Retail Industry Consumer Challenges and the Important Role of Sentiment and Text Analytics
Whether it’s brick-and-mortar or online stores, most retail transactions take place on a day-to-day basis and the volumes are quite impressive. According to Statista, retail sales across the world will surpass $26 trillion in 2022 and in the US alone, specialty stores account for $33.4 billion of market size.
The retail sector was at the forefront throughout the pandemic and continues to deal with its consequences. Deloitte report highlights retail industry outlook has become more complex in the post-pandemic era. Despite all the odds, it is inspiring to witness the exponential growth of the retail industry. It shouldn’t come as a surprise that 1 out of 4 jobs in the US exist because of the retail industry.
The use of internet came to customers’ life and changed consumer behavior for good. The advent of digitalization and the pandemic consequences have led the retail industry to deal with mountainous consumer challenges. Τhe changing customer preferences, high expectations, and data saturation have created even more issues for the retail industry.
Without extensive market research and trending tech solutions, e-retailers cannot roll out an effective marketing strategy. Plus, it takes a lot of empathy now to render the best customer experience. In fact, many retail stores use traditional approaches to mitigate consumer issues and e-retailers use a combination of traditional and modern tactics to draw more attention from customers. However, with all the significant changes happening, it is questionable whether traditional approaches or the current combination of old and new approaches is enough.
How customers buy
It is the age of convenience and people prefer to shop from the comfort of their homes. This gave rise to the concept of digital experience which necessitates the most seamless e-store experience possible for the customers. Almost 70% of consumers conduct basic online research about their preferred products buying from an e-store.
Also, Google affirms that up to 60% of consumers prefer to buy products from an online web store rather than a brick-and-mortar store.
An increasing number of customers use their smartphones to make research or buy products. In particular, more than 55% of consumers use smartphones to look up a product on an e-store. Similarly, over 50% of customers make price comparisons of e-stores through their mobile devices.
The importance of digital experience is also evident in data that suggests that millennials and Gen Z opt for brands that exhibit sustainable online growth. More specifically, Gen Z customers opt for products from eco-friendly and virtually active brands.
Customer-centric problems retail industry continues to face
There are various issues retailers need to tackle in their everyday operations to keep existing customers and attract new ones.
- Lack of personalization
Retailers can’t hope to stand out and build customer loyalty without personalization. In fact, the personalized online experience has become a hallmark standard among e-retailers. From Nike to Zara, brands aim at offering intuitive and personalized customer experiences to influence more visits from customers. But many e-retailers find it challenging to personalize every piece of content. Retailers need to be able to know the needs of customers to create personalized experience and guide them towards the sales funnel. Instead of watching only the sales numbers, they should try to understand the purchasing behavior behind the sales numbers.
- Transition to seamless online customer experiences
Seamless availability and accessibility between in-store and e-store have become another new standard in the retail industry. Regular customers want physical stores to make a seamless transition to online. Consequently, retailers now have to create fluidity between offline and online customer experience. And without centralized data, it gets more difficult for retailers to profile customers.
- High demand for multichannel experiences
More consumers want to experience multichannel buying. More than 95% of Americans prefer online shopping and e-retailers feel a lot of pressure to provide multi-channel purchase experiences to consumers. Customers ultimately want seamless offline and online store experiences. As the real-time data across various channels piles up, e-retailers struggle to provide a unified omnichannel customer experience.
- Lack of integrated technologies
Some retailers also fail to combine the “right” sales and marketing tools. Just like other industries, data silos have become a major problem in the retail industry. But with the overwhelming amount of sales and marketing technologies, e-retailers find it hard to identify the most useful tools. This causes many retailers to lose their direction in the market and execute ineffective marketing efforts.
How sentiment and text analytics can address major consumer problems in retail industry
Customer feedback is a critical source of information to understand what issues consumers face when buying a product or service and what their buying habits are. However, customer feedback poses many challenges the most important of which is that there is huge volumes of feedback coming from multiple channels, which means it is immense and fragmented. The ideal approach would be to harness the power of AI technologies, and, more specifically, leverage sentiment analysis and text analytics or text mining to contextualize an ocean of feedback. In particular, more meaningful results are generated by hybrid AI technologies to analyze text and sentiment. Voice of the customer should play a critical role in product development and business growth.
Text mining help retailers analyze customer feedback to identify the topics discussed, events, places, and people mentioned, other products or services bought, conditions of product use, connect distribution channels with these parameters, and many more. Sentiment analysis can identify customer sentiment about brands, products, features of products or services, extract and prioritize complaints, spot issues with customer service, locate reasons for product returns or app uninstall etc. Through customer sentiment, retailers can understand the essence of their brand and keep an eye on online conversations at the same time.
Sentiment analysis can help retailers address major issues and automate processes. Usually, more data requires more intuition but text analytics and sentiment analysis allows retailers to pinpoint the most relevant data in the silos. This is the secret to gain actionable insights and drive customer experience to the next level.
With sentiment analysis, retailers can figure out how their customers feel in specific areas. And the best part is that retailers won’t need to go through thousands of comments and feedback responses. It is an effective strategy to drill down various customer segments and expand sentiment understanding of current and potential customers.
Sentiment and text analytics allow retailers to keep up with the rapid market change. Online stores can utilize sentiment and text analytics to make sense of consumer data and stand out in the market.
More retailers should use sentiment and text analytics to understand the changing behavior and preferences of customers. The paradigm shift in the retail industry is far from over and the tech revolution is at the center of it. More e-retailers will need to leverage sales and marketing tech solutions to drive growth in the coming years.