Whether it is at a startup pitch competition or the latest reports on startup ecosystem, it’s exciting to note a significant number of retail tech startups offering a plethora of hi-tech solutions for everything from in-store customer analytics to fully autonomous stores. It appears retailers now have the wherewithal to improve overall store functioning, manage their inventory better, offer superior in-store customer experiences, and ultimately realize their vision of a connected store.
Let’s take a look at how the in-store technology startup landscape is emerging in key areas:
Frictionless Checkout: Technology in retail such as artificial intelligence (AI) and computer vision, and newer payment methods such as tap to pay, mobile and digital wallets, and in-app payments can remove friction at checkout and offer zero queue shopping. Each technology has its own pros and cons. While Amazon’s no lines, no checkout approach involves major overhauls, some autonomous solutions from startups can be retrofitted into the existing landscape. For example, Trigo’s AI-powered cameras can be fitted into store ceilings. However, implementation in large stores can become complex and expensive, and the return on investment (ROI) must be justified. By gathering different insights from the data captured and using it to optimize assortments, layouts, and store operations, retailers can get a very fast ROI from deploying frictionless store technology.
Operational Efficiencies: With their cutting-edge solutions, startups are eliminating non-value adding tasks, boosting in-store productivity, and improving operational efficiency. Theatro’s heads-up hands-free solution enables store associates to have one-on-one conversations, find product information, and provide virtual support without losing focus on consumers. Snowflake provides associates data access at their fingertips, including business intelligence analytics, social media information, and 360o view of consumers. While the technology offers a lot of promise, GDPR and other data privacy laws deters widespread adoption.
Customer Experience: With advances in edge computing, CCTV video analytics-based solutions are enabling in-store tracking of shoppers. This is leading to better analytics and proximity-based marketing. Startups like Oriient and Proximi.io offer digital wayfinding technologies and location-based offers. Retailers can adopt either an infrastructure heavy technology (with beacons, WiFi, or smart lights) or infrastructure light technology (geomagnetic field positioning) to track in-store shoppers. Although Walmart and Target are early adopters, guiding customers to the exact aisle and item is a challenge.
Merchandise Management/Compliance: In-store digitization isn’t complete without automating merchandise management—detecting out-of-stock issues, dynamic pricing, planogram compliance, in-store picking, or pushing promotions based on the shopper’s distance from the shelf. Rainus, Hanshow, and AWM Smart Shelf are using smart shelves and ESLs to digitize merchandise operations. In the future, ESL can be used for in-store customer tracking and analytics, personalization, shrink prevention, frictionless checkout, and inventory management, thereby justifying the cost of the heavy initial investment.
In-store Fulfillment: LeaReply, Fabric, and Thryve offer solutions to simplify the order fulfillment process, optimize pick-paths, enable multi-pick processing, and automate order orchestration for efficient curbside pickup. In contrast to Amazon’s mega warehouses, Fabric is building 500-3000 square meters pocket-sized automated micro-fulfillment centers at the back of stores to process orders more quickly and reduce fulfillment cost. However, these centers have limited storage and order preparation capacity unlike large DCs.
Last-Mile Delivery: Bringg, Onfleet, and Instacart offer solutions to manage, optimize, and automate end-to-end delivery operations for greater efficiency and scale. Cleveron is providing mobile vending machines to get orders to customers in a touch-free way. Starship and Manna are offering delivery drones and robots to deliver groceries to customers within an hour. Though promising, delivery drones and robots see limited use due to regulatory obstacles—robots must weigh fewer than 500 pounds, travel at a speed not greater than 10 miles per hour, give way to humans, and should not transport hazardous materials. More testing is required to safely drop packages at the customer’s doorstep.
A Few Points to Ponder
Despite the abundance of innovative solutions in the market, retailers are still slow to experiment with these technologies. While leaders like Walmart and Kroger are reimagining the in-store experience, these initiatives are still in early stages and it will be a while before we see large scale implementation of the new technology capabilities across their entire store landscape. The biggest hurdles in my view are:
Seamless integration with existing ERP and POS systems
Adding disparate solutions from various partners will complicate the already heavy store infrastructure and add up costs
Huge effort required to define the use case, measuring benefits and ROI, integration and testing these technologies individually, and planning for rollouts with reduced cost and lesser IT spend
With AI, edge computing, 5G networks, and the booming in-store technology ecosystem, it is possible to have a completely digitized connected store. The future of retail will be powered by a combination of innovative digital solutions. It remains to be seen if there will be one, truly game changing technology that can digitize all facets of the stores, paving the way for infrastructure light yet connected stores.
It’s time for retailers to look beyond implementing point solutions and build the future ecosystem to collaborate and deliver the stores of the future. This ecosystem will not only drive newer business models but will also help leapfrog competition by delivering the best in-store customer experience, store associate experience, and efficient operations across their store landscape.