A benefit and an investment

It is widely believed that the future of bricks-and-mortar retail is digital. But which technologies should companies invest in? What will offer real benefits?

Things could hardly be more digital: in Switzerland and Germany, the first retail companies are experimenting with bricks-and-mortar stores that are open around the clock but do not need any staff. Customers can simply take products off the shelf, while intelligent technology works in the background to identify and tally the goods.

This impressive feat of engineering is attracting a lot of media attention. But it remains to be seen whether this kind of approach will gain widespread acceptance. Valora recently had to close its Future Store in Zurich, as customers preferred shopping elsewhere. In future, we will also see how the VOI store in Grenchen performs. What’s more, the question of when these high investments will start to pay off remains unanswered.

The danger of digital whitewashing

As impressive as such lighthouse projects are, they have one drawback in common: they are fiendishly expensive. Anyone who owns a corner store or a smaller business can barely afford the technology. But even larger players in the sector run the risk of digitizing without taking the customer into account.

Voice-controlled digital mirrors, which H&M is experimenting with, and “intelligent” fitting rooms like those at Zara make shopping easier. But will they continue to attract customers to the stores in the long term, once the novelty wears off? And do they actually solve the problems that retailers face in becoming more efficient and focusing more closely on customers’ needs?

Digitization at the point of sale (POS) needs to offer advantages for customers and retailers alike.

But this raises the obvious question: which digital technologies benefit customers and retailers in equal measure? Here are a few examples:

• Online visibility and inventory ads: nowadays, the customer journey primarily starts online. This means that retailers need to attract customers to their POS before they can make a sale. And this only works if the retailer is easy to find in online search engines. An online store can help, but retail companies should not confuse selling online with “being online”. Retailers can also be present on Instagram or other networks. Inventory ads, which provide information about inventory, are an extremely useful tool. They enable customers to decide whether it’s worth making the trip to the store at all.
• Digital signage: interactive displays can be used in a wide variety of ways. They allow customers to find their way around larger stores more easily, look for products or view other information. Digital signage can provide inspiration or suggest suitable additional items – for example, by reading RFID tags on the merchandise.
• Digital sales aids: the line between digital sales aids and digital signage is blurred. Digital aids can also be used in the form of apps. When utilized consistently (which requires process optimizations in the back end), they can transform a store into a showroom. Merchandise can be better presented, because fewer products are available directly on-site. Customers can then choose for themselves what they really want to take home with them. One example of this approach is the Future Store operated by fashion retailer BonPrix.
• Self-checkout in the checkout zone: there are now so many different approaches that it’s almost impossible to keep track of them all. In grocery retailing, intelligent shopping trolleys have enormous potential. They can automatically identify the goods placed in them. And they provide real added value, as there is no need to remove the goods from the trolley, place them on the conveyor belt and then put them back into the trolley. “Scan & Go” also seems promising, as it too makes shopping faster and more convenient.
• Digital loyalty cards: digitization of the classic loyalty card opens up new possibilities, because purchases, interests and habits are immediately available as data that can be analyzed. When provided in app form, the days of customers leaving their cards at home are a thing of the past. And in combination with location functions on-site, users can be alerted to offers directly when they enter the store.
• Cloud and AI: machine learning and artificial intelligence systems can be used to optimize workforce planning and planogram placement or organize the ordering of new goods, to describe just a few of the many possibilities offered by this technology. This is no longer a vision of the future: AI will make its way into more and more programs and solutions.
• Automation: instead of changing labels on the shelf, prices are managed centrally and updated automatically thanks to electronic labels. Time-consuming inventory checking becomes unnecessary through use of RFID technology – sensors provide exact inventory figures in real time.

If retailers invest wisely and ensure that they take customer benefits into account, they will definitely master the challenge of digitization. They must not allow themselves to be pressured by the “lighthouse projects” launched by the big players.