Retail is about to change big time
We are on the brink of a second online age where e-commerce and physical retail are becoming just retail. In the last months, we have compiled thoughts on the future of retail design from leading companies across the globe that we share here.
Most of the brick and mortar stores around today are box-shaped and laid out in the manner that retailers find most practical for running the store efficiently. The main activities of the customer is to search for what they want to buy in long aisles, try to get help from the few staff members that still work in the store, queue to pay and then carry the heavy merchandise home. No wonder that the store of the past is a threatened species. All “store functions” can easily be much improved – or totally taken away – by technology and new thinking.
This is where new omnichannel retail design comes into the picture.
The emergence of AI and the use of big data and algorithms as basis for business decisions, much as we see online, is about to impact retail as a whole. All touchpoints must be optimized to capture high-quality data that can be used. As a consequence, tomorrow’s retail will consist of hyper-personalized experiences. At every touchpoint – physical and digital – each interaction between brand and customer will be unique. However, customers won’t give up their precious data for free. In a tit-for-tat data economy, retailers must offer something valuable in return in exchange for customers’ data.
In most sectors, there will be no room for digital-only or physical-only retailers – everything will be omnichannel. However, the roles for physical and digital channels will change – sometimes merging the best of the two worlds. This fusion creates new, and changes the functions of old, touchpoints. Physical stores must adapt to a digital society and e-retailers must learn the tricks of the trade from brick and mortar stores. New formats, new store sizes, information outlets and delivery methods will emerge from the fusion slurry that is omnichannel today.
As automation and artificial intelligence penetrate our society further, retail’s service offering will change completely. The first big shift will be the automation of customer information and search. The second will be the automation in mundane and repetitive tasks such as keeping inventory or handling payments, just as many factory jobs have been replaced by machines. With smarter machines, we will also see an increasing amount of robots being used in store customer service. Retail employees must instead become relationship builders, decision makers, problem solvers and influencers for their brands.
The customer of
He is from generation Z, meaning he is a digital native that is always online and on social media. However, he has not the least interest in technology itself – only the potential benefits it has to him. He wants to get inspired and learn more about products and services. He appreciates good storytelling but generally listens much more to his friends and people he looks up to rather than corporations. He enjoys being part of a group and community and is an active contributor to his networks.
She is generally excited about new technology and innovations. However, she is cautious about her privacy and does not like to share too much information – unless she gets something valuable in return. She is excited about new features, services or products, but gets equally irritated when things do not work out or are uncoordinated. She is disloyal to brands and retailers when others offer a better service or price. She is very individualistic and wants thing exactly her way – customized to the smallest detail.
She has a demanding and sometimes stressful job. She is concerned about efficiency and not interested in retail ”experiences”. Therefore she is an early adopter of products and services that make the life puzzle easier. She is willing to pay for efficiencies such as timely delivery and smart and convenient services. She has very little time to browse stores or do research – if she finds what she wants, she gets it.
With customers online at all times. Retailers must create a customer journey with no dead ends. No dead ends implies that customers can start on a smartphone or computer and continue in store, or vice versa, without any obstacles. In store, the phone functions as an extra service layer, either as AR or for doing price comparisons and accessing knowledge.
Yielding a seamless and better customer experience, cutting-edge retailers create physical touchpoints that cater for the modern, omnichannel customer. Pick-up points, order-to-home desks, self-scanning stations and express checkout points are all part of the new customer journey.
Content is king. The best retailers know this and have replaced flashing promos with top-notch digital content generating benefits for the customer. We see digital extended shelf functionality in-store that show a wider offering or in-depth information about products or fitting rooms equipped with interactive screens that allow customers to ask for assistance or just adjust the lighting.
In tech-savvy retailers’ stores, you check in when you enter. Proximity-based technology, e.g. beacons, then customize the experience for you. RFID-chips keep track of every product in the store, allowing for a no-queue, self-service experience as well as managing inventory. Computer vision is used for heat mapping and analyzing customer flows and behavior as a tool for increasing efficiency.
The pure transactional action of payments is changing fast. Mobile payments and other subscription-based models are relieving the administrative burden of handling payments in stores – increasing safety, reducing queuing time and saving employees of tedious cashier tasks.
While mainstream in the supply chain, we are beginning to see robots making their way into the aisles and check-out areas of stores. Chatbots are increasingly being used for customer service. And actual robots are used for simple and repetitive tasks such as sorting out rotten fruit or stocking the shelves.
The last mile of retail, the delivery, will see big developments in the years to come. There is much talk of drones, albeit being controversial and a heavily regulated field and some ambitious retailers have already taken off. New mailboxes, leaving goods in the trunk of your car, moving pick-up points in trucks, one-hour-deliveries to your favorite café, train station or office is getting much attention.
Designing the future
Omnichannel solutions will work to increase efficiency in shopping. Apps, mobile payments, recommendations, viewing in-store stock, and other features will speed up the customer journey. Simultaneously, computer vision and AI will make sure the customer flows are optimized and that the shelves are stacked.
Much in line with agile marketing, physical stores will, with the help of modern tech, be able to handle an increasing degree of improvisation and be quicker to adapt to the surrounding world. Retailers must learn to engage through unscheduledness, inspiration and playfulness. Rain? Promos immediately change to umbrellas. Promo not working? Computers change it every hour and optimize for the most sales.
Customers are doing their best to make sense of the endless amount of recommendations, information, comparisons, etc available to them. Retailers must seize the opportunity to be positioned as the masters of their categories. The whole customer journey, in all touchpoints, must convey knowledge and expertise and not only persuasive selling!
Not only will most regular stores be smaller in the future, retailers will also have to rethink and redesign for VR-access to physical stores, or satellite stores or pop-ups that enhance the shopping experience. Extended shelves can help with long-tail sales.
Customers expect more and better service – and they want it for free. Tailoring of goods and services, 24/7 service and endless modifications is normal for the modern customer – the challenge for retailers is finding out how to perform on the expectations (and get paid for it, too!).
While automation will no doubt take over many jobs that were previously done by humans – it will primarily be the dull and more repetitive tasks such as information giving, search, check-out, re-stocking and the ”I’ll check in the back”-ing. Employees’ roles will shift toward problem solving, being inspiring influencers and providing a human touch.
Get your retail game
Can your customers order online and pick up in-store? Order in-store to home? Do you have an app with in-store compatibility?
All your touchpoints must generate and capture data that is actionable. This should then be used to make informed business decisions about your retail concept development.
Do you have a pilot store? Have you piloted in-store screens for e.g. digital extended shelf? Do you constantly try and test connections between your offline and online touchpoints?
Richard Kylberg, Managing Partner
+46 73 545 50 18
Tomas Conradi, Partner, Head of Strategy
+46 70 821 35 03