The Rise of Personalized Products in Retail
Today's marketplace is noisy and cluttered, making it challenging for both consumers and retailers alike to differentiate themselves. In the midst of mass-produced products and cookie-cutter retail shops, personalized products have emerged as a popular choice among shoppers and businesses alike.
When implemented correctly, personalization offers an appealing, cost-effective way for consumers to form an emotional connection to a particular product or brand, while retailers enjoy increased loyalty and customer satisfaction rates.
What's driving the rise of personalized products in retail?
The rise of personalized products is a natural evolution in today's 'instant gratification' economy where consumers have grown accustomed to having access to on-demand, customized services. For example, in the past, grabbing a cab used to mean standing on a street corner to try and hail the ride. Today, consumers simply order an Uber or Lyft with a few quick taps on their smartphone.
A recent study by Deloitte reveals that "1 in 4 consumers are willing to pay more to receive a personalized product or service" and "in some categories, more than 50 percent of consumers expressed interest in purchasing customized products or services." This is just one example of research validating that personalized products are much more than just a trend.
Social networks also play a critical role here, allowing consumers to instantly share, rate and comment on their purchases, further cementing the connection between the person and the product. Customers who are happy with their purchase readily share photos of their personalized products online, helping to transform shoppers into brand advocates.
For instance, consumers are now able to achieve varying levels of control over the personalization of the products they purchase, and without paying a massive markup for fully custom products. Coca-Cola is known for creating a memorable, and highly successful campaign called "Share A Coke" which featured common first names on their Coca-Cola bottles, instantly transforming their standard beverage into something that consumers perceived as a personalized product.
Building on the success of this campaign, Coca-Cola went on to offer customizable bottles through their online store and flagship café, providing consumers with the chance to personalize an icon product.
Why small retailers have an advantage when it comes to product personalization
According to Travis Nagle, co-founder of Stem and Viesso, "there has been a slow but powerful shift back toward valuing personalization of consumer goods, partly enabled by the ever-evolving interface of e-commerce." He further explains that "Millennials, in particular, value customization when shopping" — something that's tough to find at big-box retailers and chain stores.
Small retailers enjoy a distinct advantage when it comes to product personalization for one simple reason — consumers already see local and independent stores as being better equipped to create personalized experiences than large retailers. This is because large numbers of consumers readily view personalization as a natural extension of these local shops and brands. And that's on top of the fact that industry experts such as Sarah Halzack and others believe the vast majority of big retailers are "terrible at" retail personalization.
It's become obvious that consumers expect a higher degree of customer service at a small retailer, and come in seeking a different kind of experience than what can be found in chain stores and outlets. It's common knowledge that while small retailers often can't compete over price, they can deliver value through customer service and making highly personalized products. Price is no longer the main point of contention for a vast number of savvy consumers.
How small retailers can leverage product personalization to boost revenue
In the past, product personalization was limited for small retailers. Options included screenprinting or custom embroidering onto textiles, minor alterations to clothing, engraving, and perhaps swapping out a few interchangeable parts between items. Technologies that allowed retailers to track and manage personalization were out of reach for most small business owners, leaving product personalization in the hands of high-end boutiques and services.
Thanks to the rapid evolution of CSM technologies including analytics tools, small retailers can now employ low-cost solutions to create personalized products that are matched to the unique needs of their customers and prospects.
Better yet, increasing numbers of consumers are happy to share their information in exchange for a better, more customized product or consumer experience.
Deloitte reports that "22 percent of consumers are happy to share some data in return for a more personalized customer product or service", and this number is even higher among those in the 16-24 year old demographic. Additionally, 50 percent of consumers feel that customized products can make great gifts, giving retailers an opportunity to promote their personalized products during the holiday shopping season or for special occasions like graduations, weddings, and retirement celebrations.
Low-cost options available to retailers that want to take advantage of the rise of personalized products and increase their retail sales include:
personalized email offerings (CRM tools)
leveraging point of sale (data)
personalized location-based offers
mass product customization – products that are mass-produced but the consumer is offered some limited options to customize the product or service.
Leveraging these low-cost opportunities allows small businesses to capitalize on their inherent competitive advantages while creating new revenue streams from personalized products.
Getting ahead with personalization
In today's ultra-competitive market, small retailers have an unexpected leg up on their big-box competition when it comes to offering personalized products.
Small retailers are uniquely positioned to provide customers with an intimate and custom shopping experience with that "local flair" that many customers (especially Millennials) are seeking.
Offering personalization requires an investment in technology, both to facilitate the design and manufacturing of customized products and for the execution of personalized marketing campaigns. However, the increased affordability of small business retail technology and analytics tools means that many retailers are better able to integrate these types of technologies into their businesses to gain a better understanding of what consumers really want.
The challenge going forward is no longer about offering a custom experience, but being able to adequately demonstrate the value provided to consumers in exchange for their data.
Yamarie Grullon has years of experience creating helpful & engaging content for small business owners. As Director of Content Strategy at ShopKeep, the #1-rated tablet-based Point of Sale System, Yamarie provides merchants with practical advice on all things related to business development and point of sale.