decisions. That understanding provides an opportunity to connect with each customer and provide a better experience for them. It also enables better management of the extended supply chain because the dynamics of the demand side (customer shopping behavior) is better understood.

Ken Morris
BrainTrust

When I think of frictionless retail I think of the customer and not the vendor community. I’m less concerned with how to make things frictionless for the supplier and deeply concerned with how to make the customer journey frictionless. To do so requires personalization, real time access and process execution. This harmonization isn’t easy and requires a different mindset. You need to connect the dots in real time, understand who the customer is, what they like (past and present across channels), what my inventory is, what they will pay and execute the required process. Personalization and frictionless retail are not at odds but are required to work together to create a frictionless customer journey.

David Naumann
BrainTrust

Well said Ken! Just because it is difficult, it is not an excuse for retailers. Offering customers what they want, when they want it and with the level of personalization they want is not an option. It is a requirement to attract and retain customers. This will define the retail winners and losers, IMHO

Paula Rosenblum
BrainTrust
Both terms “frictionless” and “personalization” are tossed around like M&Ms with very little reality behind them. Anything that takes the work away from workers and puts it in the hands of the shopper does NOT remove friction. It adds it. And so if, in fact, as a consumer, you’re asking me to bag and scan my own groceries, and maybe even get a random check because you think I might have stolen from you — guess what, that ADDS friction. Anyone who thinks otherwise is deluded. Personalization. I suppose I should be pleased that a major DIY chain has gotten “personal” enough to stop sending me ads for snow blowers in Miami. But to me that’s simple segmentation. And it’s creepier when they send those to me than when they don’t. But by the same token, as I finished searching (unsuccessfully, I might add) for new refrigerators both in stores and online I started getting buckets of emails offering me refrigerators on sale – information I had never asked for. Was it personal? Sure. Was… Read more »
Heidi Sax
BrainTrust

To think that personalization and frictionless retail are at odds with each other completely overlooks the customer at the center of it all. One is a prerequisite for the other. If retailers can use predictive analytics to understand what their shoppers want (personalization), then they can focus on removing friction that prevents shoppers from having it in the last mile.

Shep Hyken
BrainTrust

Personalization and convenience are part of the customer experience. Customers want both. While both are optional (for the retailer to provide), they are not at odds with each other. Anytime you can created the personalized experience you win. Add a level of convenience, you win more. It’s that simple.

Mel Kleiman
BrainTrust

The key point is that you want personalization from the shopper standpoint. Which is all the retailer should really be concerned with. It does not rely on automation, it relies on people.

Yes give your employees the tools they need and keep the right merchandise on the shelves. But personalization is not the last mile, it is the last inch. It is the interaction that the customer has with the employee that determines the real level of personalization.

Doug Garnett
BrainTrust

Two distracting retail myths. “Personalized marketing” is incredibly impersonal. And without friction humans can’t walk on the earth.

All the evidence points to personalized marketing perhaps (and not always) creating higher near-term sales while hurting the long term. It is supported by an obsession with efficiency that destroys retailers — doesn’t build them.

So let’s remember, personalization is merely a tactic — it cannot be an effective strategy.

And friction? Friction is value neutral. As a shopper, I rely on the friction of unloading my grocery cart at the counter to do a final check off what I’m buying — to see if I missed anything or to make final decisions on what to by/not to buy.

“Frictionless retail” is, again, not a strategy. It’s something to choose for situations where it makes sense and to reject where it hurts shoppers.

Casey Golden
BrainTrust
1 month 28 days ago

“Personalized” is not personal. The Experience Economy is projected to be valued at $8.7 trillion by 2029, including 1 billion new affluent shoppers under the age of 35 that prefer experiences over just stuff. The industry will have to get to a 1:1 personal experience for premium brands to meet shopper expectations. In order to do that, retailers will have to build a relationship beyond an email address and treat every shopper as if they are their only one.

Is waiting in line to check out a huge inconvenience or would it be better to make the shopper experience worth waiting for? In Paris, you might wait one hour to purchase a Louis Vuitton bag; is it hurting sales or increasing the feeling of an exclusive experience?

I am a big fan of Eataly in NYC, happily schedule time in my week to visit the store and enjoy the shopping experience; waiting in line to check out is not a bother. Is frictionless the right goal?

Craig Sundstrom
Guest

While I agree with Ron, what seems to be missing here is cost. You CAN do both personal and frictionless — think everyone having their own valet — but it’s enormously costly to do so. At the moment, as we’ve said here often enough, the cost is being ignored as everyone tries to offer free everything, instantly. But in the long run, retailers will have to concentrate on one or the other … or do both, but as high-priced niche players.

Cate Trotter
BrainTrust
I agree with the other comments about frictionless retailing being about the experience for the customer. It’s unlikely that you could ever remove all friction within a supply chain, but the customer doesn’t have to see all those moving parts. As long as their journey to buy something is as smooth and frictionless as possible they’re not going to be concerned with how you did it. I think tech will help retailers at the supply chain end as well, but as ever the focus needs to be on the customer. By that logic, personalisation is a great way to remove some friction. For example, rather than searching through every product a retailer has on its website or in its store, if the customer can get recommended items that are right for them then some friction is removed. In most cases we’re not really there with true personalisation — it’s more of a spin on classic segmentation — but this will increase. Tech can definitely help that — and be an enabler of staff as in… Read more »
Camille P. Schuster, PhD.
BrainTrust

Managing the paradox is the way to success. While both approaches will take a significant amount of investment in time, money, and training, they must intersect for success. If they are pursued and implemented separately, the investment will be wasted.

James Tenser
BrainTrust

A degree of friction has a place in retailing — especially where it enables retailers to get a grip on service. Sitting in some of the GroceryShop sessions, I had the feeling that some proponents of frictionless retailing had neglected to consider what makes store experiences satisfyingly personal.

“Personal” and “personalization” are not equivalent. Personalization engines may be exceeding impersonal, even as they succeed at delivering relevant offers or curated assortments.

As others here observe, a personal experience may require a slowing down of the selection and selling process. Are cheerful greetings from the grocery checker I see every week friction? They may add 30 seconds to the transaction time. Or are they part of the glue that binds me to the store?

Gary Read
Guest

A great way for retailers to increase customer personalization while also streamlining the consumer’s journey-to-purchase, is by partnering with data-driven payment processors. As more retail-oriented payment processors integrate web data into their mobile and web solutions, more consumers will benefit from the customized experiences. In turn the retailer builds brand loyalty, increases customer touch-points and creates a persuasive personalized experience the consumer desires.

A highly personalized shopping experience not only shows the consumer that they are appreciated, but it is also effectively a win-win-win scenario for all three parties involved in the purchase process: the consumer, the retailer and the payment processor. Consumers are pleased with the personalized shopping experience provided by payments processors (such as suggestions on additional products the consumer might also enjoy); retailers receive increased brand recognition and marketing value (and potentially increased revenue) from the additional suggested products that are displayed to the consumers following their purchase; and payment processors enjoy increased traffic (and revenue) in their app by offering goods from any merchant that is a part of their network.

wpDiscuz
Braintrust
"Both terms “frictionless” and “personalization” are tossed around like M&Ms with very little reality behind them."
"To think that personalization and frictionless retail are at odds with each other completely overlooks the customer at the center of it all."
"In most cases we’re not really there with true personalisation — it’s more of a spin on classic segmentation — but this will increase."

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