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The Dawn of Digidexterous Stores - A Perspective on the Future of Stores

 

This paper explores the opportunities for building ‘Digidexterous’ stores to revolutionize in-store shopping, create empowered workforce, build symbiotic relationship with new age digital customers and take customer engagement and experience to the next level.

Innovate: The alarm bells have gone off
It has been two decades since Amazon and eBay set the cornerstone for multi-channel retail. Although Amazon has emerged as the dominant player online, fuelled by strategic initiatives such as Amazon Prime, Amazon Locker,  Amazon Fresh, and deliveries by drones, CEO Jeff Bezos believes it is still ‘Day One’ for the company and the alarm clock hasn't even gone off yet. However, in the case of physical stores, the alarm bells have gone off long back.

Unlike online retailers that are quick to introduce innovative strategies, brick-and-mortar stores are reluctant to reinvent themselves. Some of the major deterrents for innovation in stores are the complexity of introducing change, complacency with legacy systems, and concern over huge investments. Yet, there is still hope for a new dawn. This paper explores the opportunities for building ‘digidexterous’ stores — stores powered by intelligent digital technologies — that will raise the bar for customer engagement and experience.

Becoming the doyenne of channels
Despite being far more tech-savvy than previous generations, Generation Y, the 80-million strong cohort of Americans between the ages of 18 and 35, has not forsaken shopping in stores for online purchasing.

Although online and mobile commerce are poised to become the new status quo, stores still continue to woo and hold a special place in the hearts of customers. According to recent research, retailers that enjoy both online and physical presence have reported an average 22% percent growth in sales, whereas online only have registered only a 13% percent growth.

With customers looking at innovative delivery options, online retailers can no longer afford to be just ‘pure play online’. Even colossal internet players are exploring the option of having offline presence. Testimony to this is Amazon forging partnerships with local establishments to set up Amazon Lockers on their premises that allow customers to pick up or return shipments at their own convenient time, rather than wait for deliveries at home or at the workplace. Likewise, Google Shopping Express offers same day delivery of a shopping basket that comprises online purchases made from multiple local retailers.

Unlike online retailers who may have to strive hard for physical store presence, brick-and-mortar retailers don’t have to struggle as much — the latter can double up as fulfillment centers for cross channel orders, allowing customers to purchase online and pick up items from the store.

By leveraging tools and technologies that fuel digital channels, stores can provide advanced search optimization and display product information in seconds to the customer. Similarly, retailers can implement sophisticated personal pricing programs by leveraging the GPS feature of the customer’s smart phone. For example, if a customer is browsing the lifestyle products section for a long time, he/she can be sent a personal discount on an exclusive range of wallets or handbags.

Stores have the potential to become the central distribution center for multi-channel retail, thereby shrinking delivery time, reducing overheads such as warehouse costs, and enabling complete control on inventory. The fulfillment centers of online retailers cannot match the wide store network of physical retailers.

Leveling the price war 
If showrooming gave pure play brick-and-mortar retailers cause for anxiety, the increasing trend of webrooming levels the price war. More and more retailers now offer price matching against major competitors’ dotcom prices. With advanced pricing techniques, real time feeds, and complex price analysis techniques based on various parameters—product category, size, color, stock availability, shipping, and so on—stores are better equipped to combat the price war. They can take informed decisions instead of blindly honoring price match offers. BB&T analyst Anthony Chukumba gathered pricing data on several items from glassware to cookware and small appliances at both Amazon and Bed, Bath & Beyond. On a basket of 30 such items Bed, Bath & Beyond's prices were 6.5 percent lower even without a 20 percent discount coupon.  

The concept of personalized pricing will become the ‘new normal’ at stores. Price will be driven by multiple dimensions like time of the day, the customer profile, the store, market needs and demand, stock, and social reactions. Two different customers shopping in a store may pay different prices for the same item; or the same customer may pay more in the morning as compared to a later time in the day. With such concepts around pricing in retail emerging, the price war between online retailers and physical stores is more likely to end in a draw.

Erasing the checkout line
Quick checkout continues to be the Holy Grail for retailers and customers alike. Several retailers are wary of replacing legacy technology to achieve this, fearing high costs and a major overhaul of business processes. However, real customer empowerment lies in liberating customers from long queues. Mobile Point of Sale (POS), Customer POS, robotic shopping carts,  and Scan and Go solutions are already shifting the checkout from tills to anywhere on the sales floor. For instance, Tesco is conducting a pilot run of a new, high-speed retail checkout solution that performs a collective scan of all the items in the customer’s basket.  

In the future, POS terminals may pave the way for an invisible array of network sensors, RFIDs, image processors and customer devices, enabling a ‘no stop’ checkout, and making ‘walk in, pick item, and walk out’ a reality. Consequently, a completely new set of standards for security and privacy concerns will need to evolve.

Transforming in-store shopping to shoppertainment 
From merely being nodes of transaction, stores need to transform into a curated spot meant for the creative exchange of ideas with entertainment embedded into the shopping journey. Some retailers have already stepped into the ‘future store’ mode. Nike FuelStation offers a whole new immersive in-store experience—interactive touchscreens offer information on products, treadmills record running styles and help customers select the right shoe. An element of fun is the motion sensing installation that tracks customer’s movements and creates a ‘digital avatar’ that can be shared with friends through social networks.

Similarly, Burberry is attempting to convert its stores into a seamless digital world. Its flagship store in London has been designed to recreate the online experience with streaming videos of Burberry runway shows played on giant screens. The store’s fitting room mirrors turn into screens that display information about the garment as well as play videos of models walking the ramp wearing that garment. 

The advent of disruptive technology has just begun. New breakthroughs in neuroscience and nanotechnology will dramatically change the way people shop. Already, there are devices available to read brain waves and synthesize them, which may lead to customers shopping in a store being offered the price they had in mind. This is similar to intuitive bargains or being provided with just the right amount of service expected. Although this appears surreal, it may become a reality in the not-so-distant future.

Making extreme personalization possible
Retailers are turning to Big Data analytics to power their extreme personalization initiatives. However, instead of systems delivering customized messages and content to customers, personalization can be better delivered when put in the handsThe Dawn of Digidexterous Stores - A Perspective on the Future of Stores of an in-store associate. For instance, consider a scenario where an in-store sales person can view product recommendations for a customer, based on past purchases. When these recommendations are clubbed with the store associate’s intellect, and verbal and non-verbal cues from customers, recommendations become truly meaningful.

For stores, personalization will mean thinking beyond instant gratification, converting monologue to dialogue, transactions to interactions and customer sales to customer value. By being customer-centric, digidexterous stores can help build a symbiotic relationship between store entities and the new age digital customer (refer Figure).

 

Empowering store personnel
Store associates often go by intuition rather than well supported insights to engage with customers. Interpreting numbers from complex reports or handling customer queries on stock or products has been a blind spot for them. Predictive and prescriptive analytics powered by Big Data can help associates identify stock-outs in advance, react to external events, or have real time control and greater visibility of in-store activities.

The Internet of Things (IoT) is set to radically transform the way today's stores operate. IoT can be used for in store inventory and customer tracking. For instance, Starbucks recently deployed ‘smart’ coffee machines, which connect to the cloud, enabling tracking of customer preferences down to the individual level. IoT can also be used to constantly monitor and track customer behavior and movement within the store. By enabling various devices such as the customer’s mobile phone, store wi-fi, digital signages, and store associate’s mobile phone to communicate with each other, IoT can help push the relevant information to the customer. For instance, the automatic dimming of lights when there are no activities or intelligent store shelves The Dawn of Digidexterous Stores - A Perspective on the Future of Stores displaying a special promotion to privileged customers will revolutionize in-store shopping.

Fluctuation in customer footfall often leads to understaffed or overstaffed situations. Wearable devices can be the next big thing in workforce optimization. For example, store associates wearing smart tags can be tracked by the store manager based on their location, workload, and tasks assigned. Associates can also get real-time notifications, paging and deployment alerts based on other activities happening in the store.

It is inevitable for retailers to capitalize on emerging technology to create an empowered workforce, build stronger relationships with customers, and create a store that is future-ready (refer Figure).

 

Conclusion
The future of retailing is already here with the emergence of digital technologies such as mobile, social, location services, augmented reality, Big Data, and gamification. If one were to evaluate which of the retail channels is capable of consuming all these digital elements, the scales might tip in favor of stores. Where else can you imagine having sophisticated digital displays streaming rich information except, of course, Times Square? Where else can you envision a perfect synergy of digital interactions and the human connect? It is no longer a matter of choice. Stores must embrace digital technologies and flourish, or remain complacent and face peril.

“If you do not change direction, you may end up where you are heading” – Lao Tzu

TCS Retail Forum Journal
Read other articlesTCS-Retail-Forum-Journal-Issue-4

- Reimagining Retail: The Digital Imperative
- Restore the Store: Strategies for Brick-and-Mortar Survival and Resurgence
- The Dawn of Digidexterous Stores - A Perspective on the Future of Stores
- Universal Store Commerce: More than a Digital Experience
- Global Retail CIO Agenda 2014: Taking on the Digital Paradigm Shift


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