When Tesco, the UK-based retailer, wanted to grow its South Korean supermarket chain, Home Plus, without a bigger physical footprint, the company built a virtual subway store by posting photos of its products with QR codes. The pictures mimic inventory on store shelves and give busy commuters an opportunity to build a shopping cart while waiting for their trains and schedule delivery within minutes or hours.
This type of innovative shopping experience heralds the digital store of the future, however, don’t mistake the retail store for a relic that may disappear. Rather, physical stores are here to stay and will remain the largest contributor of revenue, which is forecast to provide an average 72 percent of overall retail revenue through 2017, according to Miriam Burt, research vice president, at Gartner Symposium/ITxpo in Barcelona, Spain.
The store of the future
Although we are moving into a digital business environment, the majority of retail revenue is still coming from the store. “The digital store is not a store of the future, but rather a store of the past, present, and future,” Ms. Burt said. Retailers estimate that up to 50 percent of store sales are impacted by e-commerce and m-commerce combined. “However, there is also evidence that the click and collect service is on the increase, and that the store will remain the heart of digital business execution,” said Ms. Burt.
Massive online retailers have made moves to reflect this trend. Alibaba, the Chinese e-commerce company, bought a 20 percent stake in Suning Appliance, owner of 1,600 stores across China, Hong Kong and Japan. U.S.-based Amazon opened the Amazon Books bookstore in Seattle, Washington.
To meet evolving customer needs, the digital store must accommodate three competencies:
Buying: Customers have already made a choice to enter a store and require the following essentials:
- Stock on the shelf
- Easy to find
- Informed available staff
- Fast check-out
- Easy to try
- Easy to return
- Detailed product information
Shopping: Customers expect what they want, when they want it, in a cohesive shopping experience that is:
Customers don’t necessarily need products delivered in real-time, but in “right time”. For example, a birthday present should be delivered on the right date. Customers also want products delivered to the location of their choice, not necessarily at home. Consistency extends to pricing policy.
“There’s no reason the consumer should be penalized with higher prices for coming into the store,” Ms. Burt said.
Living: In the most evolved state, customers want retailers to understand how they live and service them on their terms. This involves levels of collaboration, personalization and customization.
Moving forward, retail CIOs should begin to evaluate relevant vendors in the market for real-time store monitoring platform solutions and general regular multichannel customer analytics reports. Set up a team of application and technical architects to work with the business to investigate the impact of the Internet of Things (IoT) in the store. Additionally, start the discussion with the business on how technology can augment the role of store associates.