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Store of the future

Measuring Stores in a Post-Pandemic World

Is bricks & mortar retail facing an existential crisis or a rebirth?

In a world where shoppers can buy just about anything online and have it delivered the very same or next day, it’s not unreasonable to ask – what is the point of stores? How can stores possibly differentiate when online shopping offers near-infinite assortment, hyper-personalisation and, increasingly, immediacy?

Over the past 18 months, bricks & mortar stores have been periodically forced to shut their doors and divert their customers to their least profitable channel – e-commerce. Retailers commendably pivoted, and consumers quickly adapted. But what happens next? Will habits learned during lockdown stick, accelerating the demise of the physical store, or will shoppers revert back to their old ways as normalcy resumes? Regardless, the pandemic-induced shift to digital has magnified the urgency for retailers to repurpose the physical space. There will be no return to the status quo.

So how do retailers balance the need for short-term agility with long-term vision? And, more importantly, what data should retailers be using to measure their success?

In this virtual debate hosted by Teradata, Mikael Bisgaard-Bohr, Vice President of Teradata EMEA, Clive Humby OBE, Co-founder of dunnhumby and chief architect of Tesco’s Clubcard, and I explore the key traits required as retailers navigate the complexities in this post-pandemic digital era.

“Historically, stores have measured two things – ‘how much and where’ – but what we need to understand is ‘who and why’,” said Humby. “We have got to stop thinking about just the transaction itself.”

Major high street retailers like Next believe that stores now face a “fundamental and irreversible disadvantage” to online and like-for-like sales declines will remain the new normal. I tend to agree. In a post-pandemic world, the role of the store will be three-fold – transact, inspire and facilitate online shopping. If the role of the store is no longer purely to sell, then how should we be measuring its success? Going forward, metrics like dwell time, conversion rates, staff satisfaction and percentage of online orders collected/returned instore are going to be a whole lot more meaningful than measuring the inevitable decline in transactions made within a retailer’s four walls.

Watch the full debate.

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Amazon Retail trends Store of the future Technology

Amazon UK debuts its till-free concept

Future of e-commerce? Stores, of course!

Big media day yesterday covering the news that Amazon has debuted its checkout-free store concept in London. 

This is watershed moment for U.K. retail. Amazon is known for disrupting the status quo, raising customer expectations and forcing competitors to raise their game. Remember Amazon is a tech company first, retailer second. The big question is – does Amazon really want to become Britain’s biggest supermarket or perhaps it’s more lucrative to license this tech to… everyone else? Either way, Amazon transformed the checkout experience online and will now do the same in-store. Goodbye, friction!

If you haven’t yet had a chance to visit the Ealing store, there is a photo gallery and additional commentary available on Retail Week.
Stay tuned for further analysis.
Cover photo: Amazon
Categories
Retail trends Store of the future

The Retail Exchange Podcast: 2020 Review & 2021 Predictions

Natalie Berg joins Karl McKeever, MD of Visual Thinking, as co-host of The Retail Exchange‘s final podcast episode of the year. 

If you were trying to end this year by winning a prize for its greatest understatement, you could describe 2020 as ‘eventful’. It is difficult in many respects to argue that 2020 was an especially good year. Emerging trends didn’t just gather momentum, they marched forward to turn the industry on its head in ways we could never have imagined. For retail, it’s been a year of contrasting fortunes. Some have faltered. Others have thrived.

To set the tone, we revisit some of the interviews and discussions that have shaped The Retail Exchange’s podcast episodes in 2020, with special co-hosts Karl McKeever and Natalie Berg reflecting on the past year – the challenges faced, things we’ve learned, the opportunities taken – and looking ahead at what’s to come in what we all hope will be a brighter 2021.

You can listen to the full episode here.

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Consumer Retail trends Store of the future Technology

When Non-Essential Stores Reopen, Will Shoppers Accept The Friction?

As Britain’s ‘non-essential’ retailers prepare to reopen their doors in the coming weeks, one of the biggest challenges they face will be convincing shoppers to walk through the door. And, no, I don’t just mean from a safety perspective; I’m talking about the additional friction that shoppers will inevitably encounter.

Will customers queue up to enter a department store? Will they want to pop in to a clothing store if they can’t try stuff on? Will they accept less choice on shelves as retailers make space for social distancing measures? If they have picked up a book off the shelf, will they remember to then place it on the special quarantine cart? This might all be worth the hassle – if there was no such thing called the internet.

Don’t get me wrong. Bricks & mortar retailers should get a much-needed initial boost when they reopen. These are uncharted waters, but pent-up demand must be a given when consumers themselves are pent up for months. We are social creatures, and the notion of ‘going shopping’ is inherently a leisure activity. The high street retailers that have thus far survived the so-called ‘retail apocalypse’ are those that focus on all the things shoppers can’t get online – inspiration, discovery, curation, community, experience.

In my latest for Forbes, I explore how this will look in a post-COVID world. Has ‘experiential retail’ finally been relegated to the buzzword archives? Has a pandemic killed the art of browsing? You can read the full article here.

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Amazon Retail trends Store of the future Technology

Amazon Go Grocery – Learning From Tesco’s Fresh & Easy Failure

Picture this – a radical new grocery concept designed to revolutionize how Americans shop. The store is much smaller than your typical supermarket, around 10,000 square feet and stocking an edited range of just several thousand products. The store doesn’t feature banks of traditional checkouts; instead it’s a heavily automated and efficiency-driven experience. There are no bakeries, butchers, or any of the counter services you’d find in most supermarkets.

Nope, I’m not talking about Amazon’s latest cashierless grocery format, Amazon Go Grocery, which launched in Seattle this week. I’m talking about the now defunct Fresh & Easy, Tesco’s failed attempt to crack the US grocery market.

In my latest piece for Forbes, I explore 3 key learnings for Amazon:

1) Have a clear proposition.

2) Destroy the friction, not the experience.

3) Expansion does not indicate success.

You can read the full article here.

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Retail trends Store of the future Technology

Mindful Consumption, Peak Amazon and the Participation Decade – 8 Retail Predictions for 2020

What’s in store for the retail sector in 2020? First, let’s be clear about what’s not changing. We’ll continue to see a bifurcation of winners and losers as the industry sheds itself of status quo retailers (translation: brace yourself for more doom and gloom). The ubiquitously connected ‘on-my-terms’ shopper is here to stay. We’ll see a continuation of the convergence of physical and digital retail. The race to stamp out friction and inefficiencies will only accelerate, and reinvention of the physical store will remain top of the boardroom agenda.

Now the fun stuff. In my latest piece for Forbes, I’ve highlighted 8 retail predictions for 2020. You can read more here.

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E-commerce Fulfilment Store of the future Technology

Great customer experiences can only be delivered with top-notch operations

The final whitepaper in our series with Red Ant explores how bricks & mortar stores must evolve to become genuine hubs for fulfilment. 

The most successful retailers today are those that view their stores as assets not liabilities. As contradictory as it may sound, they understand that the key to growing e-commerce sales is leveraging their physical infrastructure.

These retailers also recognise that traditional metrics for success are no longer valid in today’s omnichannel world; the future of retail isn’t solely online or in-store but a blend of both channels. A OnePoll survey shows that nearly 40% of shoppers use online and store channels equally.

So, the store estate is actually an asset, but problems arise if they are not fit for their new purpose. As 20% of UK retail sales now take place online, less physical shelf space is required. Instead retailers need to dedicate more space on the shop floor to fulfilment services.

Store fulfilment plus points

When asked what types of experiences they would like when in store, the top three answers from shoppers all related to fulfilment:

  • 48% want simple returns of online purchases
  • 42% want click & collect
  • 35% want to be able to order online while in store when items are out of stock

There’s no denying that the rise in online shopping has come at the expense of physical retail sales, but we can’t overlook the many opportunities it has also created for those retailers willing to evolve.

One of the main draws of click & collect is the ability for customers to ensure product availability before heading in-store, as 40% of shoppers surveyed say that knowing what you want is in stock is a factor in choosing one retailer over another.

Over half (51%) cite not having to wait for deliveries as a reason to shop in store versus online. Customers coming home to the dreaded “sorry we missed you” note adds a lot of friction to an experience that is intended to be anything but.

Holistic customer experience

Click & collect is, therefore, a no-brainer for retailers, and many have been quick to recognise that in-store collection and returns can improve footfall and consequently incremental spend. Countless studies have shown that shoppers often purchase something else once in store and herein lies the opportunity: retailers must engage with shoppers at the point of collection in a bid to cross-sell or upsell based on the items that have been reserved.

Making the most of this, however, depends on equipping store associates with the right technology. The aim should be to establish staff as trusted shopping companions rather than simply someone who gives the customer their order and ticks it off on a list.

The data is there, but retailers need to connect the dots to offer that holistic customer experience.

Download Store of the Future: The Store as a Fulfillment Hub now to get the full picture and read more of Natalie Berg’s expert insights.

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E-commerce Fulfilment Store of the future

Next gets that the future of e-commerce is stores

To be relevant in retail today, you have to acknowledge that stores are no longer purely about selling. I believe most high street retailers are on board with this concept, but few are comfortable implementing it. And that’s because for decades, we as an industry have obsessed over metrics such as like-for-like sales growth whereby success is confined to a shop’s four walls. But it’s 2019 and we all know that’s not reflective of actual consumer behaviour.

Next is one of the retailers that gets it. They have hundreds of stores with a presence on most high streets – yet the bulk of their sales take place online. They’ve accepted that stores are never going be as productive as they were before the advent of e-commerce, and while there is certainly a need to redress the balance through select closures there is an opportunity to redefine the very purpose of bricks & mortar stores. 

Next understands that, as contradictory as it might sound, shops now play a critical role in growing online sales. If you don’t believe me, just look at the tsunami of online retailers now opening physical stores. Having a bricks & mortar presence means online retailers can offer shoppers additional choice in fulfilment while reducing customer acquisition costs, generating that elusive halo effect.

Customers want to shop on their terms, they want the best of both physical and digital worlds. They want to marry the ease of buying online with the convenience of collecting or returning items instore. It’s no surprise that half of Next’s online orders are collected instore, while stores also process over 80% of e-commerce returns.

Another example of online and offline working in harmony at Next is through same-day click & collect. Shoppers can now view and reserve local store inventory for collection in under one hour. This might not be a gamechanger (I can’t imagine many Next orders are that time-sensitive) but it shows how retailers can leverage their stores in a digital era.

Lastly, Next is rethinking the role of its stores by doing something most wouldn’t dream of – teaming up with Amazon. Six months ago, Next became Amazon’s UK partner for its launch of Counter, a service that lets shoppers collect their Amazon parcels from staffed pick-up points in Next stores. Again, this is about the following the customer: according to Mintel, 90% of UK shoppers use Amazon and I would estimate that Amazon accounts for just under half of e-commerce sales in the UK. The partnership is a win-in. No one can do fast delivery like Amazon, but often it’s predictability over speed that consumers are after and this is where stores come in. Meanwhile, Next benefits from the additional footfall and opportunity for incremental spend.

Retailers can take inspiration from Next’s strategy, understanding that stores are an essential component to facilitating e-commerce sales. We have to stop treating e-commerce as the death knell for the high street. We have to ditch those metrics that pigeonhole retailers and start valuing our stores based on their ability to enable digital purchases.

This article originally appeared on Retail Week.

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Store of the future Technology

The case for seamless, not soulless, experiences

In the second of a three-part whitepaper series from Red Ant and NBK Retail, we explore the rise of the experiential store, why retailers must adopt an ‘admission fee’ mentality, and how customer experience is fast becoming the new currency in retail.

Despite the high-profile casualties we’ve seen on the high street, it’s clear that shoppers still crave the experience of visiting stores. But the service they receive in store must surpass what they would find online. We’re currently in a moment of transition, where the physical store is shifting from transactional to experiential.

Kill the friction, not the experience

Today, there’s still a sense of novelty when shoppers encounter a frictionless store experience, but in the future, digitally enabled store experiences will become the norm.

The option to bypass the checkout, for example, will simply become an expectation. This will be ‘basic hygiene’ that retailers must follow to remain relevant to their customers.

While it’s essential to invest in the right technology to facilitate a seamless in-store experience, retailers must also ensure ‘seamless’ doesn’t translate as ‘soulless’.

Retailers are experimenting with a plethora of technologies to enhance their environments and to finally bring the physical store into the 21st century. However, they must guarantee that it’s friction that they’re killing, and not the experience.

Democratising the white glove service

Just as the role of the store must evolve, so must the role of the store associate. They must be able to demonstrate genuine expertise, offering advice and personal recommendations to become a ‘trusted shopping companion’.

“29% of consumers said they would spend more money if a sales associate recommended something to complement their purchase”

In the future, what was once considered a VIP service will be democratised as more mainstream retailers recognise the benefits of providing concierge-level service.

John Lewis has already begun sending staff to theatrical training to improve customer experience, and the department store chain is also giving employees a voice by allowing them to directly engage on social media.

Retailers must aim to provide that white glove service because customer-led clienteling pays. Being able to provide a one-to-one, face-to-face personalised service has the power to increase sales and drive loyalty.

In our own OnePoll survey, 27% of consumers said that having an expert to talk to would make going into a shop worth their while.

And 29% of respondents agreed that they would spend more money if a sales associate recommended something to complement their purchase (based on what they had previously bought or had on their wish list).

The value of human interaction

At the end of the day, the most important rule in retail is being relevant to your customers.

Technology can help retailers augment the human touch, allowing them to adapt and thrive in the digital world. Today’s consumers may be hyper-informed and accustomed to shopping on their terms, but they still value human interaction – particularly when it comes to advice and inspiration.

“Employees are retailers’ most valuable resource”

With so much change afoot, it may be overwhelming for retailers to know where exactly to begin but they should start with their most valuable resource – their employees.

Retailers can democratise the VIP experience by equipping staff with the technology they need to offer specialist, personalised advice and information.

Consumers are no longer tolerant of mediocre service, so retailers must raise their game if they want to differentiate from online rivals and survive in this digital era. Clienteling and consultancy should not be beyond the reach of any retailer that wants to build an experience.

Download Store of the Future: The Experiential Store now to get the full picture.

Categories
Amazon Store of the future Technology

Don’t believe the hysteria over till-free stores

We all know it’s only a matter of time before Amazon Go reaches UK shores. Trademarks have long been registered, the rumours have been flying and, having debuted in New York City last month, it’s fair to say that Amazon has an appetite for urban expansion.

This explains Sainsbury’s recent scramble to open the first till-free store in the UK, a PR coup ahead of Amazon’s inevitable incursion.

And they’re not alone – pretty much every grocer from Tesco to Marks & Spencer is trialling scan-and-go technology, self-ordering kiosks are now the norm at McDonald’s and Argos quietly launched its first self-service digital store last month. Time is the new currency.

Checkout-free shopping will particularly cater to busy city workers on their lunch break and it will undoubtedly hit travel retail hard – till-free will become the norm in airports and train stations five years from now. But is this really the future of retail?

The customer experience is paramount, but today ‘frictionless’ often translates as ‘soulless’. Most shoppers still value human interaction in-store and, as we’ve witnessed with self-checkout, there will be resistance among some shoppers to do the heavy lifting themselves.

Source: Sainsburys

Take the new Sainsbury’s trial, for example: for a store that’s all about reducing friction, there’s certainly a lot of it initially as shoppers have to download the app and get used to scanning QR codes.

Let’s not forget that, a few years ago, Morrisons scaled back its self-checkout ambitions in response to customer feedback. There has been a lot of hype about automation, but when it comes to responding to disruption, retailers must not lose the human touch.

Defending cash

Checkout-free stores can be controversial. Not only because they will accelerate the number of retail job losses (according to the Office for National Statistics, 25% of supermarket checkout jobs disappeared between 2011 and 2017), but also because going cashless can be seen as discriminatory towards customers without bank accounts or smartphones.

This summer, Philadelphia will be the first US city to prohibit cashless stores, and a growing number of cities are considering a similar ban. Amazon has had little choice but to begrudgingly adapt, and its shiny new Manhattan store is the first Go branch to accept cash.

Lastly, we must acknowledge the elephant in the room: theft. Today, it feels unnatural to bypass the checkout, and Amazon says it takes customers several visits before they no longer feel like they’re shoplifting.

But theft is a genuine concern and was one of the reasons Walmart shelved its scan-and-go programme in the US last year, with a former executive joking that the scheme should have been simply called “‘go’ because the customers can’t seem to ‘scan’ anything”.

The biggest retailer in the world is now embracing a mobile point-of-sale solution. Equipping more staff with handheld devices so shoppers can pay on the spot is a solid compromise – you still provide a frictionless checkout experience while taking the onus off the customer and alleviating concerns over shrinkage.

I don’t doubt that the digital store is the future of retail or that checkout-free shopping will appeal to certain customers and shopping missions. But consumer adoption will be slow, and they will never replace manned checkouts entirely, which is why the hysteria over till-free stores is unwarranted.

Automation is coming but, in the process, retailers must ensure they don’t kill the experience they are working so hard to improve.

This article originally appeared on Retail Week