In today’s challenging retail environment, retail brands need to offer highly personalized customer experiences to differentiate themselves and gain customer loyalty. The hyper-personalization trend is still emerging and is likely to impact the entire distribution chain, including packaging and delivery solutions.
Hyper-personalization is more than calling customers by their names or keeping track of their preferences: it’s about using real-time data combined with customer behavior data collected from various sources. In doing so, retail brands fully understand who their customers are and can offer them a customized shopping experience tailored to their unique tastes, needs and interests. And this, whether they are shopping online or in a store.
71% of consumers feel frustrated when their shopping experience is impersonal, and 91% say they are more likely to shop with brands providing offers and recommendations that are relevant to them*. It’s crystal clear: retailers need to create unique shopping experiences to stand out from the competition, foster customer loyalty, and ultimately increase revenue.
An emerging retail trend
In the footsteps of online pioneers like Amazon or Netflix, some retail brands have already made significant progress in offering personalized products, services and messages for their customers. Starbucks, for instance, has developed a real-time personalization engine that produces individualized offers for customers based on their previous behavior and preferences. Another great example is Sephora’s truly omnichannel personalized shopping experience. By combining consumers’ online and offline data, Sephora allows clients entering a shop to receive guidance according to the products they ordered a month ago online or a product they virtually tried on their app!
Packaging, a key customer experience component
As hyper-personalization in retail becomes essential, brands need to pay more attention to their packaging and delivery solutions. Especially e-commerce players, as this is often the first physical interaction a customer has with a brand. “Packaging is a core ingredient of a brand image, especially in the luxury and cosmetic sector”, says Alexandre de Beaupuy, FM Logistic Beauty & Luxury Development Director. “It should reflect brand vision and values but also be consistent with the customer’s buying experience in the store.” Retail brands also need to respond to consumers’ growing concern for environmental issues with innovative sustainable packaging solutions, such as refillable or biodegradable packaging. This enhances customer satisfaction, and, therefore, the shopping experience.
The many challenges of hyper-personalization for retailers
Creating hyper-personalized experiences raises many challenges for retailers. First, they need to offer the same level and quality of hyper-personalization both online and in-store. This omnichannel customer-centric approach requires retailers to invest in the right data management technologies and expertise. Cost is another major obstacle. “Customizing packaging with the customer’s name, company logo or personalized message generates additional costs”, says Alban de Laveaucoupet, Lean Design & Co Pack Manager. “It often refrains retailers from taking the plunge.” Whilst customized packaging is on the rise, especially for e-commerce players, demands come mainly from luxury and cosmetic brands. “Brands pushing the concept as far as tailored packaging are those whose products are of high value or whose reputation is very high, such as luxury goods”, explains Alexandre de Beaupuy. “For a french luxury fashion house, we package cosmetics and perfumes bought on-line in a magnificent white box that unfolds like a magnolia and that contains the customer’s name and a personalized message.” Another main challenge for retail brands is to provide packaging solutions which are both tailor-made and environmentally friendly. A difficult, but not impossible task when retailers work closely with their logistics providers.
Working hand in hand with logistics providers
Brands have indeed a lot to gain by partnering with logistics providers to successfully implement their hyper-personalization strategy. “At our Lean design and Co-pack solution Division, we focus on co-building solutions that are as efficient and as eco-friendly as possible,” says Alban de Laveaucoupet. “We act as a driving force when it comes to sustainable solutions and work with our suppliers to find innovative materials to replace or limit plastic in our packaging.” FM Logistic also works on tailored delivery solutions for online and in-store purchases. “Some LVMH houses offer their customers high-end home deliveries to extend the in-store customer experience, where well-mannered delivery agents arrive at the customer’s home at a specific time, allow time for fitting and return the item in the shop if necessary.”, says Alexandre de Beaupuy. “Zara is another example, for which customer data is collected via an embedded tool on the delivery agent’s phone! We are currently operating this type of delivery for them”.
With increasingly accessible and accurate data available, combined with cutting-edge algorithms and technologies, a growing number of retail companies are likely to embrace a hyper-personalization approach, meaning more and more opportunities for logistics providers. This is clearly just the beginning.