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Redefining the “store” for a digital age


Dutch physicist Niels Bohr wasn’t talking about the retail industry when he said, “prediction is very difficult, especially about the future,” but the comment couldn’t be more relevant given the volatility facing the retail industry.

The idea of customer purchases being limited to brick-and-mortar stores faded long ago. Digital technologies, such as the Internet and mobile devices, and evolving shopping channels have made it difficult to distinguish what is and is not a “store.”

The customers’ desire to shop anytime anywhere is not only impacting retail adoption of various technologies, but also forcing retailers to adopt new store formats. Stores afford customers sensory advantages (touch, smell, taste, sight, and sound), the ability to try/experiment with products, and immediate gratification. Stores also can provide an enriching entertainment and social experience. Finally, retail associates can provide meaningful personalized service. On the other hand, pure digital shopping channels are viewed as providing immediate access to more information (product availability, pricing, social reviews, etc.) than may be found inside a store.

We envision that, in the future, a specific retailer may adopt various formats, while ensuring a level of brand cohesiveness across these formats. For example, when thinking about future retail formats some stores will serve purely as drive-through pick-up locations, as some shoppers will move away from large stock-up shopping trips to more targeted, time-efficient, needs-based trips. Sensors in the home, for example, will compile a shopping list and transmit it to a store. Customers will pull into a drive-through bay at the store to have the items loaded for transport.

Other stores will serve as product showrooms that enable the customer to interact with or try out products, as well as interact with sales associates and other customers (both physically and remotely). These stores will generally be smaller, as most of the retail space will be dedicated to highly interactive “try and use” areas, rather than merchandise display and storage. Sales associates will be customer and product/service experts, providing personalized service that encourages customers to seek out the store.

Some stores will serve as immersive experiential centers, as technology will enable shoppers to control their shopping experience. These stores will be venues for collaboration and experiences that cannot be provided online. The retail environment will be more about the sensation of and context in which a product is to be used, rather than the product itself.

Brand stores will be created that focus more on promoting the brand than on selling merchandise. The purpose of these stores will be to communicate the brand’s values, social and community involvement, to convey customer stories, as well as to provide product/service information and ordering.

Stores that offer community services as well as retail will provide services that local communities can no longer afford, and locate stores within or near those spaces. For example, the local library, which a community can no longer afford to fund, may be operated by a retailer, which also integrates digital technology and physical merchandise into the space.

Small, specialty stores will continue to fill certain niches, as well as evolve. For example, the corner butcher will continue to serve a vital function for customers desiring a high level of service and unique products not available at a chain supermarket. The movement toward locally grown/produced items may also compel a certain customer segment to shop at small, locally owned businesses.

Finally, not all of today’s store formats will go the way of the dinosaur, as certain customer segments will prefer to shop at more traditional stores. Yet these store formats will continue to advance. Not only will newer technologies be introduced, but the formats also will be designed to appeal to specific customer segments, such as the older or Hispanic customer.

Within these various formats, emerging technologies that customers will interface with also will continue to mature. These include, among other things: advanced mobile device use with store and product interface; Big Data applications; mobile and integrated POS; cashless payment (mobile wallet); digital assistants. Evolving technologies, such as sensors that enable the Internet of Things, will become prevalent.

Perhaps the most pervasive advances envisioned are related to an in-depth understanding of individual customers and their product/service desires. Retailers will respond to the individual customer’s needs, which include the ability to customize the product/service to that individual’s desires. Customer insights, collaboration, and choice will be major trends.

While each retail vertical and format will evolve differently, there are some overarching themes affecting how all retailers interface with their customers. For example, big will provide retailers with unlimited amounts of information about customers and certain classes of merchandise will become less standardized and more customized to fit specific customer’s desires. The concept of pricing will change as retailers respond to supply and demand factors as well as customer-desired customization and products themselves will directly communicate with the customer, as merchandise on the shelf will be more interactive. The Internet of Things will lead retailers to connect the dots and use this information for the benefit of the customer while technologies that allow specific customers to be identified will be adopted and used actively.

It is conceivable that cash wraps, as we know them, will disappear as mobile POS and cashless payments are broadly adopted. Wait times will be virtually eliminated. Digital screens will be prevalent throughout the environment, and will become intelligent and communicate directly with customers. The voice and credibility of social media will be integrated into the store. Investments will be made aimed at increasing store associate knowledge and ability to interact with customers.

Margot Myers is director of global marketing and communications, at Platt Retail Institute, an international consulting and research firm that focuses on the use of technology to impact the customer experience. The views expressed in this column are explore more fully in the Platt Retail Institute’s recently published The Future of Retail: A Perspective on Emerging Technology and Store Formats.

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