The entire retail industry has been hearing a lot about how consumers want personalized interactions with the retailers they choose to shop with. Over the years, RSR benchmarks have developed a more nuanced understanding of what personalization really means, from our 2008 finding that over 25% of retailers sought to “use customer data to provide personalized communications” to our most recent benchmark study, which pointed out that “for retailers, personalization may well not be the right objective… their sights are currently set on establishing relevance…they may not need a true 1-to-1 communication from their favorite brand – but if that brand does try to reach out, then the communication (and the offer it holds within) must be relevant.”[1]

McKinsey & Company has come out strongly in support of the compelling value of offering more personalized interactions with consumers. In 2021, the company conducted a consumer research study that revealed that, “… 71 percent of consumers expect companies to deliver personalized interactions. And 76 percent get frustrated when this doesn’t happen. Ratcheting up the pressure on companies, if consumers don’t like the experience they receive, it’s easier than ever for them to choose something different. Three-quarters of consumers switched to a new store, product, or buying method during the pandemic.”[2]

The imperative for personalization (or in RSR’s parlance, relevance) has become accepted wisdom for retailers big and small – and the good news is that today’s technology platforms are capable of tuning value offers to consumers in ways that frankly weren’t possible 30 years ago when Don Peppers and Martha Rogers published their seminal book on customer relationship marketing, entitled The One to One Future — Building Relationships One Customer at a Time.

But what we have also learned as we continue to observe retailer adoption of customer-centric strategies is that personalizing the value proposition and offering a more high-touch store shopping experience are not the same thing at all. In fact, results of a recent survey we conducted indicate that a lot of over-performers (“Retail Winners”) are “unclear about the value of customer engagement to our business model” (39% compared to 20% of average and under-performing retailers).

There may be a lot of reasons for this. For one thing, consumers nowadays are armed 24X7 with a wealth of information about products and services via their mobile phones. As if to highlight that reality, the recent survey revealed that almost one-half of responding retailers say that “consumers have more access to product information than we can provide in stores”, and approximately 1/3 of those retailers also believe that “consumers want more self-service options”.

That can hardly be a surprise: most consumers know what they want, where to get it, and how much they should expect to pay, before they walk into a store. For most consumers, the digital domain is where they browse for products, while the store is where they transact. That’s a 21^st Century adaptation of the self-service model that first arrived on the scene in 1879 when Woolworth’s opened its first self-service store in the U.S. (where “customers could touch and hold items before deciding to buy, and collect up their purchases at each counter before paying the assistant….”[3]).

So, the question is, how should retailers think about the “next-gen” store or the employees who would work in that store? Retail Winners seem focused on refining the self-service model in the context of a seamless digital+physical shopping journeys. Their top-two “highly valued” opportunities are “having stores meet more fulfillment-center-style tasks” and “moving towards cashierless stores”.

That is not to say that retailers are abandoning the notion of a “high touch” environment. But it does seem to indicate that the direction is towards helping consumers complete their shopping journey rather than to start a new one.

[1] What Makes An Excellent Customer Experience? Customers And Retailers Weigh In, RSR Benchmark Report, February 2023

[2]https://www.mckinsey.com/capabilities/growth-marketing-and-sales/our-insights/the-value-of-getting-personalization-right-or-wrong-is-multiplying

[3] https://www.woolworthsmuseum.co.uk/1950s-firstselfservice.htm