Retail is going through times of change. The surge in costs, margin strain and the e-commerce boom have placed the sector under great pressure. On top of this, the players in this market have had to face major changes in consumer behavior and expectations resulting mainly from disruptive commercial models driven by tech companies. These models are customer-centric and based on customization. Therefore, nowadays, clients have raised the bar and demand experiences that are operationally fluent and tailor-made to their commercial needs. All of this has triggered the need to reinvent retail.
Retail sector companies are in search of smart automation alternatives, so much so that Markets & Markets forecasts in a report that the automated retail sector will be worth 19 billion U.S. dollars by 2023, growing at a compound annual rate of 11% as from 2017. Grand View Research also has carried out a study and estimates the market size will reach 58 billion U.S. dollars in 2025.
The use of technology and automated processes allows for the implementation and optimization of different retail operations. Ranging from simple operational tasks, such as tracking product availability to avoid stockouts, all the way to customer service tasks, the service becomes more agile, with interactive kiosks and self-checkout systems, for example.
Given this context, the smart stores represent a new innovative segment. They are offered in a ready-to-set-up mode and its operations are fully autonomous, from making deliveries to answering shoppers’ queries to addressing the needs of customer care service. They are prepared to work 24/7, located in strategic spots in urban centers, both indoors and outdoors. At the same time, these shops are equipped with the technology needed to manage the sale of different products remotely, for instance pet supplies, snacks, pharmacy items, electronics, baby and children products, among many others.
Smart stores, hinging upon exponential technologies, such as robotics and data analytics solutions support, maximize the chances to engage customers with value propositions. This is particularly evident when compared to stores that are technology-free, which work much like stores in the 20th century.
Physical versus virtual
On the other hand, it is important to keep in mind another phenomenon. Even though the impact of e-commerce is undeniable, and was actually bolstered by Covid-19, the possibility to see and touch the products first-hand still draws 60% of consumers to bricks-and-mortar stores, according to a 2019 report.
In order to maintain physical store presence on top of an online service, there are many strategies available. One of them, chosen by companies such as Apple, Louis Vuitton and Samsung, is bringing flagship stores into the mix. Their aim is to enhance customer experience, creating new spaces, destination stores that people want to visit (in fact, they are real touristic attractions on their own). The design of these stores creates special atmospheres, enabling customers to interact with the physical products.
Smart stores, it is safe to say, have a different purpose, that is, to serve as a midway alternative between online and traditional bricks-and-mortar stores, complementing these models with a new sales and delivery space, as part of an omni-channel offer from brands and retailers.
According to its proponents, these innovative stores represent a new paradigm for product commercialization by offering shoppers a “retail experience that is fresh, fast and free of human interaction, allowing clients to shop for products, pick up online purchases, make payments, and restock at any time, 365 days a year.” And not only do they guarantee deliveries in seconds but they can also handle online payment and self-checkout services.
Details that matter
New generation smart stores come in a variety of versions: kiosk, totem, island or trailer. They are an alternative to the last-mile delivery. Additionally, they could work as a new advertising channel for digital signage and video visualization.
A noteworthy characteristic of smart stores is the advantage to gain insight on customer preferences, which can help launch personalized promotions and offers that run a higher chance of boosting conversion rates.
In operational terms, smart stores are ready-to-use solutions that, for example, can be installed at wholesaler’s facilities selling directly to end customers, or even at bigger spaces such as airports, shopping malls, hospitals and university campuses. They can also be installed at supermarkets, single-item stores, gas stations or pharmacies. And they can even work as centers for electronic commerce.
To operate at these stores, the consumers can either make an in-store purchase or shop online through a smart phone app. All payment methods are accepted, be it physical or virtual. In the case of an online order, the client can decide on a time and date to pick up the items, which can be done by simply swiping their smartphone over a sensor to scan a QR code.
At the threshold of the fourth industrial revolution, technologies have come to disrupt numerous industries and retail is no exception. The accelerated transformation of stores is already under way. And brands operating in the retail sector will need to adapt to this trend.