Retail restructured and the rise of experience…retailers can’t afford to ignore these red-hot technology trends this summer

Retail trends come and go, but occasionally they shape the future of the industry for years to come. Frank Lochbaum Managing Partner at KPS, identifies three key retail trends this summer and explain why he thinks they’ll prove to be pivotal.

Amazon Go will change how we shop…forever

Amazon has kept its plans for its first checkout-free supermarket outside the US a closely guarded secret, but now the secret is out. The online behemoth has earmarked a retail space in central London for its first Amazon Go store and it is guaranteed to change how we shop forever.

The format is essentially an upmarket convenience store, but it uniquely relies on cameras, sensors and artificial intelligence to detect what shoppers are picking up and bills them automatically. The firm’s patent for its so-called “Just Walk Out” technology says the system relies on “sensor fusion”, an amalgamation of data from different sensors around the store to increase accuracy and reliability of results. This data, for example, includes weight measured by smart shelves to show if a customer has picked up a product.

Customers must download a smartphone app and submit their credit card details before they can shop. They can then enter through a turnstile which automatically scans the app to confirm their identity. The shop’s monitoring systems then track what the shoppers are picking up and putting back and they’re only charged for what they’re carrying when they walk through the exit.

This is a hot trend because Amazon is in the perfect position to disrupt the grocery market. It has no legacy store network to update, it is starting with a check-out free experience, and Amazon already has a huge digital customer base, so app adoption and customer identification should not be a problem. The retailer’s existing customers also tend to be digitally savvy, so there’s unlikely to be cultural, behavioural or educational barriers to adopting the Amazon Go experience.

If the US example is anything to go by, expect Amazon Go to expand swiftly. The firm opened ten branches within a year of its birth in North America, and there’s currently no shortage of prime retail real estate in the UK at the moment thanks to a glut of CVA activity.

Competing retailers have every reason to eye Amazon’s “Just Walk Out” format nervously considering Amazon’s track record with ecommerce. The take-home lesson here is that legacy retailers must double down on their digitisation and transformation projects if they are to remain competitive in what could possibly be the dawn of the Amazon Go era.

Successful bricks-and-mortar retailers will be leaner and smarter

There’s no missing the fact that the high-street retail model is currently undergoing huge structural change as retailers grapple with a heady mix of customers’ changing shopping behaviour and an uncertain economic outlook. Out of this crucible comes a number of important structural retail trends that will become even more evident this summer.

The first is that retailers’ store estates will continue to shrink leaving gaps in the high street and the second trend is that retail staff headcount will be slimmed down and replaced with a smaller, smarter workforce supported by new technology to satisfy consumers’ increasingly omnichannel demands. This seismic shift has been predicted by analysts and industry bodies for some time, but it is now finally coming to fruition, with tough trading conditions acting as the catalyst.

High street fashion stalwart New Look was among the first to initiate a company voluntary agreement (CVA) in January 2018, and lots of other struggling retailers soon followed. It has since dramatically reduced its estate size and staff headcount and its profitability has bounced back into the black.

What New Look, and retailers like it, now need to do is ensure its workforce is as lean and productive as possible and it is backed up with the tech needed to deliver the personalised customer experiences shoppers crave. 

This sounds like a big ask, but retailers are increasingly turning to workforce scheduling software, often driven by artificial intelligence, to optimise staff time and gamify shop floor tasks and targets. There are multiple solutions available that deliver this kind of functionality from a tablet, smartphone or even a smartwatch. It almost goes without saying, however, that retailers must have robust, digitised systems and processes in place to switch to the new smaller and smarter workforce model.

 Experiential retail will become even more important

Shopping habits are changing and there’s a desperate need for traditional stores to differentiate themselves from ecommerce rivals if they are to prosper. Speed and convenience, for example, are no longer good enough.

Stores like Sephora, for example, have rethought their stores by combining traditional elements with mobile apps and activities that are completely unrelated to making a purchase.

Samsung has taken this to extremes with its $43 million flagship “pop-up” in Manhattan, that features its products, but doesn’t have any for sale. It does, however, boast interactive art, virtual reality, lounge areas, a recording studio and three-storey 96-screen display wall.

Expect to see highly diluted versions of this in the high-street this summer as retailers use increasingly sophisticated experience to lure customers instore. 

Of course, many of the retail "experiences" that have become popular in recent months depend on a plethora of connected hardware. Smart IoT devices such as beacons and smart shelves offer retail companies the efficiency to ensure their staff are effectively utilised and offer an in-store experience of efficiency and delight.

In conclusion

Retail has forever been in a state of change, but the three trends outlined above show how the pace and depth of that transformation is accelerating. Only the businesses with the right digitised systems and processes in place will be able to ride the crest of this transformational wave. Those retailers will have the agility to respond to new customer demands quickly and be able to restructure their businesses when new financial and economic pressures materialise. 

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