Aug. 6, 20196 min read
Authors: Emil Waszkowski - Head of Digital Consulting
With e-commerce growing at an unprecedented rate all around the world, brick and mortar stores have to work twice as hard to attract customers’ attention. No wonder - online shopping keeps the desire for convenience alive. There are ways to compete with online retailers and create a greater in-store experience, though. And the easiest way to do so is by using technology to their advantage.
As a matter of fact, the industry is already undergoing a digital transformation, with worldwide retail tech spending expected to increase 3.6% to $203.6 billion in 2019. It’s mostly due to the rise of new technologies, changing patterns of consumer behaviour, as well as the influence of companies that put digital first and become true pioneers of the industry.
The response to these changes, however, vary from business to business. One thing is certain - the changing nature of retail is bound to require a tech-fueled and customer-centred approach from the retailers. If they want to stay competitive, that is.
Implementing technology just for the sake of it is not good enough anymore. But, using tech solutions to increase convenience for shoppers and franchisees, or gather relevant data to enhance and personalize their shopping experience, is a completely different story.
Collecting and analysing customer data more effectively, leveraging new technologies like AR and IoT, and incorporating innovative payment systems are only a few examples of how technology can transform in-store shopping. In fact, there are many ways for retailers to differentiate from their online competitors.
With software being one of the fastest growing technology expenditures in the retail industry (according to Gartner), online and mobile shopping have become disruptive forces within this sector. Many retailers are adopting data analytics software to manage their stores more effectively and provide an effortless and personalized shopping experience to their customers - even in real time.
That's hardly surprising. According to BRP Consulting’s "2019 Special Report: In-Store Mobility", 63% of consumers rely on mobile phones while shopping in-store to compare prices, search for offers and coupons, and check inventory, among other things. With self-scanning apps, mobile devices can also turn into a POS system and speed up the checkout process while selling on-the-go. The BRP study noted that 44% of consumers surveyed would shop with retailers that offer such a possibility.
These numbers might be the reason why in-store mobile experience is one of the top customer engagement priorities among retailers. Even though many of them have already developed some sort of shopping apps, retailers are now looking at new ways to take advantage of mobile technology. And rightly so.
The biggest Central and Eastern European convenience store chain Żabka is a great example of such efforts. It has been working on two mobile apps - one dedicated to its franchisees (the award-winning "frappka" app), and the other meant for its customers. In the near future, the app will encourage shoppers to purchase products based on the circumstances while they're inside the store, and send them notifications about any Żabka stores in the vicinity - suggesting that they may be in need of shopping. Both apps align with the company’s digital transformation strategy that is supposed to lead to the creation of “the store of the future” very soon.
Another brand that brings retail to a new level is Nike. Its flagship store in New York is mobile-centred and clients can check out and choose products to be delivered to the fitting room using an app, which is also a source of personalised discounts.
Coming back for a moment to the checkout process, though, retailers have already been automating it in various ways. For starters, many convenience stores have been using self-checkout machines. However, even though plenty of consumers are expecting a more convenient shopping experience with less human interaction, such machines are definitely not everyone’s favourite.
Yet, the cashierless stores take automated checkout to a whole new level. They use cameras, computer vision technology, and smart shelf sensors to track shoppers and their actions so that they don’t have to wait in the line to pay for what they want to buy. Instead, they can be charged automatically once they leave the store.
That’s exactly how shopping works in Amazon Go stores. Amazon has been a gamechanger when it comes to e-commerce, but apparently, it wasn’t enough for this tech giant. Its cashierless stores are a true novelty - customers can simply enter the shop, pick-up desired items, and leave without queuing or checking out since the payment is automatically made via the Amazon Go app. There are now ten stores open in the US, with reported plans for thousands more worldwide by 2021.
Automated checkout enhances more state-of-the-art technology. Computer vision can be followed by face recognition and thanks to that, customers won’t even need to scan their phones to pay for the products - faces can be matched with their digital wallets. However, at least right now, Western players are not as interested in face recognition as the Chinese. Its popularity also depends on both technology itself (it’s not perfect yet) and customers’ concerns about privacy.
Not only checkout can be automated. Bossa Nova Robotics raised $29 million for their robots that scan shelves of 50 Walmart stores three times a day to monitor and restock inventory.
Robots can also serve as… shopping carts. It may not sound like a life-changing technology, but a cart that follows a client instead of being pushed and manoeuvred between the narrow aisles makes sense. It is also tested in China, at 7Fresh which is a chain of supermarkets from Alibaba’s competitor, JD.com.
Alibaba’s Hema stores that aim to converge online and offline shopping is another interesting example from China. Hema offers an entirely new experience - their stores also serve as distribution centres and customers who are more accustomed to traditional shopping are encouraged to order online and get all the products delivered even within 30 minutes. Hema is also famous for offering an in-store dining experience which is provided by robots that move ingredients from a shop to the restaurant and then serve the meals. Except for soups, which are served by human servers, so it seems that robots still need to learn.
It might seem like a distant future, but the truth is that physical stores are increasingly becoming places for experiences rather than purchases. With IoT, in-store shopping can easily be enhanced - and there’s no need to go all the way and build a cashierless store in order to make that happen.
Take beacons, as an example. They allow sending personalized messages and offers to smartphones within their reach, or analysing the routes customers take in the stores in order to display products in a better manner. RFID and GPS sensors, on the other hand, make it possible to obtain more precise data on how the products are stored or handled, and where they are located in the supply chain. This, in turn, helps retailers to ensure the whole process, from manufacturing a product to when a customer buys it, is running as efficiently as possible.
With the global IoT in retail market projected to reach USD 94.44 billion by 2025, it’s only a matter of time before the majority of retailers implements IoT solutions, one way or another. In fact, a few popular store chains in the US, including Macy’s, Urban Outfitters and Timberland, have already been experimenting with beacons, which might be why Internet-connected tech for retailers has now been offered by increasingly more startups (such as Leantegra).
Over the last few years, retailers have been transforming brick and mortar stores to meet the expectations of their customers and stay competitive. Fortunately, despite significant changes, physical stores will continue to attract customers - in fact, Forrester estimates that 86% of U.S. retail sales still happen in brick-and-mortar stores.
By using technology to their advantage, retailers are now blending the online and in-store shopping experience to provide new value to their customers. Still, in order to be successful, those in-store solutions have to work seamlessly. Otherwise, the lack of assistance might become problematic - if there’s an issue with the software, customers often feel irritated (even though many of them expect less human interaction while shopping).
It might be difficult to maintain the right balance between automation and making your customers feel special and taken care of, but it’s definitely worth the effort. Actually, it may be necessary to keep your brick and mortar store up and running for years to come.