IADS Press Release : Beyond CRM: when department stores turn into data powerhouses to reinvent their customer engagement strategies.

World-leading department stores have realised that tech-based customer segmentation and data-driven personalisation are pivotal for enhancing customer engagement and maximising sales opportunities. This is why they have rebuilt their approach to loyalty from scratch to maximise customer lifetime value and compete equally with online marketplaces when it comes to knowing their clients well.

The 2020 COVID pandemic significantly impacted customers’ expectations as they increasingly became used to e-commerce convenience. To adapt, IADS member department stores thoroughly reviewed their in-store and online systems and processes. They shifted from a traditional, broad-based marketing approach to highly targeted, monitored customer interactions. Such a strategy allows for predicting customer behaviour and delivering hyper-personalised experiences, a fundamental consumer expectation nowadays. While, in the past, individual interactions relied on talented sales individuals, now that they need to achieve scale, department stores have gone through a systemic shift, as their ability to reach mass personalisation relies on their ability to effectively combine robust technical infrastructure with sophisticated data integration and analysis. 

A similar reinvention is taking place when it comes to loyalty programmes. While they have been foundational in department stores’ historical development, retailers are reinventing them by combining technology and a new understanding of rewarding loyalty to strengthen their retention strategies.

Finally, the loop is closed by looking at omnichannel strategies fresh. Going beyond friction removal in terms of customer journeys, it is all about improving the in-store experience and harmonising it with online capabilities and services to address customer relationships in a new way.

IADS members are making unprecedented strides in leveraging customer data to build hyper-personalised experiences. While some are refining their segmentation, Boyner in Turkey is going further by implementing a sophisticated system utilising a significant number of micro-attributes per customer, drawing from distinct data sources. This initiative created an entirely new data ecosystem, with impressive results and revenue uplift through redesigned customer journeys.

Similarly, El Palacio de Hierro in Mexico has achieved a technical milestone by unifying many diverse databases into a comprehensive Customer Data Platform (CDP), encompassing everything from brick-and-mortar transactions to restaurant operations and travel agency data. This data integration has allowed El Palacio de Hierro to develop a nuanced understanding of its clients' database, driving up its customer lifetime value.

Magasin du Nord has revolutionised its approach in Denmark by developing new sets of consumer groups with several subtypes, a shift from its "one size fits all" model. Their 'Goodie' loyalty programme now employs sophisticated customer profiling, combining loyalty data with public registry information.

To deliver hyper-personalised experiences, Tsum Kyiv in Ukraine uses an advanced model to track customer behaviour. This sophisticated segmentation enables real-time monitoring of their customer base. It allows them to track customer movement between segments, helping them implement retention measures for those showing signs of churn risk. When it comes to their most valuable customers, who represent a significant portion of their business, differentiated communication strategies for each segment ensure that messaging and offers are tailored to each customer group's value and potential have been developed.

Retailers are reimagining traditional loyalty programmes with sophisticated engagement strategies to drive retention, decrease churn, and increase keep rates, as reflected in Bloomingdale’s (USA) strategy, which also believes that such strategies should go hand in hand with customer feedback systems. Breuninger in Germany has implemented a phased customer lifecycle approach with specific KPIs at each stage to measure loyalty. Their new automated onboarding journey has shown impressive results in driving acquisition, retention and sales. Also, the company's top-tier customer strategy has proven particularly effective, accounting for an essential chunk of the turnover.

Payment is a key component of loyalty. Manor in Switzerland has successfully integrated its loyalty programme with MasterCard, achieving remarkable results. The programme now generates a critical part of Manor's total turnover, with cardholders showing significantly higher spending patterns. Easiness is at the core of such strategies: new cardholders can begin using their cards within 15 minutes of signup.

To refine loyalty, Chalhoub Group in the Middle East is advancing beyond traditional RFM (Recency, Frequency, Monetary) segmentation to adopt sophisticated predictive analytics, allowing them to deliver real-time personalised experiences. The company has found particular success with WhatsApp as a communication channel, achieving higher conversion rates than traditional email and SMS campaigns.

Department stores revealed compelling evidence of omnichannel strategies' impact on business performance. Boyner noticed that their omnichannel customers demonstrate higher purchase frequency and generate higher revenue than single-channel shoppers. To support the omnichannel experience, the company has introduced innovative in-store digital solutions, including "Find in Store" features and mobile checkout. Their “Boyner Now” 90-minute delivery service complement the omnichannel customer experience. El Palacio de Hierro's data showed comparable channel dynamics: while their digital-only customers primarily represent an acquisition funnel, their omnichannel customers achieve significantly higher purchase frequency. Also, the company's brick-and-mortar customer base maintains strong engagement, showing the importance of physical retail in the omnichannel mix.

Bloomingdale's strategy also shows the importance of stores by allocating resources to make them the best brand expression, providing an inspiring environment where it’s easy for customers to discover and engage with products. In addition, and moving beyond traditional metrics, the company has implemented a sophisticated tracking framework to understand cross-channel purchasing behaviour, including several new tracking groups to provide a comprehensive view of customer behaviour and opportunities

The ongoing evolution of customer engagement strategies, supported by advanced analytics and digital transformation, underscores the critical importance of personalisation and data-driven decision-making. As these initiatives continue to evolve, retailers must remain agile and innovative in their approach to customer engagement, ensuring they stay ahead in a competitive market by continually enhancing the online and in-store customer experience.

Read the full press release below:

Read the full press release, in French, below: