Smart Retail – When Real-World Shopping Meets Digital
Retail has faced unprecedented challenges this past year (and counting).
International lockdowns, coupled with on-and-off regional disruptions, have kept employees from working, interrupted the flow of goods, and importantly, kept customers from visiting businesses to buy said goods.
There’s no doubt this lack of physical shopping has been hardest for most retailers. While all have struggled to varying degrees, some have seen actual growth in other areas of their business – particularly online.
Driven by the huge increase in online ordering, UK supermarkets have finally seen their online grocery become ‘consistently profitable’. The French luxury goods group Kering (whose brands include Gucci), saw their online business account for 14% of total sales¹.
Meanwhile, huge traditional retailers such as Target and Walmart² saw huge increases in online sales during 2020.
For any retailer that could successfully use technology to improve remote access to their services, the pandemic has proved to be very profitable. Especially as consumers needed new ways to do things – from working out to socializing. HelloFresh, a meal delivery service, ended 2020 with total sales up 107 percent³. Tonal, a remote training system, says its unit sales increased by a monstrous 800 percent⁴. Peloton sales doubled⁵.
There is no doubt that for some the pandemic boosted their existing services (it’s no surprise online ordering of food or workout systems increased) but their infrastructures were ready for it. Others were able to quickly make use of systems that were underused.
The question is, as the pandemic subsides, can retailers retain the gains they’ve made? Sure, a restaurant can boost sales by offering additional ‘drive-thru’ lanes⁶ today, but once lockdown ends, what can keep people coming?
This is especially important for traditional retailers offering ‘on-the-side’ online services. Additional efforts will need to be made to keep customers who no longer ‘need’ to shop online – but who now can clearly see the benefits of doing so.
The ongoing lockdown challenge
For many retailers, it’s regional lockdowns that continue to decide whether you can open your doors or not. In eastern Germany, just alongside the Czech Republic’s border, positive coronavirus cases are (as of April 2021) far above the national average. A big reason is that the area is largely industrial, which severely limits any ‘work from home’ initiatives, and many workers come from the Czech Republic, which is also experiencing huge infection rates. As lockdowns have been eased and workers flow back into the factories, and tourism increases, infection rates inevitably climb again.
As such, lockdowns in the region are longer and stricter, which means local retailers face bigger challenges than retailers who may be nearby, but not in the same viral catchment area.
Unsurprisingly, the lockdowns, coupled with increased competition from online stores, are forcing traditional brick-and-mortar retailers to consider alternative and smarter solutions to generate income and keep their customers.
It’s not just retailers that are changing with the times.
Consumers are shopping online in greater numbers and wanting more of that experience when they’re in a physical store. Convenience, ease-of-use, and tailored experiences are becoming more of an expectation than a nice-to-have.
For consumers who may now, in this covid world, be reconsidering the need for ‘non-essential’ shopping, the stakes are high for retailers to encourage customers into their stores.
A recent Bergmeyer report on the Future of Shopping highlighted these concerns, with 35 percent of those surveyed stating they were somewhat apprehensive and 20 percent were strongly apprehensive about returning to non-essential shopping – with 60 percent citing crowds as the primary reason.
As vaccinations roll out worldwide, there is light at the end of our current pandemic tunnel, but 2021 will not be the year retail goes back to normal. If it ever can.
Our new normal may require a true rethink of how retail needs to deal with customers. Many are looking at a fully connected, omnichannel experience – where you create a seamless digital and in-store experience for your customers across all devices and stores.
However, this all-in-one approach isn’t for everyone. Just as some companies prefer to use an Enterprise Resource Planning solution that covers everything, some go for a best-of-breed approach. And this is where smart retail comes in.
Often described as a set of smart technologies, smart retail is all about using specific tools to give your customers a better, faster, safer, and yes, smarter experience when they’re shopping with you.
For some, this could mean developing a solid e-commerce site. For others, near-field communication (NFC) can enable two devices to communicate with each other and exchange information when they’re near each other – letting products directly ‘talk’ to a customer’s smartphone (it’s also a clever way to monitor stock and see what people are interested in).
Such digital technologies are also being used to track those who enter your store. Apps, such as Germany’s Luca app, require customers to scan a QR-code before entering. The customer’s data is then shared with health authorities, and if a covid outbreak occurs, immediate contact tracing begins.
Today, with the ongoing and seemingly unstoppable development of ‘Internet of Things’ devices, it’s the perfect time for retailers to look at digitally transforming their business.
Such transformation needs to happen within your physical stores and be fully interconnected with any digital presence you already have (or will have). These digital solutions aren’t about solving one specific problem but are ideally about unlocking value and putting a system in place that can handle any issue confronting it. All while improving the customer’s experience. This means being willing to take risks and try new things.
While there may be a difference in customer expectations, everyone has similar wants – convenience, pricing, availability, and personalized service. A smart store – that connects you with your customers – can address these quickly and easily.
And give you immediate access to their valuable data, so you can better track customer insights.
Ultimately, smart retail can give your business the edge it needs to stay competitive. And there are a lot of options to choose from.
The top smart retail trends for 2021
While smart tags have been gaining in popularity the past few years, our recent pandemic and its ‘social distancing’ are seeing their usefulness increase. As are even smarter tags, which use a combination of IoT, GPS, and RFID technology.
Not only can a smart tag (which uses a unique code that identifies the product it’s attached to – and that links to your management system) tell you where items are (at all times) in your store, but how many there are, what the item is, and when they’re running low. They can also help you synchronize your promotions.
Each tag can keep you constantly informed about its status. This is invaluable when keeping your stocks in order. Prices can be changed remotely (specifically, when using Electronic Shelf Labels), more can be ordered automatically, and all can be done without staff needing to be on the floor and re-stocking during your busiest times – ideal when it comes to social distancing.
Additionally, smart(er) tags are taking things a step further. They can help you monitor the temperature in your store. Humidity levels. Where and when an item is moved. Directly monitor a product if it’s been shipped from another store. You could even monitor and adjust lighting levels depending on whether customers are interacting with products in an area or not.
The e-ink advantage
Digital shelf lettering or Electronic Shelf Labels are increasingly using (so-called) e-ink displays, which are similar to what is used with e-book readers. Not only can they update information (pricing, availability, discounts, etc) quickly and remotely, they don’t generate paper waste and use very little energy to run.
Limiting personal contact during a pandemic makes sense when it comes to safeguarding the health of your employees and customers. And while contactless check-outs weren’t developed solely for that reason, they’re proving to have a range of benefits for both customers and retailers.
For customers, one of the biggest advantages is convenience. Faster transactions and no waiting at the checkout. They can also use secure tap-to-pay technology and not even have to enter a PIN. There’s also the opportunity to pay via smartphone. And automatically link up any loyalty programs, so your staff doesn’t have to find out to activate them.
Retailers, on the other hand, can benefit from more efficient operations through faster payments and fewer employees having to directly engage with customers. They’ll also gain customer loyalty by providing a better customer experience. And depending on the scheme you’re involved in, a checkout-less/contactless solution can better protect against fraud through its inherent security and encryption.
When it comes to contactless shopping, carts (or trolleys) will be something to watch. Shops, such as Amazon Go, use cameras throughout the shop to monitor what customers place in their carts – but for most, this would be too expensive to install and run. Smart carts may be the cheaper alternative for most – built with sensors and cameras, they can use artificial intelligence to see what’s placed in them. They even come with built-in scales so they know the exact weight of the cart, which means customers can easily purchase items by their weight.
They can then pay by either their card – at the cart – or with their mobile wallet (Google Pay). It’s also a terrific way to provide incentives ‘while’ the customer shops – such as immediately providing a coupon based on what they put in the cart.
Representing the perfect mix of modern technology and digital innovation, augmented reality (AR) and virtual reality (VR) are set to revolutionize the shopping experience. It’s also a smart way to engage with customers who cannot come into your store – whether through lockdowns or other reasons.
Overall, their potential is huge. A Goldman Sachs report expects that the global market for AR and VR will be US$1.6 billion by 2025 – and it can be argued that, owing to the coronavirus pandemic’s lockdown and social distancing, that this could be much more.
Able to improve customer satisfaction and engagement, each solution provides a way for shoppers to see products without being in-store (brick & mortar eyewear shops are now enabling shoppers who visit their websites to virtually try on glasses using their computer or smartphone camera), view information on them when they are in the store, and even view how they would look in their house or on their bodies. Clothing stores have even incorporated that technology into smart mirrors that enable the shopper to take a selfie, which is then digitally placed within their catalog, showing them how they would look wearing the clothes.
VR is a computer-generated ‘reality’ using 3D imagery that a user can interact with using goggles and gloves that are fitted with motion sensors.
Your entire store can be created in a digital world where a customer can browse without ever leaving their home.
AR utilizes graphic overlays – usually on glasses and smartphones – to provide additional information about an object that is being scanned or looked at.
Adverts can be shown – as the customer looks at an item. Anything can be incorporated: Nutritional information, place of manufacture, whatever may be relevant or enticing to a customer.
For retailers, such technologies can help build more loyalty through engaging, entertaining content that provides an experience. It can also be used for employee training (virtual training/gamification, in particular), interactive marketing, and the data gathered can be used to study consumer preferences and habits.
The reality is, going virtual can help you stand out from the crowd.
Interactive displays and customer tracking
If we needed further proof that the world is becoming more digital, interactive displays and self-service kiosks are a sure sign. And for retailers, their potential is immense.
Not only can an interactive display (which can be updated remotely to reduce labor costs), provide detailed content, it does so using appealing imagery and audio that can keep customer’s in the store longer, provide a unique experience, and create additional touchpoints throughout a store. Each touchpoint can also be fitted with a smart beacon – a Bluetooth-enabled device that can pass on advertisements and other marketing information directly to a customer’s smartphone.
It’s also possible to fully monitor what a customer does in your store by setting up a smartphone and AI-tracking. With ‘always on’ Internet becoming the norm, cellphones can be used to follow your customer around your store (as phones look for wi-fi, that info can be collected) and tell you how long they were looking at any one area and how long they were in the store. AI can (along with cameras) see what they are putting in their cart in real-time, which can provide immediate insights into customer behavior and, importantly, what they’re buying – so you can better identify trends and manage your inventory.
Self-service kiosks also mean you don’t need to keep so many employees behind counters, and this also means a faster and more convenient experience for customers.
In many ways, that’s what smart retail is all about.
Improving your in-store process (including inventory management) and having something different to attract customers, provide a better experience, and give them another reason to keep coming back. Something that is vitally important as people begin to return to pre-pandemic behavior and have more confidence in shopping in person again.
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About the author
Harry is our expert for the retail and e-commerce industry.
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