Signals
Q3 2024
Intelligent
Immersive
Conversational
Personal
Experiential
A retail
renaissance
How emerging technologies and experiences are shaping the future of commerce
The last decade has witnessed an unprecedented acceleration in technology adoption in retail, from digital, virtual and social commerce to contactless and biometric checkout
Alongside this technological surge, consumer expectations for personalization and engaging retail experiences have evolved dramatically. These two forces are culminating in a retail renaissance where brands use emerging technologies to deepen their connection with and value to consumers.
This issue of Signals explores today’s retail innovation through five key attributes, which often converge and overlap in various combinations to create new experiences.
Data overlays are transforming physical stores into intelligent, interactive environments, enhancing the in-store shopping experience.
Intelligent
Immersive technologies like AR/VR are bringing the tactile experience of in-store shopping into consumers' homes and mobile apps.
Immersive
Fashion, beauty and apparel brands are pioneering experiential shopping through immersive and sustainable experiences.
Experiential
Advanced data analytics are giving retailers deeper insights into consumer preferences and behaviors.
Personal
AI and communication technologies are enabling continuous, personalized dialogue between consumers and brands.
Conversational
here are 5 key attributes
Intelligent
Data overlays are elevating in-store shopping experiences
Physical stores are evolving into intelligent, interactive environments thanks to informational digital overlays that educate shoppers and orient them precisely within the retail environment — pointing them directly toward the products they seek, for example.
These overlays are accessible via smartphones working in combination with branded apps and geolocation solutions. In addition, technologies like smart shelves, interactive mirrors and location-based communications create engaging, informative and customized in-store experiences, bridging the online-offline gap. For instance, an Adidas store in London features fitting rooms with smart mirrors that detect products and display them in various sizes and colors.1 By the end of the decade, consumers will seamlessly access information typically only found online — from detailed product specs to sustainability data — while shopping in-store.
The store of the future
Consumers who opt in could be identified when they enter the store by authenticating through their app or facial recognition. This would let sales associates — human or AI-powered — access their purchase history, preferences and loyalty status to provide bespoke service.
Personalization on entry
Product discovery
In-store engagement
Checkout
Missed opportunity
9%
Only 9% of consumers say they’re satisfied with the in-store shopping experience, according to an IBM survey of 20,000 consumers in 26 countries.3
Digitized stores may help
More than half of those surveyed said they would like to use bots or virtual assistants or AR/VR and AI apps as they shop.
50%+
But meeting expectations is essential
Two-thirds of respondents who had used AI assistants were dissatisfied with the experience and nearly 20% said they were unlikely to try again.
2/3
Clothing, home & food
Marks & Spencer, the British multinational retailer, has introduced a smartphone app that leads customers through the store to find items on their shopping lists. AR startup Dent Reality developed the app, which uses the store’s Wi-Fi network to pinpoint a shopper’s location and provide digital maps of product locations.4
H&M Group, the Swedish fashion company, equipped fitting rooms in some of its Cos stores in the U.S. with smart mirrors that recognize items of clothing, including size and color, and can make customized product and styling recommendations.5
Fashion
Active players
By the end of 2024, Instacart expects to deploy thousands of its AI-powered Caper Carts in supermarkets and stores across the U.S. These smart carts use computer vision and AI to identify items. They also have a barcode scanner, accept cards and send customers personalized offers via a digital screen.6
Supermarkets
Walmart introduced AI-enhanced Scan & Go technology in several stores this year, allowing consumers to scan items as they shop, pay via the app and bypass checkout lines. This system integrates with Walmart’s payment system and loyalty programs, providing a seamless, efficient shopping experience.7
Consumer staples
Increasingly, innovative companies are leveraging high-quality data and internet of things (IoT) architecture to overlay immersive technologies and biometrics that bring a new level of interactivity and engagement to the in-store experience. Practical use cases, such as solving the recurring problem of improving product discovery in the store or removing friction from the checkout experience, are likely to resonate well with consumers and see widespread adoption. By contrast, some early experiments that gamify the shopping experience — such as awarding digital trophies — have not gained as much traction due to a lack of perceived value.
Despite the potential of these technologies, widespread adoption has been limited to date. This may be due to integration challenges, the high cost of implementation, and the need for consumers to adopt new behaviors and new technologies. As technology advances and costs decrease, retailers that effectively address these challenges and enhance the customer experience could set new standards in the industry.
Outlook
Immersive
Mixed reality e-commerce experiences are redefining shopping anywhere
As e-commerce evolves, immersive technologies like AR/VR and spatial computing bring the tactile experience of in-store shopping anywhere, from mobile apps to consumers' homes. Today, reverse-image search is a fast-growing trend which allows consumers to upload a photo of a product to a search engine to identify the item and retail outlets where it’s available.
Retailers also leverage body scanning, biometric data and virtual try-on platforms to offer individualized shopping experiences that increase shopper confidence in purchase decisions and reduce returns. For example, Google uses generative AI to accurately show what a garment looks like on a set of 80 diverse models representing various body types and sizes.8 Similarly, Ray-Ban’s Frame Advisor Technology scans users’ faces to analyze shape, size and features for a perfect fit.9
A mixed bag
E-commerce is continuing to grow as a slice of the retail pie — from 5.1% in 2007 to 20% in 2023.10 However, 25% of apparel purchased online is returned,11 and returns cost the U.S. retail industry more than $700 billion a year overall.12
Finding a perfect fit
Checkout
In-store engagement
As the shopper moves around the store, smart shelves with sensors and digital displays — or perhaps product tags scanned by a mobile device — could provide real-time information about product provenance, sustainability and availability in the store and online.
Product discovery
Personalization on entry
Checkout
Product discovery
Ultra-wideband (UWB) technology offers accurate location tracking that merchants could use to deliver contextualized information to consumers’ devices or digital signs. The app might notify shoppers that their loyalty rewards offer discounts on items they’re looking at, for example.
In-store engagement
Personalization on entry
In-store engagement
Product discovery
Automated and unattended checkout tech, including mobile payment solutions and AI-powered apps like Sam’s Club’s next-gen Scan & Go, process rewards in real time and send digital receipts as consumers leave the store.2
Checkout
Personalization on entry
Consumers can use biometric devices or apps to scan their bodies, capturing detailed measurements that are securely stored and used to recommend clothing and accessories that fit perfectly.
VIRTUAL TRY-ON
From head to toe
Personalization on entry
Smith Optics: Consumers use a face-scanning app to ensure that their custom 3D-printed ski goggles precisely fit the contours of their faces.13 Snapfeet: This Italian startup uses 3D biometric imaging to allow customers to scan their feet. An AI algorithm creates personalized recommendations based on size, shape and style preferences. AR shows the user the footwear.14
From head to toe
Spatial
commerce
Spatial computing capabilities are enabling retailers to create interactive mixed reality (MR) environments that people can experience through advanced headsets and smart glasses. In these virtual worlds, shoppers can see 3D digital representations of products, view them from different angles, and manipulate them with hand gestures, voice commands, and body and eye movements. Shoppers will also be able to visit product showrooms, participate in product demos, test-drive vehicles, and talk with sales associates, all from their living rooms.
The global AR/VR e-commerce market is projected to reach $120 billion by 2027.15
$120B
Alo Yoga and e.l.f. Cosmetics, both based in California, have developed shopping apps for Apple’s new spatial computing headset. Alo Yoga’s app16 combines wellness and shopping in a simulated natural environment, and e.l.f. integrates gaming with product discovery.17
Early adopters
Outlook
Emerging use cases, such as virtual try-ons and home visualization apps, are expected to see widespread adoption due to their ability to enhance customer confidence and reduce returns. Ensuring accurate and user-friendly technology for body scanning and AR/VR experiences is challenging, and the current cost of MR devices is an impediment. However, as technology advances and costs decrease, retailers that can address privacy concerns and offer seamless, valuable and immersive experiences could lead the way in redefining the e-commerce landscape.
Conversational
Emerging technologies are powering an always-on dialogue between customers and brands
Advances in AI and communication technologies are enabling continuous, personalized conversation between brands and consumers before, during and after the point-of-sale experience.
Shoppers can converse with voice-activated apps like Google Assistant, for example, and with proprietary chatbots launched by Zara18 and other brands to conveniently discover and purchase products. These generative AI agents and modern point-of-sale (POS) systems are transforming the shopping experience, fostering deeper consumer connections.
AI-powered personal shoppers
Generative AI shopping co-pilots provide personalized recommendations and support throughout the consumer journey while simultaneously gathering valuable insights into individual preferences and intent. This dual benefit boosts engagement and allows retailers to anticipate and meet consumer needs more accurately, fostering long-term loyalty and satisfaction. (Read more about personal co-pilots in the Q1 edition of Mastercard Signals.)
of online shoppers believe AI personalization enhances their online experience.19
80%
From social to conversational
Conversational commerce first emerged with the rise of social commerce, where consumers explore and purchase products through social media platforms including TikTok Shops, Amazon Live, WeChat and Instagram Live. This paradigm shift transformed consumer-brand interactions by removing friction and creating a more engaging journey, according to McKinsey research.20
Global social commerce revenues are expected to come close to $700 billion in 2024.21
$700B
Social commerce generated $37 billion in the U.S. in 2021; it is expected to grow to almost $80 billion, for 5% of U.S. e-commerce sales, by 2025.
$80B
China is expected to generate $475.1 billion in social commerce in 2024; that number is expected to rise to almost $750 billion by 2029. 22
$750b
Advances at the point of sale
Modern POS systems are central to retail companies’ sales, inventory and customer relationship management functions. They are becoming pivotal to customer engagement strategies by tracking shopper preferences, providing valuable analytics, and facilitating interactive in-store experiences and communication.
UWB and other communication channels can support the issuance of digital and co-branded cards at any stage of the in-store shopping experience and deliver personalized marketing to digital signs or shoppers’ devices based on their precise navigation.
Mid-journey offers
Checkout
These technologies eliminate the need for a fixed POS by supporting unattended checkout, allowing shoppers to scan and pay for products themselves using self-service kiosks or mobile apps. This can improve the shopping experience by offering convenience and speed for the shopper, while reducing operational costs.
Post-purchase touchpoints
After purchases are made, retailers can bolster their engagement with their customers by using convenient communications channels to provide digital receipts, warranty details and other information. The latter might include details on how to return an item and even eventually re-sell it back to the retailer as part of an environmentally aware “sell-back” program
Outlook
Increasingly, brands are using AI and advanced communication technologies to create continuous, personalized dialogues with consumers, both before and after the point of sale. Practical applications, like shopping via voice-activated apps and chatbots that offer tailored recommendations, are likely to become widespread. Overreliance on AI for basic interactions without genuine human touch might fall short, however, because customers still prefer the authentic human connection in high-value shopping experiences. To fully realize this potential, retailers must overcome challenges in delivering a helpful bot experience. Tackling privacy concerns, data accuracy and integration issues will lead to richer customer conversations, foster more meaningful interactions and drive deeper loyalty.
Personal
Advanced data analytics are allowing retailers to forge a deeper customer connection
Traditionally, consumer data has been drawn from sources such as demographics, search queries, browsing behavior and purchase history, yielding broad, generic product recommendations and offers.
Going forward, retail brands have the potential to use AI, machine learning and big data analytics to gain deeper insights into consumer preferences and behaviors by parsing much richer consumer information: social media posts and reviews, customer service sessions with smart chatbots, product interactions in AR/VR environments and even in-store product evaluations. With this intelligence, companies can gain a deeper, more granular understanding of consumer motivations, values and intent. Generative AI can then use these insights to predict emerging interests and unmet needs, informing customer-specific messaging, marketing, recommendations, pricing, promotions and incentives. These can be delivered precisely how, where and when each shopper prefers, creating a dynamic fit-for-me experience.
Early adopters
MASTERCARD
WECHAT
Mastercard recently launched Shopping Muse, an advanced generative AI tool that revolutionizes how consumers search for and discover products in a retailer’s digital catalog.23 Shopping Muse recreates the in-store experience by translating consumers’ colloquial language into tailored recommendations, complete with suggestions for coordinating products and accessories.
We cHAT
Mastercard
WeChat’s conversational shopping feature allows brands to sell products leveraging WeChat’s chatbot and reach their users in new and engaging ways. The chatbot helps shoppers browse brands’ products, receive style advice and purchase products without leaving WeChat.
Personalization matters
Dynamic loyalty
Deeper consumer insights will enable retailers to shift brand loyalty programs from traditional points-based systems to dynamic, personalized, experience-driven touchpoints. Based on individual consumers’ habits and histories, technologies including AI and AR and new loyalty networks powered by blockchain will enable new customer-brand interactions, partnerships that create cross-brand loyalty platforms and hyper-personalized rewards.
Top-performing programs can increase revenue from customers who redeem points as much as 25% by boosting the frequency and size of purchases.29
25%
Two-thirds of consumers will change the brands they buy from for better rewards.31
2/3
The average U.S. consumer is enrolled in about 15 loyalty programs but active in fewer than half of them.30
15
Loyalty
decoded
Loyalty explorations
Singapore Airlines launched a loyalty wallet built on blockchain technology that allows travelers to easily spend their air miles at numerous retail outlets.32 Emirates Skyward has a similar blockchain-based program.
Snow Peak, a Japanese outdoor equipment retailer, invites customers to participate in personalized workshops, community gatherings and exclusive camping experiences at locations in Japan and the U.S. The goal is to build brand affinity, glean insights and help customers “experience the rejuvenating power of the outdoors.”33 The company credits the program with increasing customer engagement and market share.34
retailers
coach
Large retailers are leading the way. Amazon, Walmart, Nike, Starbucks and Target use AI, machine learning (ML) and advanced data tools to analyze consumer behaviors and preferences, allowing them to personalize marketing, shopping experiences and product recommendations.
Early adopters
startups
coach
retailers
startups
Coach used deeper consumer segmentation to identify the Tabby bag as a key attractor for young shoppers.35 With insights from data analytics, the company leveraged direct consumer engagement, product iterations and marketing campaigns like "Courage to Be Real" with Lil Nas X and "In My Tabby." This approach led to a surge in searches and sales, with the Tabby becoming a significant success.
startups
retailers
coach
Startups are delivering innovative solutions, too. The biggest category in CB Insight’s latest report on retail tech startups is digital shopper engagement, which includes companies that help retailers “connect with shoppers across platforms and channels with a focus on personalization and loyalty.”36
Outlook
As advanced data analytics become more sophisticated, retailers are increasingly using AI, machine learning and big data to gain a multi-dimensional view of their consumers, allowing for hyper-personalized experiences. But overly invasive data collection methods could backfire, leading to privacy concerns and consumer distrust. As the myriad new ways we shop generate rich insights into consumer preferences, successful brands that can navigate privacy concerns and deliver meaningful, personalized experiences will likely set new benchmarks in consumer loyalty and satisfaction.
Experiential
Fashion, beauty and apparel brands are leading the way to a future of immersive and sustainable shopping
Fashion retailers are pioneering a revolution in experiential shopping, blending digital and physical elements to create immersive consumer journeys.
Brands like Gucci and Louis Vuitton are leading the way with AR-powered virtual try-ons and exclusive pop-up stores that offer unique, interactive experiences. These retailers are setting new benchmarks for customer engagement and brand loyalty as they reshape the retail landscape.
reimagining brick and mortar
The rationale for in-store shopping is changing. While stores may no longer be the primary channel for product acquisition, leading retailers are transforming them into sites of meaningful consumer experiences. Stores are becoming places where consumers can socialize, learn about brands and their products, or simply immerse themselves in a brand-specific atmosphere. This transformation is happening first and fastest among luxury apparel, beauty and fashion brands.
Brand experiences
Web3/metaverse
Leveraging emerging tech and channels to drive new forms of loyalty through innovative brand activations.
Early in 2021, luxury brands including Louis Vuitton and Nars Cosmetics were quick to explore the use of NFTs as a new distribution channel.37 That year, Gucci made a splash when its virtual bag sold on Roblox, the gaming platform, for 20% more than its physical version retailed for.38
Creating unique and temporary retail spaces that offer exclusive experiences and generate buzz.
In 2021, JW Anderson’s pop-up at Selfridges in London used QR codes to trigger AR visuals39, and customers at Louis Vuitton’s Paris pop-up tapped into an AR experience to interact with animated mascots.40 Over the past few years, luxury fashion brand Jacquemus unveiled a series of unique destinations including a flower and coffee concept in Paris and Seoul and a Barbie-pink 24/7 vending machine in Milan and Paris.41
Pop-up stores
Allowing customers to engage with products and brand stories in innovative and immersive ways.
Before the 2020 Olympics in Tokyo, SK-II designed a “social retail” pop-up in Hainan, China, that immersed visitors in a cinematic universe and offered AI-powered skincare analysis, counseling and product recommendations.42 In 2023, Savage X Fenty launched Fit Xperience, a changing room solution that uses scanning, AI and other technology to scan the customer’s body and create a 3D avatar that can then be used to fit clothing items.43
Next-gen technology for interactive shopping
Advances in managing space
Merchandise matters less
A worldwide survey of retail execs indicates that providing “an in-person component to customer experience” is the most important virtue of the physical store, with 44% of respondents naming it.44
Experience matters
Mapping the retail territory
Experience matters
Mapping the retail territory
Retail facilities geared more toward encouraging a brand experience than toward moving merchandise are starting to emerge, signaling a different way to use store footprints for engagement.
Merchandise matters less
Experience matters
Merchandise matters less
Seattle startup Augmodo is deploying a range of cutting-edge technologies, including computer vision, spatial computing, AI and AR to track and map products in complex retail environments, such as sprawling grocery stores.45 The company’s technology could be accessible to users as MR overlays on the physical world, courtesy of spatial computing hardware.
Mapping the retail territory
Runway indicators
Some fashion companies are leveraging generative AI for highly customized marketing campaigns — adapting messages for individual consumers, using large language models to create content, and modifying website and app interfaces to deliver more personalized experiences. L’Oréal has used a generative AI solution that analyzes shopping habits to produce product recommendations — resulting in a 20% increase in sales for one L’Oréal brand.46
Sustainability and circular commerce
Luxury brands are adopting digital product passports (DPPs) to comply with the European Commission’s upcoming Ecodesign for Sustainable Products Regulation (ESPR), which mandates transparency and traceability for products made or sold in Europe. DPPs connect physical products to a digital identity, providing comprehensive information about the entire product lifecycle to promote sustainability and circularity. This innovation not only helps brands meet regulatory requirements but can also combat counterfeiting and confirm product authenticity. Additionally, DPPs enable rich product storytelling and deeper consumer engagement, driving higher conversion rates and fostering long-term customer trust and loyalty by transparently showcasing the sustainability of luxury products.
Numerous leading retailers, including Lululemon, Madewell and Patagonia, maintain “sell-back” programs in which they compensate customers for used items and then resell them, promoting circular economy principles.
Lululemon
Patagonia
Lululemon’s Like New Program
Customers sell back “gently worn” items for e-gift cards. The used goods — 1.7 million items to date — are cleaned and sold on Like New’s online resale shop. Profits are donated to Lululemon’s sustainability programs.47
patagonia
Lululemon
Patagonia’s Worn Wear Program
In addition to its sell-back program, Patagonia will repair most damaged garments for free, with employees using on-site sewing machines in some stores.48
Outlook
Fashion, beauty and clothing brands are at the forefront of experiential shopping, merging aspects of in-store and online experiences into new immersive environments. Practical applications, like AR-powered virtual try-ons and exclusive pop-up stores, are expected to become the norm. However, gimmicky experiences that do not add tangible value to the consumer journey are unlikely to gain traction. As these segments continue to advance experiential retail, more brands will follow suit, transforming stores into destinations and crafting memorable shopping experiences. This approach will draw in customers and forge strong emotional connections with the brand, driving loyalty and long-term success.
A retail renaissance
Over the next five years, retail will be transformed as individualized consumer engagement, conversational shopping, dynamic loyalty programs and immersive experiences become industry standards.
Companies that integrate AI chatbots, digital shopping assistants, in-store digital touchpoints and VR/AR experiences into the consumer journey will enhance product discovery and should ultimately increase brand loyalty and customer retention. Each of these five attributes underscores the importance of treating customers as unique individuals and building more robust, meaningful connections with the brand. Successful retailers can achieve this — along with improved financial performance — by providing a retail experience that is individualized, contextually relevant and responsive to consumers' evolving needs and preferences.
Mastercard stands at the forefront of innovation in retail and commerce, leveraging its deep expertise in AI and data analytics to revolutionize shopping experiences, optimize payment operations, enhance cybersecurity and bolster trust.
With over two decades of AI expertise, Mastercard is at the forefront of using generative AI to optimize operations and innovate payments. Solutions like Authorization Optimizer and Scam Protect empower partners with intelligent transaction routing and smarter recommendations, driven by the analysis of over 143 billion transactions annually.
Making commerce even smarter
Making commerce even safer
By embedding AI-powered security measures in our products and services, Mastercard proactively identifies and neutralizes threats, ensuring data security and building trust in the digital economy. Mastercard's deep bench of AI-powered cybersecurity solutions prevented over $20 billion in potential fraud losses in 2023. Due to advances in generative AI, card fraud detection has doubled in speed and reduced false positives by up to 200%.
Making commerce even more personalized
Mastercard is revolutionizing retail with AI-powered tools that enhance consumer shopping experiences. Through Dynamic Yield, Mastercard helps its customers deliver valuable, useful and enjoyable experiences at scale with smart personalization. DY uses AI to personalize every step of the consumer journey, across numerous channels, including web, mobile apps, email, SMS, digital assistants, kiosks, in-store displays and more. In 2023, DY's AI delivered 371 billion impressions of personalized info across hundreds of brands.
Partner of choice
Mastercard's co-creation approach with partners drives innovation at scale. By leveraging its global infrastructure, Start Path program for supporting startups and commercial partnerships, Mastercard collaborates with over 80% of the top digital payment and neobank fintechs on the CNBC global fintech list, solving real-world problems and transforming the commerce ecosystem and its vast network of innovative new companies.
https://www.netguru.com/blog/smart-mirrors-in-retail https://corporate.walmart.com/about/samsclub/news/2024/04/30/sams-club-deploys-ai-powered-exit-technology-at-120-locations-leading-retail-industry-with-customer-experience-innovation https://newsroom.ibm.com/2024-01-08-IBM-Study-Widespread-Discontent-in-Retail-Experiences,-Consumers-Signal-Interest-in-AI-Driven-Shopping-Amid-Economic-Strain#:~:text=The%20third%20biennial%20consumer%20study,14%25%20content%20with%20online%20shopping. https://www.thegrocer.co.uk/marks-and-spencer/mands-takes-ar-wayfinding-app-trial-public/663880.article https://www.just-style.com/news/hm-group-pilots-smart-mirrors-in-cos-us-stores/ https://www.retaildive.com/news/instacart-smart-cart-checkout-technology-retail-grocery/715944/ https://tech.walmart.com/content/walmart-global-tech/en_us/blog/post/skip-the-checkout-line-with-scan-and-go-at-sams-club.html https://www.voguebusiness.com/technology/google-introduces-virtual-try-on-using-generative-ai https://www.setextechnologies.com/using-artificial-intelligence-to-find-the-perfect-eyeglasses/#:~:text=Ray%2DBan's%20Frame%20Advisor%20Technology,glasses%20that%20are%20most%20suitable. https://www.digitalcommerce360.com/article/us-ecommerce-sales/ https://coresight.com/research/the-true-cost-of-apparel-returns-alarming-return-rates-require-loss-minimization-solutions/ https://nrf.com/media-center/press-releases/nrf-and-appriss-retail-report-743-billion-merchandise-returned-2023 https://snowboardmag.com/gear/smith-i-o-mag-imprint-3d-goggle https://techxplore.com/news/2022-05-mobile-app-based-3d-user.html https://www.globalmarketestimates.com/market-report/ar-vr-in-e-commerce-market-3516 https://www.retaildive.com/news/alo-yoga-app-apple-vision-pro/706646/ https://investor.elfbeauty.com/news-and-events/press-releases/landing-news/2024/02-02-2024-110018651 https://juphy.com/blog/the-importance-of-personalization-in-conversational-commerce https://www.fticonsulting.com/en/about/newsroom/press-releases/fti-consulting-us-online-retail-sales-to-reach-114-trillion-in-2023 https://www.mckinsey.com/capabilities/growth-marketing-and-sales/our-insights/social-commerce-the-future-of-how-consumers-interact-with-brands
https://www.statista.com/statistics/1251145/social-commerce-share-worldwide/
https://www.researchandmarkets.com/reports/5578574/china-social-commerce-market-intelligence-and https://channelx.world/2023/11/new-mastercard-shopping-muse-ai-based-shopping-tool/#:~:text=Mastercard%20is%20putting%20technology%20and,for%20both%20brand%20and%20consumer.&text=In%20addition%20to%20helping%20shoppers,properly%20describe%20it%20in%20words. https://www.salesforce.com/eu/blog/future-of-customer-service/#:~:text=We%20found%20that%2073%25%20of,companies%20treat%20them%20like%20numbers https://www.mckinsey.com/capabilities/growth-marketing-and-sales/our-insights/the-value-of-getting-personalization-right-or-wrong-is-multiplying https://blogs.perficient.com/2023/03/01/customer-experience-trends-in-2023/ https://explodingtopics.com/blog/personalization-stats https://www.mckinsey.com/capabilities/growth-marketing-and-sales/our-insights/the-value-of-getting-personalization-right-or-wrong-is-multiplying https://www.mckinsey.com/capabilities/growth-marketing-and-sales/our-insights/next-in-loyalty-eight-levers-to-turn-customers-into-fans https://blog.accessdevelopment.com/2019-customer-loyalty-statistics https://info.bondbrandloyalty.com/the-2016-bond-loyalty-report-press-release-us https://www.ccn.com/singapore-airlines-will-launch-blockchain-loyalty-wallet-frequent-flyers/
https://www.snowpeak.com/pages/campfield https://outdoorindustry.org/press-release/snow-peak-usa-announces-the-launch-of-its-global-loyalty-program/ https://www.businessoffashion.com/articles/technology/how-coach-used-data-to-make-its-tabby-bag-a-hit/ https://www.cbinsights.com/research/report/retail-technology-startups-2023/ https://www.voguebusiness.com/technology/mapping-the-net-a-porters-of-nfts https://hypebeast.com/2021/5/virtual-gucci-bag-roblox-resale https://www.voguebusiness.com/consumers/new-era-ar-vr-pop-ups-enough-to-lure-customers-in#:~:text=At%20Selfridges%2C%20JW%20Anderson%20has,bees%20buzzing%20and%20flowers%20blooming. https://www.voguebusiness.com/consumers/new-era-ar-vr-pop-ups-enough-to-lure-customers-in#:~:text=Louis%20Vuitton%20opened%20a%20pop,the%20Spring%2FSummer%202021%20collection. https://wwd.com/fashion-news/fashion-scoops/jacquemus-cafe-fleurs-seoul-1235882485/ https://www.cnbc.com/advertorial/behind-the-vs-series-by-sk-ii-studio/ https://www.retaildive.com/news/savage-x-fenty-delves-deeper-into-fitting-room-tech/643390/ https://www.emarketer.com/content/retail-executives-worldwide-say-physical-stores-add-personal-element-customer-experience https://www.geekwire.com/2024/former-niantic-leaders-spatial-computing-startup-aims-to-help-retailers-track-shelf-inventory/ https://www.salesforce.com/news/stories/loreal-salesforce-success-now/ https://shop.lululemon.com/story/like-new https://www.alpinetrek.co.uk/blog/patagonia-worn-wear/
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
31.
32.
33.
34.
35.
36.
37.
38.
39.
40.
41.
42.
43.
44.
45.
46.
47.
48.
Sign up for Mastercard Signals
hide sources
return to contents
Three out of four consumers expect retail companies to understand their unique needs and expectations24 and deliver customized interactions25 — and they’ll stick with brands that do and abandon those that don’t.26
3/4
Indeed, companies that prioritize personalization see significant boosts in engagement, conversion and retention.27 Fast-growing companies generate 40% more revenue from personalization than their slower-growing counterparts.28
40%
The emphasis on personalization has led to an increased focus on responsible data management. In light of sophisticated data breaches and reported misuse of data, trust has become a new currency for brands. Retailers that want to gain share of wallet will need to earn consumer trust by complying with regulations keeping pace with expectations for how data should be used responsibly. (Read more in Mastercard’s Q1 Signals issue.)
show sources
Checkout
In-store engagement
As the shopper moves around the store, smart shelves with sensors and digital displays — or perhaps product tags scanned by a mobile device — could provide real-time information about product provenance, sustainability and availability in the store and online.
Product discovery
Personalization on entry
WECHAT
MASTERCARD
WeChat’s conversational shopping feature allows brands to sell products leveraging WeChat’s chatbot and reach their users in new and engaging ways. The chatbot helps shoppers browse brands’ products, receive style advice and purchase products without leaving WeChat.
Early adopters
MASTERCARD
WECHAT
Mastercard recently launched Shopping Muse, an advanced generative AI tool that revolutionizes how consumers search for and discover products in a retailer’s digital catalog. Shopping Muse recreates the in-store experience by translating consumers’ colloquial language into tailored recommendations, complete with suggestions for coordinating products and accessories.
retailers
coach
Early adopters
startups
Large retailers are leading the way. Amazon, Walmart, Nike, Starbucks and Target use AI, machine learning (ML) and advanced data tools to analyze consumer behaviors and preferences, allowing them to personalize marketing, shopping experiences and product recommendations.
coach
retailers
startups
Coach used deeper consumer segmentation to identify the Tabby bag as a key attractor for young shoppers.33 With insights from data analytics, the company leveraged direct consumer engagement, product iterations and marketing campaigns like "Courage to Be Real" with Lil Nas X and "In My Tabby." This approach led to a surge in searches and sales, with the Tabby becoming a significant success.
startups
retailers
coach
Startups are delivering innovative solutions, too. The biggest category in CB Insight’s latest report on retail tech startups is digital shopper engagement, which includes companies that help retailers “connect with shoppers across platforms and channels with a focus on personalization and loyalty.”34
Pop-up stores
Creating unique and temporary retail spaces that offer exclusive experiences and generate buzz.
In 2021, JW Anderson’s pop-up at Selfridges in London used QR codes to trigger AR visuals39, and customers at Louis Vuitton’s Paris pop-up tapped into an AR experience to interact with animated mascots.40 Over the past few years, luxury fashion brand Jacquemus unveiled a series of unique destinations including a flower and coffee concept in Paris and Seoul and a Barbie-pink 24/7 vending machine in Milan and Paris.41
Next-gen technology for interactive shopping
Allowing customers to engage with products and brand stories in innovative and immersive ways.
Before the 2020 Olympics in Tokyo, SK-II designed a “social retail” pop-up in Hainan, China, that immersed visitors in a cinematic universe and offered AI-powered skincare analysis, counseling and product recommendations.42 In 2023, Savage X Fenty launched Fit Xperience, a changing room solution that uses scanning, AI and other technology to scan the customer’s body and create a 3D avatar that can then be used to fit clothing items.43
Lululemon
Patagonia
patagonia
Lululemon
Lululemon’s Like New Program
Customers sell back “gently worn” items for e-gift cards. The used goods — 1.7 million items to date — are cleaned and sold on Like New’s online resale shop. Profits are donated to Lululemon’s sustainability programs.47
Patagonia’s Worn Wear Program
In addition to its sell-back program, Patagonia will repair most damaged garments for free, with employees using on-site sewing machines in some stores.48
Signals
Q3 2024
Intelligent
Immersive
Conversational
Personal
Experiential
