Smart Predictions for the Brick and Mortar Store
The retail landscape continues to undergo a rapid pace of change. Not only is the growth of digital commerce relentless, but the industry is experimenting with new innovations that have the potential to bring a technological revolution to shopping as we now know it.
For example, there are completely person-less stores that rely on video cameras and artificial intelligence to track purchases and collect payment. Advanced data analytics are used to understand trends, demand, and in-store behavior.
While some have wondered if this revolution could lead to the death of traditional retail and the brick and mortar store, physical stores are not becoming obsolete — but how they will be used to deliver the best possible customer experience is changing. These new technologies will be used to enhance the in-store experience, not replace it.
Stores are becoming brand experience and innovation centers. While digitally integrated stores and shopping concepts are emerging, stores remain the key opportunity to engage consumers and create a brand-building experience. Intelligent technologies such as IoT and machine learning help identify shoppers, provide compelling personalized offers, and capture consumer feedback.
Augmented and virtual reality, along with shopping assistants, make traversing the store and finding the right items easier. They also drive opportunities for cross-selling and up-selling. The key to improving customer experience and promotions is the digital transformation of brick and mortar stores.
Data analytics are shaping store processes for better business. Technology can aid and elevate the customer experience — without consumers even noticing it. Retailers can utilize analytics to understand foot traffic, reveal trends, understand causality for conversion rates, reveal customer demographics, and more. Regarding security measures, analytics can be used to trigger alerts caused by certain store activity, perform people-counting, and monitor for theft. Based on data and insights gathered, store processes and even the stores themselves will be re-configured.
However, while data analytics are applied in store to provide better insights into shopper behavior, there are important privacy concerns that must be addressed.
Data protection laws are expanding around the world and consumers are more aware of this issue. Retailers must follow the laws and protect against data thieves while finding the right balance between consumers’ desire for privacy and more relevant, personalized offerings. Smart solutions from SAP are working hard to protect user and customer data, including in-store threats against credit card readers and unmanned cash registers, while enabling retailers to use it responsibly to offer a better customer experience. By safeguarding personal data, a more trusting relationship between the consumer and the retailer can be nurtured.
Predictions for 2020
As digitalization changes the way consumers interact with retailers, the traditional retail model is coming under pressure. The borders between brick and click are blurring and consumers will choose the experience that fulfills their needs with the least friction.
This offers opportunities for retailers with a physical presence to protect and gain market share against digital-only competitors. The use of breakthrough technologies in stores can help drive frictionless experiences and fulfill consumer needs faster. As it is now the era of the experience economy, stores need to become brand experience and innovation centers, not just places to buy products.
The future of shopping will be defined by early adopters of innovative technologies that create compelling experiences based on data —not only from consumers but also from employees providing feedback on brands and products. The combination of operational data with experience data is the key to unlocking heretofore unavailable, actionable insights.
To run “smart stores” as a way to differentiate on consumer engagement and experience, retailers are integrating technologies like smart mirrors that allow shoppers to virtually try on more styles and colors. They’re also offering mobile shopping apps that make it easy to look up product details, perform automated ordering, and check out. In the meantime, store associates are expected to provide higher levels of customer service; to do this, they need tools with access to customer data, product information, and inventory availability.
Enabled by new digital technologies, retailers around the world are looking to develop new business models to drive additional revenue streams. Take Valora’s Avec Box concept. This fully automated store at the main train station in Zurich, Switzerland, uses an end-to-end SAP footprint to manage inventory, prices, and payment with no store associates or traditional manual processes. By using intelligent technology as a backbone, Valora keeps its operating costs low and can now pop up store locations in high-traffic areas quickly as part of a completely new sales channel.
It’s an exciting time to work with consumer industries, because every day we can influence how shoppers engage, buy, and connect with the brands they love.