Why it matters:
- As customer acquisition costs increase, brands are focusing on keeping valued customers with improved service.
- Artificial intelligence is being used to create smarter virtual assistants who can help consumers with complicated shopping decisions.
- AI virtual assistants are expected to become table stakes for any company with an online or in-person store.
Making shoppers feel seen, understood, and appreciated is becoming increasingly important as brands and retailers seek to retain their best customers.
As a result, companies are focusing on being able to deliver what they are calling “concierge retail,” with sales employees and virtual helpers who will know a customer’s preferences and shopping history and can make knowledgeable product recommendations.
While luxury brands have been investing in in-person concierge shopping experiences with human sales associates, mass merchants including Amazon and Walmart have been developing their digital concierges.
AI-powered sales associates designed to assist online shoppers or provide store employees with better information to help customers are expected to become essential tools for all retailers, large and small, in the coming years, retail experts told CO—.
Online sales still account for less than 25% of all retail sales, and a key reason for that is some purchases require more information and sales assistance than is typically found online, Raj De Datta, Co-founder and CEO of Bloomreach, a tech company specializing in e-commerce customer personalization, told CO—.
“At this point, we’re very good at satisfying the kind of shopping needs where the consumer does most of the research and they just come to a website and say, ‘Help me find this,’” De Datta said. “But where we don’t do a great job is advising and consulting—hence the interest in an AI-based concierge-type approach to shopping,” he said.
Likewise, in-person retailers, particularly in the luxury category, are realizing they have to do a better job of making customers feel valued.
The future of shopping is now, a la ‘Minority Report’: ‘They put this jacket on me, and I said ‘Wow, this is exactly what I wanted’’
When the nation’s retailers met in January for their annual convention, concierge service was a popular theme.
Salesforce CEO Marc Benioff, in a keynote session, talked about his experience of walking into a Loro Piana luxury clothing store in Manhattan. As soon as he gave the store personnel his name, a salesperson was able to immediately access information about everything he had bought from the company previously, anywhere in the world.
“They put this jacket on me, and I said, ‘Wow, this is exactly what I wanted,’” Benioff said.
“That they really do know me, and that I felt that when I walked into the store – I think we’re going to see a lot more of that,” he said.
Benioff recalled the scenes in the 2002 science fiction movie “Minority Report,” where the character played by Tom Cruise was greeted by personalized ads featuring his favorite styles and brands when he walked into stores.
Futurist Peter Schwartz, who was a consultant on “Minority Report,” now is the Senior Vice President of Strategic Planning at Salesforce, where Benioff is hoping he will help the company prepare for the rapid changes AI is bringing to retail.
Sam Atkinson, Co-founder of Swap, an e-commerce operations platform, told CO— he had a similar experience to Benioff’s Loro Piana shopping trip while at the Saint Laurent store in New York City. “They were able to pull up everything that I’ve bought with them for three years and recommend a similar pair of jeans to the fit that I bought three years ago,” Atkinson said.
“That’s becoming more of a trend with the premium brands – you are able to go in a store and have a much more personalized shopping experience than you might otherwise get,” he said.
[Read: Future Shop: Retail Innovations That Will Change How Consumers Spend in 2024 and Beyond]
Chatbots, he said, “fail on so many levels. They are intrusive. They don’t have any context. They don’t seem to know you.”
“We envision a very different kind of conversational experience that understands what I’m searching for and jumps in and says, ‘It seems like you’re struggling to find what kind of shoes might be best for someone with knee problems. We have a few recommendations,’” De Datta said.
Adding perks like exclusive stores for top spenders and private chats with a retail CEO to boost customer loyalty
Juan Pellerano-Rendón, Chief Marketing Officer at Swap, told CO— the company is seeing luxury brands use the concierge approach as a way to strengthen the connection with their top customers.
For example, he said, Gucci has appointment-only stores for top spenders; Chanel has private boutiques in select cities for its top-tier clients; and Brunello Cucinelli has made its Casa Cucinelli showplaces the focus of trips and special events for valued customers.
One of Swap’s clients, menswear brand Percival, has created a loyalty program that rewards top customers with an invitation to join “The Closed Circle,” a community with direct access to Percival Co-founder Chris Gove through a private group chat.
Brands increasingly are building communities of their biggest fans by offering them something extra, Pellerano-Rendón said.
“It’s happening at all levels, from mid-market to mass-market to luxury,” he said.
Swap is exploring a partnership with UK-based company Harper Concierge, which delivers online clothing orders to customers for in-person try-ons, can provide the services of an in-person stylist, and picks up the items shoppers don’t want to buy.
Driving business via digital shopping assistants to counter high customer-acquisition costs
A key reason brands are looking to offer extra service to top customers is the increased cost to acquire new customers, Swap’s Atkinson said.
The brands Swap works with are focusing on, “How do I get my customer to come back and buy from me again, because that’s cheaper than trying to get a new customer to buy from us for the first time?” he said.
In e-commerce, smart digital shopping assistants can help drive sales of categories “that don’t work well online – cases where it’s a high consideration or high complexity purchase,” De Datta of Bloomreach said.
For high-consideration purchases, such as the best running shoes for someone with knee problems, or high complexity purchases like a car, shoppers often find searching for information on the web is arduous and painful, he said.
Building a better chatbot — which often ‘fail on so many levels’
In January, Bloomreach acquired Radiance Commerce, an AI-powered shopping concierge platform, in order to expand its Bloomreach Clarity conversational shopping assistant product.
The shopping concierge programs being created are designed to be lightyears beyond the chatbots consumers are familiar with, and that most consumers hate, De Datta said.
Chatbots, he said, “fail on so many levels. They are intrusive. They don’t have any context. They don’t seem to know you.”
“We envision a very different kind of conversational experience that understands what I’m searching for and jumps in and says, ‘It seems like you’re struggling to find what kind of shoes might be best for someone with knee problems. We have a few recommendations,’” De Datta said.
A good AI shopping concierge must be able to do four things well, he said: It must know you and your shopping habits and preferences, and have deep knowledge of the products. It must understand where you are in the shopping journey for a particular purchase, whether you are in the just-looking phase or close to making a choice. And, De Datta said, a good virtual concierge must have high-quality conversational skills and be able to understand questions and share the right information.
He envisions smart AI-powered concierges becoming crucial for all e-commerce businesses, large and small.
“The main criteria are: What are you selling and what is the nature of your sale? Am I selling something that a human being in a store would add a lot of value to? Then it’s probably a category that can benefit from this,” he said.
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