Many people are familiar with the outdated, traditional old store model — think long lines, limited assortments, out-of-stock inventory, and unhelpful sales associates. Considering the popularity of online shopping, customers expect more convenient, tailored in-store experiences to match the ease of virtual shopping.
Although fewer people are shopping in physical stores, brick-and-mortar locations aren't disappearing completely. In fact, over 76 percent of Gen Z shoppers like in-store shopping as much as, or more than, shopping online. Physical stores have two key differentiators over online competitors: in-store associates and brand ambassadors. If positioned correctly, both can push physical retail past online retail in the coming Golden Age of Retail.
The possibilities for future stores are endless. For instance, magic mirrors, augmented reality screens, beacons and interactive showrooming are all becoming a reality for the futuristic physical store. Technology is rapidly changing, but adoption of that technology can differ. For example, radio frequency identification (RFID) seems close to becoming a viable technology today 15 years after Walmart famously asked suppliers to adopt the technology. Inventory tracking drones, first displayed at warehousing conventions a few years ago, now appear at NRF’s Big Show, moving up and down simulated shopping aisles. Considering that these are multimillion dollar investments for brick-and-mortar retailers, how can a business owner approach the future with any confidence these big bets will pay off?
Fortunately, you don’t need perfect clarity of the future to run a successful retail store. The key to success relies on agility. Here are a few predictions on what the store of the future will look like:
The Store of the Future Will Be Personalized
Generic assortments from coast to coast won't cut it anymore. If consumers are going to make the effort to visit a store, they need to be more than just satisfied with their experience. Consumers don't always know what they're looking for before they enter a store, but they do know what being treated as a valued customer looks like — and are then more likely to buy. Companies like Costco, TJ Maxx, and Ross Stores do a great job of attracting treasure hunters with ever-changing, interesting assortments.
Better still are the companies that use their intimate knowledge of consumers to create propriety products for their customers, and then offer those assortments locally. This is no easy task, often requiring machine learning (ML)-based demand forecasting and collaborative product lifecycle management capabilities.
The Store of the Future Will Be Automated and Interactive
The smartphone is the center of a consumer’s universe. This handheld asset has done more to shift the scales of power in consumers’ favor than any other invention. Using their phones, consumers can shop everywhere they go. In response, retailers must operate smart stores that can anticipate, sense and interact with customers everywhere they go — inside and outside of the store.
For example, Amazon Go promises to bring asset/customer interaction to the next level with smart shelving, optical tracking and mobile interactivity. Likewise, Lowe's is experimenting with inventory tracking robots that can replace the time-honored tradition of bringing employees in early to take a physical inventory count. Beacons, smart fitting rooms and RFID can bring Internet of Things (IoT) data into recommendation engines and replenishment calls to ensure that the right product is always within arm’s reach.
The Store of the Future Will Be Centered Around Experience
Never in the history of human kind has entertainment played as big a role in our lives as it does today. Binging Netflix shows, frequently checking social media between routine tasks, and constantly scrolling for inspiration on Pinterest and Instagram … let's face it, entertainment is constantly competing for our time. And our tolerance for boredom is getting lower and lower.
Stores cannot simply remove long checkout lines or trips to the back of the store to check inventory. However, stores of the future must be exciting in order for consumers to stick around. For example, if consumers want showrooming for product information, then stores need to enable customer interaction with products and brand ambassador expertise.
For instance, Nike’s House of Innovation in New York City allows shoppers to scan shoes that will be brought to them personally before heading off to an in-store basketball court to cross-up their friend. Education, entertainment and shopping — all in a single visit.
There Will Be Many Stores of the Future
Retail stores of the future will look very different across the industry. Department stores, hardware stores, mall-based fashion stores, grocery stores, and drug stores will all have their own versions of the store of the future. Each will have a different emphasis and balance between product interaction and education, treasure hunting, and immersive experiences. Within every retail niche or given brand, customers expect different things from different stores, which will require retailers to adapt.
How to Build the Store of the Future
The key strategy for retailers investing in stores of the future will be to deploy modern, flexible platforms around personalization and promotion, asset management, and converged commerce that will enable and measure innovation effectiveness.
These platforms leverage the latest technologies like ML and IoT to connect users through mobile and social networks, as well as provide predictive insights and visibility into inventory, customers, pricing, and promotion — across all channels of ordering and fulfillment. This is where retailers can invest in true agile customer innovation.
The Battle for Customer Loyalty Will Be Won in the Store of the Future
Every retailer needs a customer engagement strategy. Store investments in innovation must be made in alignment with each retailer’s customer engagement strategy, with the final step clearly measuring the impact of these innovations on both customer satisfaction and profitability. Retailers must think like software companies and double-down on innovations that drive the right balance between customer satisfaction and profitability. This critical balance is dependent upon delivering on the right store experience. The store of the future isn't going to be easy for retailers to pull off. However, it is possible by adapting technology that equips retailers for success.
Matt Simonsen is the director of retail strategy at Infor, a global software company that builds SMB and enterprise ERP software cloud products.
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