The role of physical stores in an increasingly digital world is evolving, with brick-and-mortar retail still offering differentiated benefits to their online partners. For the consumer, physical retail offers an element of personal service, staff expertise, and the ability to test and feel products to validate their quality and fit. And for the retailer, physical stores bring boosted margins through reduced supply chain costs. They also provide a ‘hub’ to offer tangential services that bring people together for more than just shopping, such as a coffee shop within a bookstore. But with the pandemic encouraging a focus on the ‘digital shopper’, what can retailers be doing to encourage customers to shop in the physical world, writes Charles Hope, Retail Principal at leading UK tech consultancy BJSS.
The expectations of the modern consumer are constantly evolving and they now expect the best of both worlds. They want the seamless experience and product information provided online, as well as the tailored customer service they receive in-store. In these times of high inflation, continued strike action, the cost-of-living crisis, and high energy bills, retailers must think hard and ask themselves what value they are actually providing to their customers. What is going to encourage them to part with their hard-earned cash in this macroeconomic climate? With people increasingly conscious of how and where they are spending their money, retailers must do even more to stand out from the crowd and ensure customer loyalty.
Meeting customer needs and informing business decisions with tech
Technology has a big role to play. The past few years have seen retailers focused on enhancing their omnichannel offerings. Now, to encourage shoppers back through the doors, brands are looking for ways to enable cross-channel activation and apply digital solutions to the in-store experience.
Emerging technology allows us to replicate some of the online benefits and comforts in-store. With customers becoming more and more familiar with voice interfaces and chatbots, we are seeing rapid advancements in Natural Language Processing (NLP) technology. For example, many systems are now starting to process multiple languages and more complex requests. This form of AI can be used in front-of-house and in-store displays that support customer queries, with generative AI able to produce engaging and natural conversations, designed in a way that reflects the retailer’s brand and values.
Augmented reality (AR) is also making its way into stores. For instance, grocery retailers can use AR to benefit their in-store customers through wayfinding apps. Marks & Spencer’s List & Go, for example, allows customers to input their shopping list and calculates the most direct route to the items they need. And QR technology is now enabling ‘endless aisle’ experiences, where customers can view additional product information, check availability and even purchase products that aren’t in stock at the physical store.
In addition, frictionless checkout and ‘just walk out’ technology (in the style of Amazon Go) alongside distributed point of sale (POS) systems can reduce queue times by allowing customers to make purchases from anywhere in the store, streamlining the journey to purchase. For example, in supermarkets, POS systems can be placed across different departments, such as the bakery and the deli, allowing customers to buy items as they shop, and simply ‘walk out’ once they’ve gathered their items.
The introduction of these technologies can help create a frictionless shopping experience which meets the needs of today’s time-poor customers. But it isn’t just about customer satisfaction. These programs also provide a wealth of invaluable data that retailers can use to improve their forecasting and inventory management. The consumer insights captured through interactions with technology help retailers to identify purchasing habits and adjust stock orders to maximise profits; inform new product decisions based on localised requirements; and reduce waste.
Sustainability is no longer a ‘nice to have’
Amidst heightened climate change awareness, sustainability is now an existential requirement. Although it may surprise some customers, shopping in-store can have less of an environmental impact than online shopping due to the reduction of shipping and returns emissions and packaging waste. But again, brands need to go further.
ASDA, for instance, uses its physical stores to partner with Music Magpie to engage customers in circular economy initiatives. Customers recycle their used technology at designated SMARTDrop Kiosks and receive cash to shop in-store in return. Other brands, such as UNIQLO, are providing services to help extend the life of customer purchases through repairs.
For some brands, like LUSH, sustainability has always been at the core of their product design, supply chains and brand messaging, whereas others (across fast fashion for example) may find it harder to win over the hearts and minds of the customer in this regard. In the sustainability arena, authenticity is paramount to success, and it is not enough to simply offset emissions and ‘plant trees’. With the increasingly sustainability-conscious Gen-Z coming to the height of their purchasing power, the retailers that fail to meet this demand will lose out.
It’s about more than just ‘shopping’
If brands are going to retain and engage customers, stores must be more than a space for a quick purchase: they must be a space for consumers to experience a brand. From special events to community-focused spaces, experimental retail may just be the emerging future of the high street.
Experimental retail can come in many forms. The apparel company, Gymshark, offers personal training sessions, bookable classes, and gym facilities at its flagship store in London, and for people loyal to the brand it has become a place to meet up with other like-minded individuals, cementing brand loyalty through their shared experiences. Others, like Waitrose, offer cookery school classes using the cooking equipment it sells, implicitly creating a positive connection to the brand’s products by creating an experience that brings you out from your smartphone and into the physical world.
Maximising technology to stay ahead
It’s clear to see that the retail landscape is undergoing a revolution, with technology changing the way we engage with brands and make purchasing decisions. With a wide range of digital solutions available, it is more important than ever for retailers to ensure their technology is relevant to customers, and is additive to the consumer experience.
As this retail revolution accelerates, successful brands will leverage practical technology to optimise their business costs and create next-generation shopping experiences that align with the evolving needs of their consumers.