How Brick-and-Algo is Born

Data Augmented Retail Goes Mainstream 

In 2016, we are starting to notice a trend in how brick-and-mortar stores are getting  data augmented retail (DAR) upgrades. This is part II, in a series about the transformation of brick-and-mortar by data science. To read part I, go here. 

How Brick-and-Mortar Retail is becoming Brick-and-Algo (algorithms), with data-centric customer experience optimization. 

Of all influences, maybe Amazon is contributing the most to this. Or a close second as compared with cloud POS SaaS integrations that to do customer analytics differently through the spectrums of loyalty-marketing and customer lifecycle marketing automation. 

Date-Centric Optimized Customer Experience 

Imagine data at the service of the customer? Really, you are thinking this already exists with Amazon's cross selling predictive analytics engine? Yes, but imagine that pervasive in physical retail, where emotional branding is more salient than just Ecommerce and the mobile customer experience (mCx).

• Email branding means creating high-value relationships
• How can this occur without data on your brick-and-mortar customers?
• A fully data augmented brick-and-mortar stores = A Brick-and-Algo store. 

Cloud Point of Sale / Big Data + Customer Analytics + Product Analytics = Brick-and-Algol Retail. 

Brick and mortar stores are starting to see the potential of better customer insights via sku level data and marketing that's connected and automated to customer and their touchpoints that enables retention, recency and notification campaigns that respond in real-time to data-triggers. 

• Customer analytics + Product analytics = Data-centric Marketing automation 
• Loyalty marketing tailored to data insights = More customer-centric campaigns that can generate ROI. 

Rise of the Brick-and-Algo Store 

This is where data science creates value and ROI for an independent store. This gives them the tool (SaaS) to compete with Ecommerce and the Amazons of this world. That's why I'm so excited about the potential of smart loyalty marketing. 

• Small-Box retail is given an automating marketing engine 
• Retail entrepreneurs and family businesses are given customer insights that are actionable. 
• Starting a small biz in Retail now becomes strategic, not just a gut feeling. 

If data science can augment the chances of how well you are able to manage your store, not just from a POS-centric (inventory) setup, but with Email & SMS marketing as well, you can do less with more and the cost of doing it (cloud = less costly + more seamless) means we are entering an era where independent retailers can flourish. 

Lessons from Amazon 

As Amazon has reincarnated something into physical retail, with a brick-and-mortar location, this presents a new model of what brick-and-mortar becomes in 2016 and really starts to plateau and get full penetration in the early 2020s. 

The very e-commerce giant that disrupted a segment of retail, is now dropping the retail gauntlet and doing more than omnichannel but participating in innovation of physical retail itself. Success breeds opportunity, and if your name is any of the Big 3 As: Apple, Alphabet or Amazon - the digital gods are in your favour. 

Amazon understands its about being where customers are and giving them choice. For example, Amazon also introduced a new feature this year called Watch A Deal, where app users can save items to their watch list and then be notified when a deal is about to begin. While this is app-centric, this is basically a product bookmark, that a customer can use to be better matched with products that interests them. 

Giving Physical Retailers the Right Tools 

Brick-and-mortar retailers can replicate ideas that enterprise retailers are doing in their microcosm with the right software, and if they are linked to a cloud POS solution. These platforms enable the Big Data that's required where APIs can perform specialized functions that can generate  ROI physical retail.

Without better insights and analytics, retail owners often don't have the resources to do marketing that's effective, especially if the store scales quickly. That's why SaaS add-ons that plug into Cloud POS data, are so optimal. 

That's how brick-and-mortar stores are transitioning, to becoming brick-and-algo retailers. 

Let's take another example. Amazon is famous for doing seasonal targeting across channels well. Retailers can create specific campaigns as well to target seasonal events that are most relevant to their sales peaks and store traffic peaks and customers. 

By having a software suite that can do analytics, loyalty programs, lifecycle insights and marketing automation; physical retailers can replicate the data augmentation that an Amazon is doing a big scale in Ecommerce. Customer are mobile, as such, you'll want a solution that not only does Email marketing campaigns but SMS marketing to reach customers optimally. 

Vertical Specific Marketing 

While Amazon is a genius at product matching for customers, for small-box retail, white label loyalty programs may be even more effective at generating ROI. This is because customer experience varies according to the vertical. In some verticals its more product centric, while in others it's more experience DIY or lifestyle centric. 

In the case of this ecommerce Giant, Amazon's stock and variety of books is nearly limitless, while for retail owner of a local store, it's not as product orientated, but brand-trust orientated.

The customer experience is as much a high-value relationship as a question of simply the best prices for the right product. The psycho-social aspect of the interaction players a larger role in the transaction. Getting the right software for your vertical is therefore important as a retailer, but things like analytics, customer insights and more customizable loyalty programs are universally valuable. 

Do you believe Brick-and-Algo has a future in how brick-and-mortar adapts to a digital landscape of ecommerce and enterprise level corporations and global disrupters?