High street retailers clueless about their customers

Did you know  that home shopping and online-only retailers spend a significantly greater amount each year on IT compared with any other types of merchants. In some cases more than three-times as much.

Home shopping retailers spend more in this stuff

The recent IT in Retail Research report from Martec International for sponsor BT Expedite revealed that non-store retailers have an IT spend the equivalent of 3.5% of their total sales, which compares with an average of only 1.1% across the whole industry. For grocers it is as little as 0.7% and for large format speciality stores it is 1.2% of total sales.

But why exactly? Martec put this higher spend down to the fact that “typically home shopping retailers do a lot with their customer data in terms of personalisation/targeting/suggested selling etcetera, which store-based retailers don’t do because they mostly don’t know who their customers are (by names and addresses)”.

Get to know your customers

If they don’t know them by their names and addresses then it must be assumed that these people can’t be targeted with relevant offers. Since many of these retailers will be multi-channel operators (that also have an online presence and maybe catalogues too), they are clearly clueless about how their customers shop across channels.

This is worrying because retail success in the future will arguably revolve around utilising data. There is ever increasing amounts of the stuff being collected and it can provide retailers with great insight into their shoppers, which can then be leveraged into targetting them with relevant marketing. This can ultimately convert them into high-spending loyal shoppers.

Retailers do at least appear to be on the case as the Martec/BT Expedite report also showed that high levels of funding are expected to be committed to e-commerce and multi-channel projects in 2010/11.

Among the non-food retailer subset, e-commerce was the top investment priority with 24% stating it was their key focus. For all retailers it was second with 17% giving it top priority, whereas the main focus was on store systems, with 22% of retailers stating this as their number one priority. [For a fuller write-up of the report take this link to The Retail Bulletin].

Until this spend fully translates into high street retailers knowing a lot more about their customers then the situation will remain as such: home shopping retailers might be the store-less ones but they are certainly not clueless when it comes to their shoppers.