Top 10 Retailers That Do Personalization Best

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Top 10 Retailers That Do Personalization Best

By Jordan K. Speer - 09/18/2019

Every retailer wants to customize the shopping experience, but very few have achieved a level of personalization that is both desirable and seamless across channels. According to a recent survey, these retailers have come closest.

Don’t let anyone tell you there’s no ‘i’ in personalization, because there is. It’s right there between the ‘l’ and the ‘z.’ But personalization is not just for Liz, it’s for all people. Remember back in the good old days when you’d enter a country store and the proprietor knew your name, and your kids’ names, and what you liked to eat for breakfast, and whether or not you were an early adopter of new-fangled technologies like the radio? Yeah, me neither, but that was apparently a thing, and it’s the kind of high-touch service retailers have been trying to get back to for decades, but it’s a lot more difficult when you’re managing a portfolio of dozens or hundreds or thousands of stores and e-commerce sites too. But that hasn’t stopped retailers from trying. And, as technology has caught up with their goals, and consumers walk around glued to their devices, they’re starting to get really good at it.

Which brings us to the 3rd annual Retail Personalization Index, a scoring of 100 retail brands ranked according to how well they use data to personalize and connect the customer experience across email, site and mobile, conducted by Sailthru. The survey evaluated 250 retailers chosen based on a mix of size, importance and interest. The personalized marketing automation technology provider evaluated retailers across a wide set of attributes, and combined the scores with the results of a survey of more than 1,500 consumers in the United States and the U.K. to determine how personalization drove customer satisfaction.

What they found was that high-scoring retailers are showing signs of true multi-channel personalization designed with the individual customer in mind. Consumers are reporting higher satisfaction with these companies and report that they plan to purchase again from those with engaging and personalized experiences.

When comparing the top 25 to those that did not make the top 100, Sailthru found that, on site, 88 percent of the top 25 retailers had personalized recommendations vs. only 21 percent of retailers that did not rank in the index. On email, 96 percent of the top 25 retailers provided personalized product recommendations compared to just 23 percent of unranked retailers and on mobile, 84 percent of the top 25 retailers use push notifications vs. 10 percent of retailers not in the top 100.

Here’s a look at the Top 10 retailers that have come the farthest in getting personalization right.

1.    Sephora

It’s no surprise that this is Sephora’s third year in the No. 1 spot on the index. The company has perfected personalization in a multitude of ways, from marketing to customer service, to personalized experiences, both in-store and in-app and online, knocking it out of the park a couple of years ago with an app that allows shoppers to virtually try on makeup via 3D augmented reality mirror. With one view of its customers across channels, Sephora knows the ‘you’ in the store is the same as the ‘you’ online, and that’s just the right formula for connecting customers to the messages, beauty brands and products that work for them — and there are a lot to choose from, which adds fun and complexity to the personalization. Sephora carries a vast assortment of more than 300 beauty brands, including its own popular private-label line, and with its on-brand events and innovative customer service — including a ‘Color Up Close’ program for its staff this year, with daily virtual learning lessons on inclusion — the focus is on the specific needs and desires of each individual. In its marketing initiatives, too, the company delivers deeply personalized touches, emailing customers when products they want are back in stock, or to remind them of products they’ve left in their shopping carts, while members of its Beauty Insider loyalty program are made to feel extra special with frequent free gifts.

Overall personalization score: 79

2.    Nordstrom

If there’s one phrase the name Nordstrom is synonymous with, it’s ‘customer service,’ and you don’t get to be the poster child for serving the consumer without gaining ground in personalization along the way. That white-glove attention didn’t subside when the internet came along: if anything the department store retailer has doubled down, finding ways to combine the two into a new breed of customer service that goes above and beyond. Consider that when it opened its long-awaited men’s only store in Manhattan in 2018 (pictured at top), it had the hustle and bustle of the city in mind, launching 24/7 BOPIS to allow customers to pick up their purchases at their convenience. It also offered alterations, express returns and personal stylists — who will even come to you in the comfort of your own home. Online, the intelligent homepage personalization, ‘we think you’ll love’ product recommendations and trending location-based style inspiration of its digital offering sent it up six spots from No. 8 last year.

Overall personalization score: 77

3.    Rent the Runway

Rent the Runway has an ace in its bag of personalization tricks that most apparel companies don’t have access to — more data, more detailed data, and different types of data. “In the past,” CEO Jennifer Hyman noted last year, “all a retailer could really tell you was what your sell-through was, but they couldn’t necessarily tell you if the customer actually wore that shirt, how often she wore it, whether it stood the test of time.” Because RtR’s clothes are returned to the company’s processing facility, the company has an intimate connection with them ― it knows what garments require repairs; it knows how many dry cleanings and wearings a garment can withstand before it needs to be retired. That’s valuable data that it can use in a variety of ways to improve the customer experience, both with its online subscription plans and in-store in its physical locations, the fifth of which recently opened in San Francisco, after the company secured a $125 million investment in March. This year, the company that popularized rental e-commerce clothing jumps 23 spots on the index for its approach to personalization, as it has expanded its product offering, from high-end evening gowns to women’s office apparel and now to casualwear.

Overall personalization score: 73

4.    The Home Depot

For using both product and customer data to drive messaging across online and in-app channels and deeply investing in email personalization in the past two years, Home Depot landed at No. 4 on the Index, making it the only retailer in the DIY category to land in the top 25. Whether you are doing it yourself for reasons of duress (broken pipes or termite infestations) or for reasons of enhancement (the new home addition or treehouse for your kid), the big-box home improvement retailer offers more than one million products, thousands of customer reviews, and hundreds of in-app videos on its digital channels and 2,200+ stores. At every turn, the retailer is there to offer up help and advice. It’s ‘frequently bought together’ and ‘related products,’ features, for example, ensure that DIYers never miss an important item at checkout.

Overall personalization score: 68

5.    Best Buy

You can’t have a successful digital marketing program without personalization, and yet most sales still take place in brick-and-mortar stores. Best Buy is bridging the on and offline personalization with its app, which enters “local store” mode when the customer walks into a store and sends relevant personalized push notifications while also tailoring the experience to that location’s inventory. It also includes an “On My Way” feature that lets sales associates know when someone is heading in to pick up an online order. With AI-driven technology, Best Buy has honed its personalized emails by timing, frequency and products to make sure customers never miss out on the products they’d like best. It also has a generous My Best Buy program that rewards shoppers on all its platforms, while its well-known Geek Squad service offers tech and installation support, providing the  company with a competitive advantage over online-only retailers. For customers who don’t even know where to begin, the retailer offers free home visits to help customers figure out exactly what they need, whether that’s smart-home tech, appliances or home theaters and a service launched last year offers unlimited technical support in-person, over the phone or online for an annual fee. That’s called meeting your customers where they are, both physically and mentally.  

Overall personalization score: 67

6.    DSW

While some retailers expand by focusing on brand new categories, DSW is doubling down on the tootsies, since last year opening “nail bars” in seven locations. The shoe retailer, which turned 50 this year, hopes the pedicure service will increase loyalty from its 26 million+ members by bringing them back more frequently into the stores. By joining online browsing data with transactional data, DSW can build a more holistic view of the customer, which it is using to understand what she wants, and by gaining one view of the customer across channels, it can be sure it doesn’t send an abandoned cart email message to a consumer who’s already completed the purchase in-store. Additionally, the retailer uses a comprehensive quiz to onboard customers, which it uses to help make attribute-based product recommendations that circulate the homepage and are pushed out to consumers via email at a frequency that complements the customer journey. Likewise, the DSW app features geo-targeted notifications that will ping the consumer if they’re in proximity to a store and have an available reward or offer, reminding them that they might want to come in.

Overall personalization score: 67

7.    Ulta

When Ulta acquired two tech startups late last year — QM Scientific and GlamST — it opened the door to greater personalization capabilities via an optimized recommendation engine and a beauty preference center. QM Scientific operates an AI-based shopping assistant that learns each individual customer’s preferences and habits over time, enabling devices, apps or bots to respond to shoppers with relevant and timely information or offers, while GlamST provides mobile, web and in-store virtual makeover tools that use augmented reality. The retailer also added individualized skincare regimens, hair product recommendations based on indicated preferences, and more rewards to its ‘Ultamate’ loyalty program. A dedicated page, Sparked, is designed to get customers to explore its offerings, with each post tailored to its loyal-shopper profiles, while its personalized emails offer relevant recommendations and offers.

Overall personalization score: 67

8.    Urban Outfitters

In Q4 of the most recent fiscal year, Urban delivered double-digit growth in the digital channel, driven by increases in sessions, conversion and average order value. Loyalty really works: Urban boasts 8.3 million followers on Instagram; its popular loyalty program, UO Rewards, has about 10 million members worldwide, who accounted for more than 70 percent of the brand’s sales during that quarter. That might be because the UO program richly rewards its members with exclusive offers, special prizes, early access to sales, extra discounts and other perks. Its 4.9-rated app, (which will get you even more goodies) offers a highly personalized feed, and its dynamic and customizable features make it easy to search for what you want. Urban Outfitters, which will hit the half-century mark next year, has always brought together an eclectic mix of items, and it expanded that last year with its UO MRKT, a curated third-party marketplace connecting its community with an evolving lineup of “culturally-minded brands and new discoveries.” The retailer also started accepting Apple pay and Afterpay, a buy-now, pay-later platform. Urban Outfitters omnichannel experience also features personalized emails, engaging and relevant editorial, and a well-timed cadence of communications.

Overall personalization score: 66

9.    Adidas

The sneaker retailer tapped into something big when it launched its Yeezy collection, a multi-year collaboration with rapper Kanye West, several years ago, and now everyone’s waiting to see what adidas has in store for its partnership with Beyonce. So far, the company is staying mum about the upcoming launch. Adidas also builds connection with its customers by using data to give shoppers the information they need, whether that’s through its expansive product search and filtering criteria capabilities or via apps that cater to individual interests, from health and fitness goals (Runtastic), to building soccer skills (Tango App). Overall its omnichannel approach is paying off — with gross margin forecast to increase this year to around 52 percent.

Overall personalization score: 64

10.Wayfair

Following a trend among pure-play retailers, the digital-only furniture retailer just turned digital-first, launching its first full-service brick-and-mortar store in Massachusetts, and paving the way for customers to actually sit or lie before they buy. With the data it’s collected online, the company should have plenty of insight into how it might want to display that furniture in-store and how it can combine that with its sophisticated digital model, which offers a virtually endless array of furniture, personalized online for customers according to a mix of attribute-, behavior- and collaborative-based product recommendations. While the physical store will appeal to customers in a new way, the retailer has proven that shopping for furniture online offers advantages you cannot get in the store, including a mobile app that allows shoppers to visualize furniture in their own homes using augmented reality. You can’t really get much more customized than that — unless you’re simultaneously sitting on the furniture in-store, which, to repeat, you can now do. Wayfair also offers home design experts and Pinterest-like Idea Boards.

Overall personalization score: 64

 

Jordan K. Speer is editor in chief of Apparel and technology editor of RIS. She can be reached at [email protected]