April 23, 20209 min read
Authors: Mikołaj Saik
It’s been more than a month since the COVID-19 quarantine paired with multiple restrictions were imposed, affecting the economies around the world. As a result, the situation is increasingly difficult not only for citizens but also for certain industries like retail.
Many shops remain open, but this doesn’t change the fact that recent restrictions have a negative impact on their profitability. Nonetheless, the actions towards liberalisation of retail and unfreezing the economy are seen much more frequently these days. In such circumstances, it’s worth figuring out how retail businesses should operate in this new reality. Here’s our take on this matter.
Even though the curve of new COVID-19 cases per day starts to gradually flatten, especially in Europe, the results are far from being satisfactory. In many countries, including the US, there are still thousands of deaths being reported daily.
Source: COVID-19 Dashboard by the Center for Systems Science and Engineering (CSSE) at Johns Hopkins University (JHU) 16.04.2020
Most economies remain frozen, which generates enormous loss each day. In fact, according to the Business Centre Club, every day during the lockdown means approximately 7-8 billion PLN lost in Poland alone. In the long term perspective, every month the economic slowdown caused by COVID-19 is a loss of 2 percentage points in annual GDP growth of the major economies.
Every day also brings us closer to the domino effect, which could have irreversible consequences due to a large number of closing small and medium-sized businesses. If they somehow stay afloat, though: the more they have to wait, the harder it will be for them to get their businesses back on track and adapt to the new reality. No wonder that 84% of Polish entrepreneurs demand the restrictions and limitations being lifted as soon as possible. For many of them, a few more weeks under the lockdown would cause immeasurable debts or bankruptcy.
Being aware of the economic consequences the lockdown has, a few European countries have already started to remove some of the restrictions or at least increase the limits. In Austria and the Czech Republic, more stores are expected to be open. Even Spain, despite a concerning number of deaths that still remains high, is trying to change the policy to be more “liberal” for the citizens.
The restrictions have also been lifted in Poland, at least judging by the recent news. In response to the deteriorating economic situation and changing policies in neighbouring countries, the Polish government has now planned to “unfreeze” the economy. Right after opening the parks and forests to the public, the idea is to liberalise retail, which should be promising enough for the retailers. It doesn’t mean, however, that there will be no more restrictions regarding the hygiene and safety of both store staff and customers. In fact, opening the doors to one’s shop might still be challenging, especially without preparation and taking appropriate measures.
It’s safe to say that a lot will have to change with the virus being around, and we’ll all have to get used to the new reality. So far, the only economy that can be treated as a benchmark after the crisis, is China. Due to a significant drop in COVID-19 cases and the increasing immunity within the country, more than 80% of all stores and restaurants are now open.
The economy was somewhat revived, but the situation in shopping malls is still far from being as it used to. The profitability of malls in Shanghai dropped by 30%, in comparison with the sales results before the crisis. People are still afraid to go outside and visit crowded places, making shopping a necessary activity rather than an enjoyable one.
At the same time, the situation creates a demand for shopping online. Interestingly, the SARS epidemic largely contributed to today’s success of retail giants such as Alibaba or Tencent. Can coronavirus have the same impact and inspire the popularisation of certain solutions?
It’s hard to compete with solutions like e-commerce these days, but this doesn’t mean that there’s no room for other “quick-fixes”. It’s worth taking into account other tools and tactics that can help the retailers meet the expectations of their customers and keep both them and store staff safe in the process.
In our opinion, it’s crucial to keep minimising the “physical touchpoints” with customers inside the stores. By making it possible to avoid human contact as much as possible while shopping, customers can feel a lot safer and thus, still willing to shop in brick-and-mortar stores. The efforts to reduce the number of shoppers at once are also appreciated, but might not be enough to attract customers anymore.
The COVID-19 crisis causes steep changes in consumer behaviour. The penetration and adoption of online grocery shopping and native mobile apps usage for shopping has grown in the last 2 months more than in the last 2 years. Most of these steep changes are here to stay at the "new normal" phase post the crisis. Shoppers will go back to buy also in-store, but will want to keep social distance, shorter shopping trips and less friction during the shopping journey.
Therefore, retailers will face no choice but to develop their omnichannel strategy (improve home delivery capability as well as click & collect both in-store and in pickup centers), improve native mobile app functionalities (such as Scan & Go, wayfinding and product search, product recommendations, contactless payment and more) for better shopping journey.
Because of the current economic situation, retailers rather focus on implementing short-term solutions that can help them operate despite difficult circumstances. They have to realise that the virus won’t just disappear, though, which is why it’s also important to start thinking about the actions they will take once the worst part of the crisis is over.
Even with the virus being under control, the situation inside brick-and-mortar stores won’t exactly go back to normal. Public, crowded places like shopping malls still won’t feel safe, and it’s up to the retailers to show the customers that they actually care about their safety and health. How can they do it, then?
Our answer is Scan & Go. It’s confirmed by the efforts of retail giants like Walmart, that’s currently investing in this technology in its Sam’s Club chain. The self-checkout systems market size was already expected to exceed 4 billion USD by 2024, and the current crisis is likely to fuel its growth.
Here’s why Scan & Go can be a game-changer in the long run:
The increased safety of customers and store staff - no queues, no contact with other humans or even the self-checkout kiosks, that can be used by multiple shoppers and are prone to transmitting the virus. The only thing the customers have contact with is their smartphone.
The speed of the process - one of the advantages is also the fact that everyone proceeds with checkout on their own, which eliminates the need to stand in queues and makes shopping much faster and safer.
Lower costs of running the store - Scan & Go can also eliminate the need for cashiers, which are prone to be infected with the virus (not to mention that confirmed cases are likely to scare the customers away for a long time). This way, retailers are actually able to save money and keep everyone safe - but it doesn’t change the fact that they should reduce the number of cashiers gradually.
Technology is not exclusive anymore - since pretty much everyone owns a smartphone these days, all that it’s needed is a dedicated mobile app that can enable shopping. The retailers don’t even have to invest in self-checkout kiosks anymore.
Retailers don’t have to fear thefts - there are many ways to ensure transparency and minimise the risk of thefts. Walmart, for example, is equipped with surveillance cameras to monitor who enters and leaves the shop. Nonetheless, it’s worth taking into account that the mobile app that Scan & Go solutions revolve around helps to build trust between the customer and the retailer. The retailers trust the customer to scan items correctly and pay for them - in return, they create an account and entrust the retailer with personal information. Shoplifters will try to be anonymous and are less likely to use a solution where they have to identify themselves.
FutureProof Retail came up with an interesting solution to prevent theft: encouraging bag checks to detect items that were not scanned. To start with, store associates have an app which allows them to flag suspicious customers and trigger a bag check. Before customers leave the store, they scan a QR code at the exit and either get a green light saying “good to go” or a blue light which means a store associate will check their bags.
These checks can also be triggered randomly - which means that every customer will get checked from time to time, and this doesn’t mean that they raised suspicions. The system simply maintains a trust index and learns from these checks. Basically, customers who scanned their items correctly gain trust and will get checked less often. On the contrary: if items were not scanned, they are added to the basket, which means that customers will get checked more often.
As Christian Toelg from FPR said, “FPR’s loss prevention system is lightweight as it does not require expensive hardware, cameras or sensors, nor permanently assigned staff. At the same time, it is highly efficient with loss rates that are substantially lower than those at the cash registers.”
Future Mind works with various businesses in the retail industry, and we’ve been concerned with the challenges they have to face. In these circumstances, together with our partner FutureProof Retail, we want to help introduce Scan & Go to the local stores. FutureProof Retail has already implemented Scan & Go in a number of stores in the US, helping them fight the current COVID-19 more effectively, and restart their operations after the quarantine.
The solution we’re bringing together to the local markets can easily increase the safety of customers and store staff while being really intuitive. In fact, to ensure the simplicity of the UI, FutureProof Retail used Grandma Test - they tested each feature with a group of real grandmas to make sure it is easy for them to use before the feature is released.
These are not the only benefits, though. Their Scan & Go has plenty of features that add value for the shoppers and the retailers: in-store navigation, marketing automation of in-store promotions or shopping suggestions, just to name a few. It also offers comprehensive anti-theft & anti-fraud protection through dedicated technology and well-tested methodology.
Together with our partner, we can start implementing Scan & Go relatively fast, depending on the chosen model:
If you own a large chain and have a mobile app in place, the Scan & Go solution has a dedicated, easy-to-implement SDK which allows us to integrate it with your existing app. If you don’t have the mobile app yet, we can create a mobile strategy for your business, including mobile app development. Don’t hesitate to get in touch before your competitors do!
If your retail business is much smaller and you don’t have the app - don’t worry. FutureProof Retail offers a free Scan & Go solution for stores like yours. It includes the self-checkout feature, as well as the anti-theft technology and the possibility to adjust the solution to your own branding. You can find more details here.
It’s clear to see that retail is now facing one of the most breakthrough moments in the last ten years. Our current clients are large companies that have already started their digital transformation journey before the crisis - and can now change their focus and implement new tech solutions relatively fast. This process might be challenging, but it’s still much easier.
From the very beginning of COVID-19 quarantine, we’ve been wondering how to help companies that need a solution here and now, that can be implemented within days, not months. Together with our partner, we’ve come up with a solution that can help these companies adapt to a new reality, which is going to come very soon. Implementation of Scan & Go is a great opportunity to keep the market position and provide customers with the safest shopping experience possible. - says Tomasz Woźniak, CEO of Future Mind.