Thriving in the next decade of store transformation

Published December 1, 2022
By Levino Perrucci

Ever since the first retail stores opened in the 1800’s, the retail environment has been transforming to increase efficiency, security, and accuracy of transactions. Each new wave of transformation is marked by either a new technology or a shift in shopper decisions.  For example, the invention of cash registers allowed daily profits to be measured and therefore spread like wildfire across the retail market. The barcode gave the ability to track inventory automatically with each transaction. Cash register receipt printers provided clear evidence of a sale; barcodes streamlined itemizing while providing easier management of inventory.

In parallel with technological advances, consumers have forced transformation by adopting new technology themselves. Consumers adopted credit cards, forcing retailers to accept them. Consumers also started taking the risk of buying items online sight unseen, forcing retailers to create an ecommerce site or increase the availability within the stores. When consumers drive transformation, retailers are often caught off guard. And when retailers drive transformation, consumers may be hesitant to adopt aspects of the store that they see changing.

No matter where change starts, it always leads to the creation of new customer journeys. New journeys equate to more choice on the type of experience a consumer has, which in parallel results in shorter lines on the original journeys. For example, self-checkout machines were meant to reduce the cost of labor per transaction. Even though some customers were hesitant to adopt the idea of self-checkout, they benefitted greatly as they realized that the lines for assisted checkout were reduced. The same occurred for mobile shopping and buying onlineEvery transformation starts with a new technology and ends with a new customer experience. The real question is, which technology will start the transformation, and what does the new journey look like? Your ability to stay ahead of the next decade of transformation will depend on your ability to try new technologies and gather data on how your shoppers react.

Checkout is part technology and part psychology. When do you invest in the infrastructure to support  new technology in your store? Is one lane enough data? How about one store? What if shopper demographics vary among stores?  Across how many demographics should you test before knowing a new technology is worth investing into?

The problem with adoption is when you treat new technology as “all-in”, you end up making a gamble that the technology will help your business. The way to de-risk adoption is by focusing on the experience of the shopper and introducing change incrementally. First, the change should add a small benefit to your customers. When your customers begin to adopt that benefit, you make an incremental change to lean further on the technology. This also creates the perception that the change is driven by consumer choice.

The writing is on the wall

Buying online is simple, shopping online can be tedious. The level at which store traffic normalizes depends on the number of items that can’t be found online, and the experience a store provides. As websites expand the ease of buying more items like produce and other foods, experience becomes the last piece of control for driving store traffic. This can be seen in stores such as Cabela’s, Bass Pro Shop or Scheels, where the sights and sounds alone make you want to come back and window shop. You as a retailer are not only in the merchandising business, but also in the service business. Just like a museum with a gift shop, you want to lead with how your customer will feel and convince them to purchase items while inside your store.

Changes on the horizon

The next wave of store transformation is being driven by the introduction of computer vision technology. This is driving customer journeys that are “automatic” by handling the itemization, payment, and item tracking. The market sees this as a positive, as no scanning is necessary, yet the technology requires a lot of infrastructure and customer information to support. These requirements increase the risk of adoption. At the same time, coming off the pandemic, your customers are demanding a better experience in stores. 

The blueprint for this next wave of transformation is adding frictionless computer vision first on top of the journey your customers know today, then standalone alongside the journey they know today. You should consider making the technology an option until customers naturally gravitate to it. This is all assuming this new technology makes for a better experience.

Decades of change

Since the very beginning of store transformations, there are customers that have become accustomed to the old way of life. And it’s still evident, past retail methods still exist in today’s retail environment.

The general store in the 1800’s worked by having all items behind the counter, and the attendant used the customer’s shopping list to gather all the merchandise. We can call this “Full Service”. It wasn’t until 1916 when Piggly Wiggly opened the first store with aisles so shoppers can browse the aisles with baskets and bring everything to a counter for checkout. This was called “Self-Service”. Consumers were shocked when they were told they had to walk around and pickup their own items, yet consumers eventually ended up adopting the new journey because it gave them the ability to choose from different versions of the same product. Brands began competing to grab customer attention on the shelves, and products were made to deliberately stand out. Consumers benefited in the end and continued to shop in the stores that provided more choices.

Fast-forwarding to today, we still use a “Full Service” journey when buying deli meat or wall paint. For different reasons, pharmacies also provide a “Full Service” experience. But the point is, past journeys don’t get replaced until your customers stop using them. At times the past journeys simply settle into a niche. 

Giving your customers the choice to choose their own adventure increases a positive experience, drives efficiency and brings customers along for the ride. You as a retailer are responsible for testing new technologies, and consumers are responsible for deciding on the right technologies for them.

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