2025 The Year of
Personalization, Finally?
As we enter 2025, we reflect on 2024's retail landscape: record bankruptcies, clear winners and losers, and inflation woes. From Gen Beta to Baby Boomers, we have more generations than ever spending money, each with unique needs. But boy are they different!
As we read these stories, talk to our own clients, we see the struggles. Many struggles aren’t really that different than 10 or 20 years ago. To grossly oversimplify, it’s the struggle between short term performance and long-term vision. When the pressure for short term results takes over, managements take their eye off the customer and start to discount feverishly to keep the traffic up.
Going into the second half of this decade, I believe we’re going to see more retailers go back to basics:
- Brand. Why are they here? What do they stand for?
- Macy’s was a beloved department store, some would even say it was magical at times. Quality fashion at reasonable price point and some hints of luxury. Staff ready to help guide you through your shopping experience.
- Offering. What was that niche they filled that customers loved?
- Abercrombie CEO has stated to CNBC “Getting close to the customer and understanding what they are looking for is the win. Put out there great product, fashion and an equation that they are excited about.”
- Customer. Todays customer is demanding a personalized experience.
- As Starbucks works to recover their new CEO is working to bring back the personalized service, writing customers names on the cups, addressing people by name.
When you think about the basics; the basics of service and when service levels are extraordinary, it’s typically in a small store. Remember the butcher who always remembered your parents’ favorite cuts? The specialty retailer in my hometown, Sweet William, all the associates know me, they know what I like and what works for me. They make it easy for me. As large retailers it’s hard to get to that level of personalization but today there is opportunity and the tools to get you there.
We predict that more organizations will go back to the basics to deliver on their brand promise while creating meaningful personalized experiences. To do this successfully, we will see more organizations:
- Move to the cloud
- Adopt a unified customer data strategy across the org
- Invest in connecting systems across the full tech stack
- Lean in further to ML, AI and generative AI
- Enhance their customer retention and loyalty strategies.
To thrive, retailers must embrace a unified customer data strategy, move to the cloud, and leverage AI and generative AI—while remembering that technology enhances, not replaces, human interactions.
Move to the Cloud
Adopt a Unified Customer Data Strategy
Investing in Connectivity
Lean further into ML, AI and generative AI
Enhance your Customer Retention & Loyalty Strategies
Many organizations are still hampered with legacy systems. Some homegrown, some provider on-prem. Organizations are limited by these systems because they weren’t built to be agile and configurable, they were custom designed to support an effort at one point in time. As technology has evolved and customers’ expectations with that, to stay competitive organizations need to update their tech stack, move to more configurable platforms and move to the cloud.
As we scroll LinkedIn, we see many posts asking "to CDP or not to CDP". Organizations are looking for ways to bring their customer data together. Personally, I believe a CDP can be helpful. However, no technology is going to help if you don't have a unified data strategy as an organization.
A unified data strategy ensures that all collected data can be effectively utilized to create a comprehensive view of the customer, enabling personalized interactions at every touchpoint.
As a customer loyalty platform provider, we’ve seen first-hand the challenges that a lack of connectivity across a tech stack can create for any initiative and the organization.
A simple golden rule of data collection – only collect what you intend to use. If your systems are connected and the data isn’t flowing in a way that you can use it, you won’t be successful in delivering engaging personalized customer experiences. Integrating systems is not easy nor inexpensive but it is imperative to your success.
There are plenty of people writing about this, so I’ll keep it short. AI will bring you more value. Focus on it wisely. Challenge your teams to create a plan for leveraging ML & AI. Challenge your vendors partners to create or share their plan for you. Then evaluate what’s best for your business and your team, execute cautiously and accordingly.
Remember, technology enhances human interactions, not replaces them. Applying insights from AI/ML can equip your in-store team to personalize your customer's experience in real-time.
Loyalty, when executed effectively, is key to successful personalization. Unlike other marketing strategies, loyalty involves a mutual commitment to an identified value exchange, enabling 100% accurate data collection directly from customers. Organizations committed to personalization must invest in customer loyalty strategies.
Our most successful clients have made these changes and are now focused on further enhancing their loyalty strategies. They’re calling this personalization maturity. They are creating ways to further customer engagement, ways to further extend their brand into their customers lives by recognizing their passions and successes. These brands are tailoring their approaches to different generations, recognizing that customer behaviors and preferences evolve throughout their lives.
These brands are creating customer experiences that exceed the experiences of the village butcher and local apparel store. It is possible to get back to the basics, make enhancements and deliver truly personalized experiences.
Over the next few years, we believe we will see more and more organizations moving in this direction. We will see stronger growth from brands that fully understand their customer and deliver on their needs.
The State of the Retail Industry 2025
JAN 2025
As Chief Growth Officer, Erin Raese leads Annex Cloud's go-to-market teams and corporate strategy. With more than 25 years of experience in the loyalty industry, Erin brings a wealth of knowledge and passion to her role. She began on the brand side with Hyatt Hotels, followed by years consulting fortune 500 brands on loyalty strategy and program design. She also co-founded the loyalty marketers association—Loyalty 360. Erin has deep passion for driving our customers' success through loyalty initiatives. She believes that a customer-first, loyalty driven organization is the path to success. Erin has a virtual open-door policy—don’t hesitate to reach out to talk loyalty, your program or your plans.