Let’s get personal

Personalisation in retail: Balancing differentiation and operational costs

In the competitive retail landscape, personalisation has emerged as a key differentiator, enhancing customer experiences and driving loyalty. However, the costs associated with implementing personalised services can be substantial, requiring a careful balance between delivering unique experiences and maintaining operational efficiency

In a nutshell…

  • Personalisation is crucial for customer retention, but can significantly drive up costs.
  • High-end brands invest heavily in personalisation, focusing on customer loyalty.
  • Print-on-demand faces environmental challenges, prompting innovative solutions.
  • Auto-boxing machines and digital printing offer scalable personalisation.
  • Operational constraints during peak times require streamlined processes and temporary staffing.
  • Post-purchase personalised communications enhance customer engagement and satisfaction.

A closer look…

Personalisation in action

Personalisation in retail operations can manifest in diverse ways, from packaging to post-purchase experiences. Luxury brands take a meticulous approach, where the packaging process involves selecting the right materials with system-assisted guidance and camera oversight. Despite being much slower to pack than cheaper products, this high level of personalisation is integral to luxury brands, focusing more on customer retention than direct revenue generation. 

For high-profile, exclusive-release products, retailers go to great lengths to ensure security and exclusivity, including black wrapping, warehouse lockdowns, and dedicated security.

We’re seeing innovations like post-concert merchandise being enhanced with QR codes, allowing fans to order memorabilia from home, extending the event experience and maximising revenue. However, the shift to print-on-demand can be hindered by environmental concerns related to chemical use, prompting  logistics leaders to look for safer alternatives and innovations which support flexibility like pre-coated materials.

Retail Hive members are starting to navigate personalisation and operational efficiency by using auto-boxing machines and digital printing solutions that allow the on-demand customisation of cardboard boxes. This method reduces waste and storage needs while providing tailored packaging for different occasions. However, it’s a huge investment upfront, with a big space requirement in the warehouse, put under pressure during peak. 

For retailers of personal products, balancing discreet packaging with operational feasibility also plays an important role. The complexity of offering personalised services online, such as gift boxes, involves managing cutoffs, allocating resources, and ensuring quality. Despite interest in more personalisation, legal and logistical challenges often deter extensive implementation. QR codes and discreet messaging offer alternative avenues for personalisation without extensive operational burdens.

Still to do…

Retailers must continue to innovate and integrate technology to streamline personalisation while controlling costs. Enhancing IT systems to support seamless personalisation processes, exploring sustainable materials for print-on-demand, and leveraging data for tailored customer communications are crucial steps. Balancing customer expectations with operational capabilities, especially during peak times, remains a key challenge. Ongoing collaboration with technology providers and a focus on scalable personalisation solutions will help retailers meet evolving consumer demands without sacrificing efficiency or profitability.

Retailers should also invest in training and retaining skilled staff who can manage personalised services effectively. Developing robust quality control mechanisms to ensure consistency in personalised offerings is vital as failures can have a big impact on brand value. In addition, creating flexible operational frameworks that can adapt to seasonal peaks without compromising service quality will be essential.

Source: The Retail Hive: Supply Chain Leaders Exchange roundtable on “Hyper-Personalised Fulfilment”, May 2024

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