Insights / The rise of digital retail technologies in complex times

The rise of digital retail technologies in complex times

Introduction

It’s well documented that 2020 has changed the retail landscape. Businesses have had to adapt the fundamental ways they work. And, with physical processes and in-store customer experiences under threat, this means relying more than ever on digital technologies. 

In this white paper, retail data specialists, rascal systems, explores what these changes look like, how digital retail technologies are helping, and what the future for retail might be in such complex times.

What’s behind the boom? 

One thing to make clear is that, even prior to the outbreak of Covid-19, many retailers were already pushing their digital transformation strategies to improve the customer experience – to provide a more convenient and frictionless service. 

The difference now is that the key driver has shifted from customers demanding a better experience, to customers demanding a safer experience. According to leading data and analytics company GlobalData, with increased competition from e-commerce, reduced foot traffic, and low consumer confidence, the need to build digital capabilities is now or never for physical retail stores.

Research by the shopping app Ubamarket* backs this up. Its study found that more than 40% of Brits would prefer as little human interaction as possible when they shop. While 34% of consumers believe self-checkouts cause significant anxiety due to hygiene concerns and proximity to other shoppers. 

On top of this, 62% of shoppers said they want to be able to complete their supermarket shop and exit the store in under 20 minutes.

 

Exploring the technologies 

Footfall analytics and virtual queuing technology are among the new platforms which retailers are deploying to speed up customer journeys in-store and provide increased safety and convenience.

Online platforms and digital services are also being utilised to enable shoppers to plan store visits, book remote online appointments and engage in try-before-you-buy initiatives.

It’s digital technologies like these that are giving retailers the tools to meet shifting demands. Provided, of course, that they’re implemented correctly.

 

Smart checkouts are moving quickly    

One of the prime technologies that’s accelerating in 2020 is the smart checkout. This is where the fixed checkout process is replaced by a frictionless model. 

Probably the most prominent example of this technology is Amazon Go: these outlets embrace the concept of ‘Just Walk Out’, where customers don’t have to visit a single pay point. The benefit of this is that customers do not have to encounter a cashier – protecting both parties in the current climate.

Amazon has already made this technology available to other retailers, although some are developing their own systems. Tesco, for example, is trialling its own version for staff at its UK headquarters. 

Elsewhere, the technology company AiFi is partnering with Albert Heijn, Carrefour, Żabka, and Loop Neighborhood to launch autonomous grocery and convenience stores featuring contactless and checkout free shopping. AiFi is on target to deploy 330 stores around the world by the end of 2021.

‘We are going to see explosive growth in autonomous stores,’ says Steve Gu, CEO and co-founder, AiFi. ‘With the onset of Covid-19, the need is even more urgent for a contactless and autonomous retail store where you can shop and feel safe in a physical environment.’

 

Scan-and-go improves the flow

Although not completely frictionless, scan-and go solutions enable customers to avoid the traditional checkout process and quickly pay for their goods at specialised terminals, using handsets or newer mobile apps.

Although scan-and go was already growing pre-2020, retailers have significantly invested in this technology to offer it for the first time, or to provide more terminals to cope with increased demand. This solution again promotes cashier-less interactions between a retailer and its customers, while also reducing queue time and ensuring customer throughput is maximised.

Central England Co-op is the latest retailer to announce a scan-and-go trial in partnership with Ubamarket. If successful, it will be rolled to 262 food sites in 16 counties. Will Broome, Chief Executive of Ubamarket says: ‘This past year has been incredibly difficult for the retail sector and the launch of the Central England Co-op – Scan, Pay, Go app demonstrates a clear focus on the evolution of customer experience, convenience and safety in a rapidly changing retail landscape.’

 

Queues are getting shorter  

Asda and Sainsbury’s are rolling out virtual queuing systems to stores so shoppers don’t have to wait outside; while Kroger is monitoring customer footfall and activity inside its stores to curb the spread of Covid-19. The system counts the number of shoppers entering and exiting the store using IoT-embedded cameras, alerting operators when the store reaches 50% of capacity. This prompts them to open additional checkouts to speed up the process.

Click and collect is not a new concept, however its surge in demand in 2020 has been exceptional. 

This technology also provides customers with the ability to pick up additional items while collecting their original order. Cybertill* found 65% of consumers make additional purchases in-store when picking up click and collect orders. 

Virtual experiences are another area that retailers are beginning to explore. In the run up to Christmas 2020, John Lewis and Waitrose* launched a new AR feature on the John Lewis IOS app. The feature enables customers to try before they buy on a range of artificial Christmas trees, virtual cookery classes, make-up masterclasses, personal styling services and more. 

 

Is this risky retail? 

New technology always comes with some inherent risk. Take click and collect as an example. A retailer needs to ensure the customer gets what they have purchased, or a suitable replacement, while still managing costs and maintaining margins. To do this properly, the importance of robust data and workflows underlying these processes cannot be underestimated.

Other issues with click and collect include the increased burden on store staff and service levels with a third of shoppers (32%) stating they have faced long queues at collection points (Cybertill*).

Locker storage solutions, like Quadient’s*, can address these in-store collection issues, relieving staff of the responsibility of managing parcel pick-ups and giving them more time to serve customers. 

One of the other key risks is losing the brand experience. Customers tend to shop regularly with one retailer for a reason, often loyalty and trust. If all retailers in essence become ‘the same’ – offering the same levels of frictionless experience, best-in-class online platforms, and with little time spent in a physical store – then distinguishing yourself from the competition becomes a more difficult task. 

Retailers need to come up with ways to ensure they maintain brand recognition, differentiation and, ultimately, loyalty. To continue with a sustainable and predictable business model, innovation will be key to protecting the brand experience.

 

Conclusion

In a previous white paper, we eluded to the fact that digital transformation had begun prior to the pandemic, but the reasons were very different. This trend has since been accelerated. Retailers now need to embrace what’s expected of them and deliver the best, safest experience for their customers.

Venkata Naveen, Disruptive Tech Analyst at GlobalData, sums up this shift: ‘While the long-term social and economic impact of the pandemic on retail stores is still not clear, it has brought the industry a once-in-a-lifetime opportunity and created an imminent need to build digital capabilities. The shopping behaviours of consumers, shaped up by the implications of the pandemic, can only be met with the digital savviness of retail stores.’

As well as elevating the shopping experience for consumers, digital technology allows forward-thinking businesses to drive efficiencies, optimise inventories, increase profits and win market share. Yet, despite the potential on offer, not all retailers are embracing digital transformation. Many organisations still have hard work ahead to change their cultures, systems and workflows to implement a successful digital strategy.

It’s clear that, in today’s ultra-competitive retail market and challenging environment, technology paves the way to gaining a competitive advantage. And those who leverage digital technology soonest, will be the ones who benefit most.

Contact us here