What is Hyper-Personalisation in Retail?

I wanted to write a piece on this topic, as it’s falling into that buzzword territory in retail. We all love the idea of a personalised shopping experience for ourselves, but the world is full of millions of other people, so how can a single brand or store be personal for everyone?

Hyper-personalisation is the 2020’s version of the previous decade’s standard “personalisation”. At its core, hyper-personalization in retail is the process by which retailers utilise shopper data and AI to anticipate, predict, and deliver upon the needs of customers, before the customer themselves.

Steve Jobs, former CEO of Apple, stated

“Our job is to figure out what they [customers] are going to want before they do… People don’t know what they want until you show it to them… Our task is to read things that are not yet on the page.”

In this Steve Jobs quote, he is not really talking about the customer as one unique special customer out of several million. He is probably thinking of the customer as one homogenous hivemind, broken down into maybe 10 or 20 easy to understand chunks by age and gender profile. There are teenage customers, middle aged, and older, and products should be brought out tailoring to each, in order to remain relevant cross-demographic, region, and economic stratum.

Most retailers today are rich in data. A brand’s E-commerce and Social Media teams should have a great understanding of their shopper through cookies and clicks, purchases and feedback through the website, but also how the public perceive your brand through social channels, in contrast to your competition. Big data combined with AI has, in the last decade, been seen as the answer to hyper-personalization. Our brand has all this shopper data; let’s now use AI tools to compartmentalize everything and this will show us who we are and where we need to improve. 

Social media savvy consumers (excluding paid influencers) will highlight brands for their best products, the overall vibe of their in-store experience, the impact of staff, and much more. This is the power of the connected world and many brands suffer from a perceived lack of customer care in the eyes of the modern clued-in shopper. People will generally tell you what they think of you online. Are you a cool brand? A responsible brand? A cost-effective, yet good quality brand? A brand only for higher earners? A brand where older people feel younger if they buy from you or vice versa? 

Jack Stratten, director at Insider Trends and RETHINK Retail Top Expert has an interesting take on the future of retail, in which brand loyalties may decrease amongst the next generation. As Gen Z and Gen Alpha, hit the working world with their disposable incomes, he feels that a new generation is likely to brand hop rather than remain loyal. He believes that “Retailers need to look more closely at the wider culture in which we now live” and that “younger customers have an insatiable appetite for new brands.

Can hyper-personalization be done without AI?

Shops have evolved, for the most part, through “hyper-personalisation” but in a more natural and slowly evolving way.  A shoe shop from mid 20th century may have initially just sold shoes. But if that shop is still around today, it will probably sell socks, insoles, cleansing sprays, wax oils, polish, rain and stain protectors, different coloured laces, and many more footwear related paraphernalia. Because these are all things that people buying footwear will think about as add-ons to their shoe-buying mission. This would spawn from customer feedback, competition, and common sense; all of which require just the “I” from AI. 

So, the short answer is yes, but what is lacking is the ability to measure, analyse, and act on your shopper data, other than merely patting oneself on the back for all of that intelligent product purchasing you did. Through the rapid onboarding of AI tools across the retail spectrum, it’s clear that AI tools are a necessity in order to quickly assess your shoppers’ behaviours, habits, and buying patterns as well as a way to eliminate wrong information, hearsay, and error margins from a business strategy approach. Members of different teams within organisations should really be singing off the same hymn sheets, rather than making decisions based off gut-feeling or a belief that the tried and tested will ring true again.

But does the shopper even really know what they want?

Food shopping is my most regular form of shopping and I tend to visit one of three large brands, once a week. When shopping I have universal basics I need to get, many of which I am happy to buy supermarket’s own brand at the lowest price, but for most other items, I am watching for discounts.

So, I am not necessarily buying the same items each week. I will fall for the yellow stickers again and again and the 3 for 2’s and the 50% off’s and will end up with new selections of quite random items like sauces, ice creams, ready meals, vegan options, all because the prices were good (as far as I’m aware).

When shopping in fashion retail, I generally have an idea of what I’m looking for, but again I’ll be very tempted by the sale section and will only buy full price if the item I need does not have any good variants in the sale section. So, for me, it’s always sale first, full price items later. This isn’t obviously how everybody shops, but if you were a Tesco, a SuperValu, a JD Sports, a Boots, or a UNIQLO, you’d have a pretty good way of manipulating what’ll be in my basket through your yellow tags and stickers.

Hyper-personalisation, in theory and by definition, is a way of predicting and delivering a product range to your shopper that will delight and surprise them into purchasing, as you have delivered a need to them, they have yet to anticipate. Depending on your store, this can mean many things. A store selling groceries may want an aisle fully stacked with every additional add-on a shopper could think of when it comes to pasta or noodles, but does this mean that every packet of peanut and oyster infused mix in flavouring will be sold off your shelves? Of course it won’t.

If you’re a suit retailer, and you buy in pink shirts to go with your popular navy suits, does this guarantee that every man buying a navy suit will then also buy a pink shirt? Of course it doesn’t. There is obviously a balance between hyper-personalisation, and I guess “hyper-generalisation”, but it’s clear that a store with the tools to measure and predict their shoppers’ needs will have an edge over their competition, even if it’s a resource they only lean into for certain key retailing decisions.