The Power of Personalisation: Creating Tailored Customer Experiences in Retail - Part 1

The retail landscape presents challenges for both businesses and consumers. Companies are vying for visibility and trying to stand out in a highly competitive digital environment. At the same time, consumers face an overwhelming array of choices and digital noise, making it difficult for them to decide where and with whom to purchase from.

While essentials like a user-friendly website, a seamless customer journey, and having the right products to meet demand will continue to be fundamental to business success, one area that businesses can focus on to stand out from their competitors is personalisation.

What Is ‘Personalisation’?

When we talk about “personalisation,” we are not referring to personalised products; rather, we mean creating a tailored experience for consumers. This can be achieved through various channels, including websites, emails, apps, and in-store experiences, and ideally, it should integrate all of these.

Personalisation, once seen as just a “nice-to-have,” is now considered a “must-have” for businesses. Just as next-day delivery has become the norm, consumers increasingly expect personalised interactions. In fact, 71% of consumers expect companies to provide such experiences, and 76% feel frustrated when this expectation is not met ⁽¹⁾.

Moreover, personalisation benefits businesses just as much as consumers. Research shows that companies implementing effective personalisation can generate 40% more revenue than those that do not ⁽¹⁾. It helps to increase average order value (AOV), improve conversion rates, and encourage repeat purchases. For consumers, personalisation means receiving more relevant promotions and tailored messaging, which makes them feel valued.

All of this contributes to building brand loyalty – something that cannot be bought and does not happen overnight. Brand loyalty is developed over time through consistent, positive interactions and experiences that foster trust and confidence.

The Power of Online Personalisation

Online sales continue to thrive and are projected to grow, even amid a challenging global economy. In 2024, online sales in the UK were forecasted to increase by 4.5%, reaching £138.8 billion ⁽²⁾.

Personalisation, while not always directly related to artificial intelligence (AI), certainly benefits from the current AI boom. AI has evolved from being the trendy new buzzword just a few years ago to becoming a nearly standard feature across various technologies, including everyday items like smartphones and cars. It is even shaking up the household appliance industry ⁽³⁾. Beyond the home, AI is being incorporated in a number of (if not most) industries, including retail. On websites, it can create customised product selections and deliver personalised greetings and promotions, among many other uses.

Mobile apps are another useful channel for online shopping. Many businesses provide exclusive discounts and promotions for purchases made through their apps. This strategy not only encourages users to download the app but also provides an additional platform for consumers to browse and order. For businesses, apps represent a valuable channel for engaging customers, with features like push notifications, to enhance communication reach even further.

In addition to on-site personalisation, businesses can leverage emails and social media for tailored communication, with the former being used for everything from basket reminders, personalised product discounts and useful post-purchase information, and the latter for targeted ads.

Emails are one of the most widely welcomed and accepted forms of communication. Nearly 75% of surveyed brands use emails for personalised marketing and advertisements, and 69% of consumers prefer this channel. Interestingly, despite 7 out of 10 people indicating they prefer emails for personalised marketing, the open rate for emails is less than 25% ⁽⁴⁾. These statistics suggest that while some may believe using one or two channels is sufficient, engaging across multiple channels is essential for maximising reach.

Is In-Store Personalisation Still Relevant?

While physical store channels can be overlooked in discussions about personalisation, they can still prove very useful.

More retailers are offering memberships or subscription options, which give savings for customers. These savings can come in the form of accrued points, exclusive discounts, or special product offers for members. Typically, these memberships are created and managed through apps, allowing retailers to offer personalised promotions, deals and vouchers, similar to those available in online shopping.

Research has shown that 81% of consumers regularly shop online, while 83% prefer the in-store experience ⁽⁵⁾, showing that the hybrid shopping model is here to stay. In response, some businesses have opened brick-and-mortar stores to merge the convenience of online shopping with the unique experiences only offered by physical locations.

A notable example is Gymshark, which initially built its cult status online but has since opened several physical stores. While some may argue that opening physical locations was unnecessary due to their significant online success and loyal following, the decision stemmed from a design to foster community and provide experiences that cannot be replicated online. The community features they offer include free in-store training classes, which can be booked through their app, as well as open events and one-to-one personalised shopping and training consultations, also bookable via their app ⁽⁶⁾. These offerings enhance brand loyalty, making consumers feel like they are ‘part of the club.’

The takeaway is that omnichannel strategies continue to remain strong and hold relevance. Despite the increase in online shopping and its anticipated growth, physical stores still significantly influence purchasing decisions across various sectors and age groups.

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The Power of Personalisation: Creating Tailored Customer Experiences in Retail - Part 1

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