Retail Leaders Doubling Down on Brick-and-Mortar–For Good Reason
The future of retail lies in its past: brick-and-mortar stores. And the future is as bright as ever.
Retailers around the world are stepping up their data analytics game in the physical shopping realm, leveraging new technologies such as AI, cloud and robotics to not just enrich the customer cross-channel experience but dramatically improving operational execution and the employee experience as well. At a time of growing concern over how technologies such as AI and robotics will negatively affect the retail workforce, that last point is a welcome revelation.
And even though cultural and political security and privacy issues may be preventing American retailers from matching some of the more leading-edge innovations currently deployed in Asia, there’s no doubt leaders such as Walmart, Kroger, Home Depot, Gap, Kohl’s and other traditional retailers in the U.S. recognize the in-store opportunity.
Looking beyond Amazon’s physical stores in America and toward Alibaba’s Hema superstores, JD.com’s connected stores and Ocado’s fully automated warehouses has provided inspiration for some U.S. retailers. Some are even forging new partnerships with these overseas leaders to accelerate their own brick-and-mortar and fulfillment capabilities.
The future of brick-and-mortar is here as industry leaders show the way
My hypothesis was crystallized as I reflected on NRF 2019 Big Retail Show. In previous years, my presence at NRF was typically tethered to a booth or precisely scheduled customer and partner meetings. The overwhelming nature of “Retail’s Big Show” has often left me wondering about how much I missed, or how I would have liked to focus on just one business area to gather a more in-depth perspective.
With that in mind, my journey in NRF 2019 was decidedly different – with a keen focus on how data and technology can enable brick-and-mortar (people and processes) to drive business improvement and strategic differentiation.
Here are three takeaways that left me convinced brick-and-mortar can (once again) be a powerful competitive differentiator for traditional retailers – and why the time for all retailers to act is now:
No. 1: Enhancing Operational Excellence
Perhaps we have finally reached a tipping point for solving age-old in-store business improvement opportunities thanks to AI. Just consider two high-value use cases.
The industry has been grappling with out-of-stocks and merchandising execution for decades, showing lackluster progress. But now there’s streaming video data and computer vision, providing real-time updates on in-store out-of-stocks, shelf, display, pricing and promotional execution – at the individual item and store level.
And price transparency is now a retail competitive reality thanks to dynamic pricing and electronic shelf labels (ESLs), which are capable of delivering instantaneous pricing and promotional actions to individual stores.
Robots: The Future is Here
While Walmart, Kroger, and others continue to test autonomous in-store robots armed with cameras that cruise up and down aisles, Ahold Delhaize USA is deploying its robot, nicknamed Marty, in nearly 500 of its Giant/Martin’s and Stop & Shop supermarkets following a successful pilot.
Armed with computer vision (AI), these robots can enable real-time alerts to both headquarters and in-store associates, improving operational response, customer experience and even realizing new data monetization opportunities by sharing insights with retail trading partners. Retailers are also experimenting with existing video cameras and camera-enabled ESLs.
ESLs are now all grown up
Cost was a barrier when ESLs surfaced with great promise more than two decades ago. However, they’re much less expensive now, the tech is far more sophisticated and the use cases are even more compelling. Take dynamic pricing – today’s omnichannel reality. The ability to execute real-time and AI-infused competitive response with personalized offers at the item, store and even intra-day level is just the beginning. ESLs also hold promise to enable key workflow management tasks for in-store associates with secondary stock location, number of facing information – and even flashing lights to assist with picking BOPIS orders.
No. 2: Enriching Customer Experiences
Steeped in new insights and performance measurements from online store fronts, emerging technologies are now enabling similar insights for retailers in-store. Understanding customer dwell times, conversion, purchase paths and so on now provide shopper insights and engagement opportunities for brick-and-mortar operations as well.
Inspiration Beyond Borders
As impressive as the Amazon Go concept may be, it was inspiring to learn more about Alibaba’s Hema superstores and JD.com’s connected convenience stores. The complexity of product offerings, truly frictionless checkout, table-side robotic delivery of fresh prepared meals and highly automated in-store pick and pack systems was impressive – and at scale and complexity far exceeding what Amazon Go is doing today. Ocado and JD.com’s fully automated warehouses, real-time route optimizations and fulfillment capabilities that promise 30-minute delivery across a broad geographic territory have yet to even be rolled out nationally by Amazon Prime Now in the U.S.
Video Killed the Analog Store
Streaming video and AI-powered computer vision was NRF’s indisputable eye candy this year. While Asia may be a bit further ahead with implementation due to broad cultural adoption of mobile payment and acceptance of facial recognition technologies, many leading western retailers are experimenting at some level. Use cases for streaming video and computer vision can undoubtedly become a game-changer in areas such as in-store loss prevention and shrinkage, out-of-stock mitigation and improving in-store customer experiences – all while working within culturally acceptable privacy norms.
No. 3: Empowering the Front Lines
I was immeasurably inspired at NRF 2019 to hear success stories from young, fresh-thinking CEOs of point solutions such as Zipline and Shyft – as well as retail leaders such as Gap and Lush – who are reimagining workforce management. Using next-generation WFM solutions to streamline tasks and improve communications with tools better aligned with a millennial and mobile workforce not only makes sense, but also appears to be paying off.
Providing front-line associates with mobile, social-network based tools to access and swap shifts at a moment’s notice directly with colleagues “when life suddenly happens” is empowering and reduces management stress while still holding individuals accountable to ensure that shifts are covered.
Additionally, much has been written about always-on consumers often knowing more about products than in-store employees. It was evident at NRF that progress is being made toward “information parity” to help enable active influence in the customer journey. Retailers are actively moving toward providing in-store associates with better, easily accessible information they can leverage to interact with increasingly knowledgeable customers.
These are just a few examples of how AI, robotics and cloud capabilities in retail were on display at NRF this year. These innovations reveal not only what’s possible for improving store operations, enriching in-store customer experiences and empowering the front lines – it perhaps foretold the future of brick-and-mortar retail.
Brent Biddulph is general manager, retail & consumer goods, of Cloudera.
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