What you need to know:

• Super Retail Group is spending $20m+ building out its omni, digital, loyalty, and customer capabilities under a strategy known as ‘closest to customer’.
• The long-term goal is to see average spend per customer increase by $30 to $300 per annum – a significant goal given the ASX-listed retailer has more than 10.3 million loyalty program members now spending in one of our four branded retail chains. 
• The company is building its own internal personalisation ‘stack’, underpinning all four retail brands, to ensure it can provide discrete offers and targeting depending on brand.
• The recent launch of the new Rebel customer loyalty program also reflects a rethink around the design of loyalty across the group, oriented around better value and more attainable stretch targets for customers that deliver incremental gain for the group.

This year, Super Retail Group cracked the 10.3 million loyalty member mark across its four retail brands, adding over 1 million active club customers in the last 12 months. Overall group sales also increased by 7 per cent to a record $3.8 billion in the last financial year, with normalised EBIT up 10 per cent to $438 million.

It’s a testament to the ASX-listed company’s commitment to becoming a super retailer by focusing on the customer, not just the transaction, says its GM of member engagement, Aaron Fuller.

“You can’t choose one or the other – it’s not a binary decision to choose the Apple versus the apple tree,” he tells Mi3. “That’s something we talk about internally a lot: Do we invest $1 today for $1.10 tomorrow, or do we invest today for $2 in a year? The whole industry as a whole is driven so much by hourly, daily, weekly, monthly sales, no matter what retail sector you're in.”

There’s no doubt SRG has chosen to plant and grow the apple tree under its ‘closest to customer’ strategy. The retailer is investing millions of dollars into its loyalty, personalisation, and omnichannel play, outlaying $18.1 million in FY23 on the triumvirate of CX tools, up from $7.2m in FY22.

These capabilities are being built under a shared services customer engagement team, headed by chief strategy and customer officer, Rory Scott, and featuring a crack team of experienced digital, loyalty, and personalisation professionals, including Fuller, recruited from tier-one organisations such as Qantas, flybuys, Amazon, Myer, and Lorna Jane. It all has the backing of SRG MD and CEO, Anthony Heraghty, who also boasts significant brand leadership credentials from his time across agencies such as McCann Australia, George Patterson, CUB and Pacific Brands.

Fuller himself boasts of a significant pedigree in loyalty and digital experience, and was previously head of design, digital enablement, and customer journey operations for six years at Qantas. He previously held senior positions in marketing and product at Qantas Loyalty and joined SRG two years ago.

The impetus for change at SRG came with the pandemic. The group’s four brands – Supercheap Auto, BCF, Rebel Sport and Macpac – were all performing solidly prior to Covid, largely driven by in-store purchasing and decent loyalty membership. The pandemic prompted significant digital transformation across most bricks-and-mortar retailers as a superior online-based shopping experience, not just the product being sold, became the battleground.

“When the group made the decision to invest in loyalty and personalisation, it created an ability for us to build a data science and machine learning capability for personalisation,” Fuller says. “That was really the start of things. My challenge is to think about the now, medium to long term, building more members, who stay with us for longer.”

Building personalisation as a company capability

The driving force behind Fuller’s plans is personalisation in a retail setting. If you think about it, retailers haven’t historically had a lot of data on customers behind first name, surname, email, phone number, and transactional history. That’s a far cry from the rich data financial services and insurance companies have traditionally had. With loyalty and a data-driven play, that’s all changing. 

“Data was a big missing piece of the strategy and we recognised we need to have a big data play. That comes with a huge investment for the group, because you have to build out not just capability, but effectively re-organise your architecture of how you collect data, how you use data, how you're going to use data in the future, to feed the hungry beast, which is the personalisation machine,” Fuller says.

In SRG’s case, that translated to a big uptick in loyalty investment, plus the decision to build its own personalisation engine.

“Salesforce has a great personalisation product, as does AWS, Braze – there is a lot of tech out there that promises to do personalisation for you. They're all basically creating algorithms to work out what is the next-best message. We decided to build that personalisation capability internally at Super Retail Group,” Fuller says. “We see it as a competitive advantage to leverage our first-party data and everything known about the customer.”

Rather than buy something off the shelf, the business has partnered with Snowflake, Databricks, and AWS to build the core capability, running these algorithms and the machine learning process internally at SRG. This is fractionalised and spread across all brands.

“If you're competing as one brand, it’s a sizeable investment,” Fuller says. “We are a big partner with Salesforce and have Salesforce’s personalisation product running on our ecommerce sites. It does a great job of asking ‘Do you want X with Y today?’ with continually great results in increasing conversion and basket size.

“We see personalisation as bigger than a vendor or just tech. It’s not A or B, but a blend of everything we know about you, every online interaction such as product pages and reviews, everything our internal machine learning algorithms have built that predict what is the right next product for you, or right next message for you - because there might not always be a product. And with basic rules, such as such as if you do this, do Y.

“We don’t say personalisation equals vendor X or vendor Y or algorithm Y. It’s what are the things you’re doing to basically increase the relevance of that message.”

For Fuller, that means a combination of tools, with rapid experimentation and a continuous learning loop wrapped around the lot.

“It doesn't matter what worked for you or I last week or last year, and it doesn't matter whether I've done these projects before. The market is constantly changing, everyone's updating their tech. Customers’ behaviours and expectations are changing all the time. The only way you actually know anything is working is to just do more tests,” Fuller says. 

“A culture of experimentation is a bit like personalisation: Everyone talks about it, very few people are doing it very well or not doing it enough. We certainly have a way to go in regard to the number of experiments we're running as a group. But when you have personalisation embedded, like we have with BCF and now Supercheap Auto, we’re running up to 100,000 variations in any given day, which a human can't do.

“Effectively, what we've built is a relevance machine and team, driven by art and science aka algorithms. But the only way we learn is by whether you respond to those messages, articles, and pieces of content, or you don't. Whether you do or you don't, we’re constantly learning, which is evolving tomorrow’s send and tomorrow’s experience.”

Where personalisation is going at SRG

To date, personalisation has been scaled to 50 per cent of BCF club members via email and it’s been tested and validated on SMS as well. Personalisation has begun across Supercheap Auto and with the debut of Rebel’s new customer loyalty proposition in November, it’s becoming a reality in that business too. Email has been the first cab off the rank, as well as the website, with SMS and in-store also in the group’s sights.

The future vision for Fuller is building out SRG’s offers engine into a service, which is effectively all those things around personalisation, and rules-based offers on when the right time is the right time to talk to the customer about camping, running, or racing.

“Irrespective of what it’s talking about or where the customer is, SRG is pulling in from offers widgets to provide personalisation across all digital channels and into in-store,” he says.

Just take the humble printed receipt. Given more than 20 million receipts are printed every year across SRG stores, Fuller sees that valuable real estate being used to show customers what products other people like them purchased, or providing links to useful content complementing their purchases.

“You also have the role of QR codes, which we’re all now used to. You can use the QR code to scan something you see in-store and add it to your wishlist online. Or you can tell us you want more information sent to you on that product,” Fuller explains.

Fuller points to Dick's Sporting Goods in the US as a great example of connecting digital and physical globally where the retailer has QR codes across stores encouraging consumers to check out what offers are online for them today, as well as to check if the price is cheaper as a member.

“You pull out your phone and all of a sudden, we can now connect the utopian version of life, which is connecting the digital and physical. Because it was always hard to try and stitch those things together,” Fuller says. 

Another use case in SRG’s sights is threading first-party data through its advertising programs. SRG has signed up with tech loyalty partner, Epsilon, whose product, Core ID, is already huge in the US and used by Walgreens. This serves up content in a paid environment such as Facebook and Google, based on first-party data that indicates products right for a certain user.

“An alternative to buying a custom audience today through Google or Facebook is the ability to use first-party data and spend media dollars behind that to tell you about a product,” Fuller says. “That could be a product the machine has generated, it could be the sleeping bag offer because you purchased a tent yesterday, or it could be a loyalty offer you have seven days to activate for a value multiplier.

“The focus for us is to work through how we leverage and maximise the value of what we've invested in loyalty and personalisation, through all channels. We will continue to be obsessed with testing like we've done through email, into all channels.”

Commercial value realisation

SRG is benchmarking the commercial return of its personalisation investment in the shorter term against incremental visitation of the average customer, along with the incremental annual spend of the customer. The proof will be in the pudding longer term when it gets from $270 to $300 in annual spend average across the four brands.

Key ways it’s tracking results now include whether the group is seeing more visitations or shops per year, and if it’s accruing more money from active revenue per year.

“Those stage gates need to be continually met for us to keep on investing in the future brands and rolling out future brands. We're on track to deliver those targets,” Fuller says.

There’s also the internal benefit back to SRG from personalisation, such as providing learnings around who the customer is that inform products and services, ranging, supply chain and store expansion.

“There is no shortage of use cases extending beyond one-to-one marketing communications of that data science capability. This is just the start of it, not the end of it,” Fuller adds.

Loyalty concepts of value

Loyalty program design goes hand-in-glove with personalisation. This can be seen with the recent Rebel loyalty program relaunch, where immediate value has been added in for customers that wasn’t there previously. Notably, points are accrued on every dollar spent in any channel, and 100 points equal $5 to spend in-store. There’s also no joining fee.

“What all the research showed is when you’re giving me a point for every dollar and $5 for every $100 I spend, a shoe purchase of $250 represents $12.50 back. I’m now going to consider walking down five flights of escalators at Westfield, as there’s now a compelling reason to shop. It sounds obvious, but what we have built is a program that is changing behaviour,” Fuller continues.

“Members receive the points the next day and it promotes and provokes the next member’s shop before those points expire. Our communications strategy post-shop / earn is to share with members what points and dollar credits you have, matched with relevant offers and products for you to use your points on.

“For the less frequent shopper, before your points expire after six months, we communicate your points are about to expired across multiple channels. Typically, loss aversion kicks in and members are motivated to visit and use those points they have earned. Otherwise, you might not have shopped again prior to the relaunch of Rebel Active this year.

“Woolies and flybuys do this already, which is you either earn points or points are about to expire. That's the reason we send you an SMS or an email – you open that communication and underneath there's a loyalty offer plus personalised product recommendations for you. It’s based on what you're buying.”

SRG also chose not to stick with the path of paid subscriptions such as Prime, removing any loyalty program entry fee. Fuller says there’s been no erosion of value thus far from its removal.

“I get the psychology of why I get want to get value out of the program because I'm paying for it. But we've certainly seen no erosion of behaviour of customers - either paid members before or who are non-paying now – which has been great,” he says. 

By contrast, one of the superpowers Fuller believes SRG has is a concept called ‘Best Price Credit’, which Supercheap Auto promotes. It's where something goes on sale and Supercheap sends you the credit without you asking for it, within 14 days.

“That is magic. Members post about it. Universities use it as a test case for great loyalty program design. There's opportunity there as to how we think about that,” Fuller says. “Other brands outside SRG do a similar thing, we’re not the only brand that does it. But we're certainly well known for that product,” he says.

It’s worth noting SRG also made the active decision not to have one single, cross-group loyalty, as has been launched by the Wesfarmers Group with its OnePass offering.

Future concepts of measurement

From everything SRG has announced publicly as well as the roadmap in Fuller’s sights, it’s clear there’s plenty of runway ahead for personalisation at SRG.

And while measuring personalisation rates is currently in the financial year report, Fuller is looking forward to a time when the scale of personalisation across multiple channels will make it impossible to dissect whether personalisation, loyalty or both are driving commercial value for retailers.

“The argument is, well did the shop that was that attributed to personalisation, or was it attributed to loyalty? My view is you can't separate them, they're two sides of the same coin.”