Creating a Fully Connected Retail Environment

7 July 2020

There has long been a school of thought that bricks-and-mortar retail can learn a lot from eCommerce. The very best online operators, the hyper-successful digital giants like Amazon and Chinese outfits and Tmall, have transformed expectations around how retail should function with their aggressive focus on choice, convenience and giving consumers what they want.

If in-store retailers didn’t believe digital commerce had any relevance to them previously, COVID-19 has changed the rules of the game. Throughout lockdown, thousands of businesses have had to switch to or ramp up their eCommerce operations just to keep trading. Moreover, consumers stuck at home have had time to get used to buying online, if they weren’t already regular digital shoppers.

With physical distancing restrictions in place for the foreseeable future and an understandable wariness about venturing out to crowded public places with the virus still at large, newly re-opened stores face a battle to build footfall back up to pre-pandemic levels. The ‘new normal’ demands that things are done differently in bricks-and-mortar retail. And part of the answer will be learning the lessons eCommerce has to teach.

Connected retail is a concept that seeks to do just that, effectively bringing the digital revolution in store. All of the things that online retail has excelled at – choice, convenience, personalisation, smart use of data – connected retail has sought to learn from them and apply them in a way appropriate to physical stores.

Examples include finding ways to shorten queues and speed up checkout, diversifying purchasing and fulfillment options (such as offering home delivery on out-of-stock items), improving product selection, personalising service and offers, and empowering shoppers with better access to information and increased autonomy.

The overall objectives are to improve the customer experience by bringing together the best aspects of digital and on-premise shopping. This is achieved by focusing on ways to deliver a heightened level of service, which ultimately helps to increase turnover and margins by boosting sales volumes, average spend, customer retention and so on.

As you might have already guessed, there is one common ingredient critical to delivering all of this – technology. As an extension of the digital revolution, connected retail asks bricks-and-mortar stores to embrace a whole new range of tech solutions, from customer-facing devices to cutting edge software.

But what exactly is required to create a fully connected retail environment? Here are seven key ingredients for establishing a fully connected retail environment.

Fully functional POS

Point of sale equipment has been a mainstay of retail for decades. But in the connected store, POS has to do much more than the standard transaction processing, and indeed should probably from now on be viewed in terms of ‘point of service’. By ‘fully functional’, we mean that connected POS solutions should serve as integrated hubs which provide staff with assistance in all aspects of customer service.

With powerful high-speed processing capabilities and intuitive touchscreen interfaces, modern all-in-one POS terminals can be paired with cutting edge, sector-specific software platforms to deliver:

● fast, efficient checkout
● CRM integration to drive more personalised service
● automated up-sell and cross-sell cues to boost average basket value
● flexible fulfilment options, such as arranging home delivery from store, collection at another branch or pick-up in a remote locker.
● instant information about stock availability and other product details
● real-time reporting tools that will help retailers gain up-to-date insights into everything from the impact of promotions to changes to merchandising.

Self-service kiosks

One of the defining characteristics of online retail is the level of autonomy and empowerment it has handed to consumers. With the internet often quite literally in the palm of their hands, people have become used to doing everything from answering queries about products to resolving issues with a purchase for themselves, without having to ask a sales assistant or call a customer service number. They increasingly expect the same levels of autonomy, at least as an option, when they visit a store as well.

Kiosks provide this option, and therefore play an important role in the connected retail set up. They also have other advantages, such as reducing wait times at checkout and allowing staff to focus on providing the kind of service that really adds value to the customer experience. But kiosks also need to be used smartly to have the right kind of impact. They have to have the kind of intuitive, obvious-on-first-use interface that makes them as easy as using an eCommerce app on a smartphone, and they have to be placed intelligently in store to ensure people actually use them.

Mobile POS

Mobile POS is an extension of what we have already discussed above, but pushes the emphasis on service even further. With a POS system in portable tablet form, the onus is no longer on the customer heading to the checkout or information desk to ask for help – staff can be proactive in taking service to the customer, armed with all benefits (instant access to the product catalogue and CRM, ability to process transactions on the spot, arrange re-orders or deliveries etc) of digital technology in the palm of their hands.

Digital signage and wayfinding

They say that one of the secrets of great website design is making it as easy as possible for online shoppers to find what they are looking for. Why should the same principle not apply to stores?

Wayfinding and clever merchandising designed to help customers find what they are looking for have long been a feature of store design – think of the extensive use of signage in supermarkets and department stores, both to direct customers and to promote goods. But with the development of digital technology, the options available have reached a whole new level of sophistication.

Cutting edge digital solutions help to personalise product discovery and merchandising in store. Take the example of a signage system which changes the display to show items related to those picked up by a customer, automating part of the cross-selling process.

Digital signage can also be used to extend the product range available to customers, for example via ‘infinite shelves’ which use screens to display a range of products that the store simply doesn’t have physical space for. A much-maligned yet still innovative variation on this theme is the ‘magic mirror’ concept which allows customers to virtually try on clothing and then scroll through variations in colour, cut, pattern and so on. I am fully aware this technology has had many, many false dawns yet the principle is the embodiment of connected retail.

In terms of wayfinding, we saw the emergence of systems which used bluetooth to link shopping apps to digital signs. This Beacon technology hit the headlines some 5 years ago but again the development of this principle has continued apace and is now successfully being used to direct customers straight to items on a shopping list, or make suggestions based on their purchase history.

Alternatively, voice could be used. Walmart is developing a voice navigation app, which let’s a customer say what product they are looking for and then shows them where to find it on a map of the store. This is an approach first attempted in 2016 by Macy’s using IBM’s Watson.

Digital tracking

Another benefit of deploying Beacon or sensor type technology in stores as described above is that it can be used to track customer movements around a store, helping to build up an in-depth picture of what customers are buying and from where – ultimately providing invaluable insight into how merchandising is impacting on purchasing decisions.

Of course, we’re currently a long way off every customer having an app on their phone for every store they visit, so other systems are being developed to collect the same kind of data without reliance on app, simply through using another common identifier embedded within a phone. These sensors have been developed further to be utilised in the post-covid environment to monitor and control social distancing via alerts and messaging,

One particularly interesting one is applying AI-powered monitoring tools to images captured on CCTV to record what people do ‘at the shelf’. Developments in Computer Vision technology mean we may soon even be able to track customer sentiment at a shelf or display via analysis of body language and facial expressions.

The most sophisticated extension of the use of cameras can be seen in the Amazon Go stores. From personal experience this is the most significant seamless shopping experience I’ve ever experienced. Cameras using ‘computer vison’ underpinned by deep learning and what the company call sensor fusion allow customer to simply pick items up and walk out of the store. The combination of the technology described ensures that customers’ Amazon accounts are accurately charged only for the items they take out of the store.

Another type of tracking technology, RFID, is being used extensively to track goods rather than people. Based around a tiny chip that transmits a trackable radio signal, the most famous use of RFID technology can also used to track which items a customer has taken off a shelf, like Amazon Go, logging them on an app which then automatically processes payment, all without the need for traditional checkout. Elsewhere, RFID is most commonly being used to help companies keep track of inventory, both in store and through their supply chain and is an area the AURES LAB is heavily involved in.

Integrated platforms

If the thought of running all of these different hi-tech systems sounds like it would add a lot of complexity to your in-store operations, you touch on a very important point. In order to achieve a fully connected retail environment, it is essential that each separate component system is not run in its own isolated silo, but as part of a much bigger whole.

In short, if you ran your POS, your kiosks, your signage and tracking systems as separate entities, you would face an uphill task monitoring, maintaining and administering them all. You would also miss out on an invaluable opportunity to gain in-depth, 360-degree insight into your operations, which we will discuss more below.

That is why we are increasingly seeing the adoption of ‘business management’ suites in retail, based on the agile eCommerce model. The idea is to have a single point of control for running all of your technological assets, an integrated platform which takes care of day-to-day administration, performance monitoring, security, data analysis, etc, in one convenient place. Moreover, such platforms, which are often modular in design and cloud-based, offer the scalability to grow with your business and adapt to add new technologies as they become available.

Data analytics

Finally, as mentioned above, one of the big benefits of integrating all in-store (and online) digital systems into a single platform is the opportunity it creates to gain complete end-to-end insight of your operations and customers. More importantly we have also discussed the use of tracking technology to create data-led insights into customer behaviour. When combined with online activity through, for example, clienteling solutions, the value of data analytics is compelling.

The truth is, all digital systems create data which, if harnessed correctly, can provide valuable business intelligence. The final ingredient of the fully connected retail environment is to have the analytics capabilities to turn all of this available data into useful insight. You might look at it as using data analytics to get full value from the investment you have made in digital systems.

In conclusion, from footfall to at-shelf behaviours to transactions, collecting data from connected retail systems can map out the entire in-store customer journey in granular detail. As retailers look for ways to adjust to the post-pandemic landscape, being able to optimise what they do in store based on this intelligence will be crucial.

To learn more about these challenges and issues, do not hesitate to contact our AURES Experts.