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11/08/2021

Three Elements of Future Stores: Customer Experience, Self-Service, Dark Store

What do the Galápagos Islands and retail have in common? Evolution. Each environment is a study in evolution, constantly changing to adapt and survive. In the retail world, you don’t have to embark upon a Charles Darwin expedition to witness how this industry is rapidly changing to adapt to new consumer expectations.

Retail locations still employ captivating visual displays on the floor space to draw shoppers into stores but in today’s retail environment, floor space to accommodate these display-driven interactions is shrinking, which poses new challenges to brick-and-mortar stores.

What happens when stores completely flip the script and take out staff? The answer: “dark stores ” and they are now being built completely on the self-service model of shopping, both in-store purchases, and fulfillment of online orders. A dark store is not the model Sam Walton, founder of Walmart, ever envisioned for his brick-and-mortar empire but it is very much part of today’s ever-evolving retail landscape.

Can existing stores adapt to this changing environment? What is next and what are the critical stages towards the path for retail success? The answers to these questions reside within these key elements of today’s retail evolution:

Customer Experience
Enhancing customers’ experience remains the number one goal of any retail organization. Store managers will still seek to enhance this experience through showroom displays that capture shoppers’ attention as they enter the building, showcasing high-margin, seasonal, and different products that embody a brand or image.

These displays are the right-brain touchpoints in the customer journey that continue to invoke feelings and emotions. Customer experience will impact all areas of the business and a shopper who has a positive experience is more likely to become a repeat and loyal customer. Perhaps no organization understood this more than Macy’s. Since 1858, Macy’s has used its then-groundbreaking window displays to draw in customers. In fact, they actually introduced the concept of window shopping. This element of retail will not go away, but the real estate dedicated to these displays will continue to shrink and give square footage for self-service or dark store processes. A window can display a few products—a smartphone can display millions! This is another sign of the changing retail times.

Self-Serve
Retailers are having trouble finding employees. The Wall Street Journal reports that in April 2021, there were 9.3 million jobs unfulfilled, the highest level on record since the year 2000. The store-of-the-future will evolve to overcome this challenge by outsourcing labor to the customer in the form of a self-service checkout. Stores will empower customers to perform self-serve tasks like BOPIS (buy online, pickup in store ) —all the retailer has to do is stage the orders to be picked up. Self-service, if done correctly, will make BOPIS fast and efficient for the customer, cheaper (with reduced labor) for the retailer, and enable store staff to focus on actually selling products vs. fulfilling orders.

In these future stores, the digital and physical worlds will all be interconnected using omnichannel strategies that are intertwined with customer behaviors e.g. self-serve and cell phone. For example, if a customer wants a receipt for an in-store purchase, they will simply scan a POS-generated QR code that will take them to a webpage where they can opt to save the receipt directly into their phone’s “receipt” folder.

Self-serve can also be flipped to perform BORIS (buy online, return in store), enabling customers to return items back to the store without waiting for an associate to receive and register the product. This feature will not only simplify the customer return experience but also provide merchants with valuable data about their likes and dislikes.

If done well, self-serve BORIS solutions will provide a new platform for retailers to perform cross-sales or up-sale functions automatically, providing relevant product suggestions, coupons, or notifications of special pricing on similar products. Because the stores are using omnichannel strategies, these coupons and special-priced items will be carefully selected based on the customer’s past purchases. Leveraging these practices, stores such as Apple, Dick’s Sporting Goods, and Nike do not need the same amount of labor because they are empowering the customer to engage in self-service practices.

Dark Store
Just when you think automation can’t evolve anymore, there is a new form of retail being created that takes the staff completely out of the shopping experience. Dark stores are not staffed, they rely on systems that can track and monitor goods and the customers that use these stores for BOPIS, and BORIS operations. These new dark stores look more like an isle-filled warehouse and may be automated with picking robots and autonomous carts to gather items and send to workers who prepare the order for rapid, same-day delivery. Rapid order fulfillment stores will need to dedicate more square footage for processing and less for in-store, right-brain shopping.

Behind the glitz of showroom displays, the majority or in some cases the entirety of floor space will be dedicated to inventory management and contain a vast array of tracking systems focusing on order accuracy and speed of deliveries. If fully automated, the dark store concept will save money by eliminating the need for staff to perform mundane tasks like fulfilling orders or, in some cases, eliminating staff entirely.

Conclusion
Today’s retail environment is hard. Stores can't find employees to work, customers want quicker delivery, and when customers actually go into brick-and-mortar stores for purchases, they demand new services such as fast self-service pickup and returns. Now, with a pandemic thrown into the equation, these stores also need to provide contactless experiences.

Retailers need to view these challenges as opportunities if they expect to evolve and survive. They need to shift business plans to in-store, omnichannel processes that enable them to become a full-service hub that meets today’s customer expectations. They should look to solutions will allow them to take advantage of all the services such as BOPIS, BORIS, and even exchange items in the store — with self-service and contactless interactions. Returned items can be sent to the dark store location where they are automatically processed, returned to inventory, or pulled for donation due to damage. Sometimes evolution is escalated through human intervention and for retailers, the good news is that today, there are existing tools ushering in the next stage of retail’s evolution.

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