What will the store of the future look like?

Due to the COVID-19 epidemic, retail stores had to close suddenly, and now that many retailers are reopening their doors, we thought you might be interested to know what the store might be like for those customers who decide to shop there in the coming months and years. Of course, the practical implementation of some of the experimental solutions and the customer experience may be slightly different from what was originally intended, so we've highlighted all the points where you can expect any changes. Nevertheless, many of the technology solutions and sales tools that Jeff Schmitz discusses in his post are becoming increasingly valuable to retailers who prioritize omni-channel marketing optimization. Some of them can be useful from the perspective of both employee and customer safety. If you have questions about the trends discussed here or how COVID-19 may evolve, contact Zebra.

According to the Zebra Shoppers Study, a majority (77%) of retail sales executives believe that customers are satisfied with today's level of personalized in-store service. However, the truth is that only 57% of shoppers are satisfied. This is a major difference in perception and needs to be addressed if retailers want to increase foot traffic and sales in their stores.

While the majority of shoppers (57%) still prefer the conventional store over the Internet*, this trend will not continue for a long time. Based on current consumer feedback, in five years only 46% of consumers will still be making more purchases in conventional stores than online. (*These statistics come from a survey conducted in late 2019.

We suspect this time frame has shortened because of the COVID-19 epidemic and consumers' desire for social distance.)
But that doesn't mean the traditional retail model is dead, or at least terminally ill. E-commerce has not devalued conventional stores, as the headlines might suggest. 64% of retailers opened new stores in 2019. And online retailers, including those who started out digital right away, are directing their customers to physical stores to implement the buy online, pick up in store (BOPIS) model, as well as to return online purchases. (This is true even today, despite the economic difficulties many smaller retailers have had with COVID-19.)

Retailers also didn't have to abandon the operating principles that have kept their storefronts open for so many decades. At least not completely.

The convenience of online shopping has prompted retailers to create new customer experiences and implement standards of operational efficiency and warehouse management to satisfy the 21st century shopper who expects instant response to their request, whether for information, product or service.

Technology is a major factor in a positive shopping experience

If retailers want to win and keep customers in these challenging times, they must modernize their stores and supply chains. But executives may find it difficult to find the technology to help them understand what's really going on at their locations or in the marketplace and find the reasons for what's happening. And without the right technology, it's nearly impossible to know how to fix problems that affect the customer experience in a store (for example, improper product placement can make it seem like there isn't one), or how to take advantage of opportunities to increase basket size.

At the same time, it can be difficult to understand whether technology is helping or hindering the customer's in-store experience.

That's why retailers and technology solution providers have been taking part in concept stores, such as the Modern Retail Collective at Mall of America, or implementing their own pilot projects in their stores for the past couple of years. Before new technologies like RFID tags, automation systems and mobile platforms can be widely deployed, they need to be tested in real, flexible environments to see which ones actually improve the customer experience in the store.

For example, can real-time assortment management and, in particular, replenishment of merchandise be better managed with an "eye in the sky" tracking system? And can this system help figure out which clothes a customer tried on and bought, and which ones they left in the fitting room or put back on the shelf? (Or even control the distance between employees and between employees and customers?)

Some may simply want to know if investing in new mobile computers at the point of sale and warehouse software is enough to give employees smart tools and improve the customer experience. Others need to integrate additional smart technology, such as the Internet of Things (IoT), prescriptive analytics or even artificial intelligence (AI), to meet today's retail requirements. And how much can an intelligent automation system improve the customer experience? Would a robotic device that checks the presence and display of items on the shelves help prevent shoppers from leaving empty-handed? Could the entire inventory management process be reduced to the installation of shelf cameras connected to the AI? (This measure also promotes social distancing in stores by reducing the number of employees controlling items on the shelves. Employees could be sent with merchandise to specific shelves only if those items are confirmed missing. This will minimize any contact, including extended contact with customers).

While some questions still await detailed answers, we can assume that in the near future we will be able to better understand the impact of technology as stores reopen and the results of these pilot programs emerge. As this report suggests, already the first wave of the Modern Retail Collective project in late 2019 has provided insights into what technology is improving the in-store shopping experience.

For example, we learned that half of shoppers (50%) like self-service and they prefer not to be disturbed by store employees. (It's suspected that now that COVID-19 requires additional physical distance measures, that number will only grow.) Nevertheless, "small prompts explaining or demonstrating the technology" proved helpful. Another 45% of shoppers "wanted to be shown what to do first and then do it themselves. In most cases they only went to a store assistant when they had questions. Finally, a small group of customers (5%) "wanted and needed help from a store employee throughout their interaction with the tech systems." These preferences could not be detected by the store staff, and formal surveys were needed to identify them. (Such assistance will be needed for some time until shoppers become accustomed to the new technology, which is designed to increase their independence and help them maintain social distance.)

Where do we go from here?

If retailers want their physical stores to remain successful in the digital economy, they must move from "systems of record" to "systems of reality" and do so quickly. Only those with a certain level of operational intelligence and task flexibility will be able to adapt quickly to market changes and meet customer expectations. The good news is that, according to Zebra's Intelligent Companies Index, most retailers are pretty close to being called an "intelligent company.

However, technology alone is not enough. As the first wave of the project Modern Retail Collective showed, if retailers want to get the most out of investments, "the introduction of technology must be supported by comprehensive changes in the store.

Workflows need to be redesigned and employees need to be trained to strike the right balance between technology use and human involvement so that technology doesn't become a disincentive. (Keep in mind that technology does not replace store employees. It allows them to become more efficient, while giving customers exactly the independence they want).

Merchandising strategies also need to change to account for the natural flow of customers in stores and customer interests, data on which is mined, of course, by technology. What's more, performance metrics need to better align with customer expectations and behaviors and become more actionable. Simple key performance indicators (KPIs), which were sufficient five years ago, may no longer be a meaningful measure of success. (Even the metrics that were in use six months ago may have to change due to COVID-19.)

As noted in the McKinsey report, "A broader set of input and output metrics must be tracked to truly measure the success of omni-channel marketing. Employees need to measure their impact on the omni-channel customer shopping experience and help take specific and measurable in-store actions."

To summarize

While we're not exactly envisioning the store of the future yet, it's safe to say there will be a combination of mobile systems, RFID, analytics, and intelligent automation. These technologies will allow retailers to see what's happening in any area at any given time, understand why it's happening, and know exactly what to do about it. Store employees will no longer guess how much their actions help or hinder customers, and customers will no longer walk out of the store feeling unsatisfied.