Retailers will be under more pressure than ever this year to differentiate themselves in a cluttered and competitive environment, and this in a market where consumers are also under huge budget constraints. 
Rising interest rates, a weak rand, transport and utility costs, and regular petrol hikes have all dented consumer confidence and eaten into discretionary spending. Against this backdrop, retailers may be tempted to focus on price as their differentiation – but I would argue that they could consider focussing on innovation instead.
Cutthroat competition is nothing new to retailers, but today, they face a market where their customers have more choice and less appetite for spending money. In this sort of market – with margins already paper-thin and little space to cut them further – smart retailers are starting to think about how they can get customers to spend a little more with them each month and how to steer them away from competing brands on the shelf.
This is where innovation comes into play. By making the shopping experience easier, more enjoyable, or more convenient for their customers, retailers can protect margins rather than racing to the bottom through price competition. 
We are seeing many of South Africa’s top consumer brands starting to integrate digital – in particular mobile – into their retail experiences in a bid to innovate. Rather than seeing it as a threat to their traditional processes, leading brands are using digital to enhance and extend their relationships with their customers.
Today, digital is everywhere, creating new transactional spaces and consumer experiences that stretch from interactive outdoor, self-service kiosks, and smartphone experiences to digital couponing, integrated rewards programmes at till points and social media sharing, and even into automated call centres. Each of these touchpoints is a place to converse with the customer and to understand him or her better by gathering data.
By way of example, if you know which other products your customer is buying alongside yours in a supermarket, you can use this information to help inform how you target them from a lifestyle perspective. This kind of data about the consumer is increasingly valuable in a competitive landscape, when it can be used to retarget and reengage them at a later date, but with an increased knowledge of what the consumer wants and when.
This process of engagement gives brands space to innovate in ways that delight and surprise consumers – either by creating increased layers of experience or adding a layer of education and utility for the consumer, while communicating about a particular product. In all these examples, digital allows brands to deliver integrated and valuable experiences for the customer that fuse creativity, technology and business solutions.
Innovation in retail is about capturing customers’ attention and winning their hearts by understanding their needs. These relationships of shared value can position retailers for long-term success and sustainability even in difficult times. 
Gloo is proud to be South Africa’s most awarded digital agency for both effective and creative work. It has been recognised as the nation’s Digital Agency of the Year in 2007, 2008, 2009, 2010, 2011, 2012 and 2013. Gloo was also named overall Ad Agency of the Year at the 2012 AdReview Awards – the first time in the history of the awards that a specialist digital agency has been awarded this title.
www.gloo.co.za / Twitter: @glooniverse
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