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GUEST COMMENT How have digital trends transformed the physical retail sector?

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GUEST COMMENT How have digital trends transformed the physical retail sector?

Nigel Ashman is president of Onvu Retail
Nigel Ashman is president of Onvu Retail

With the rise of ecommerce, Amazon has taken the retail industry by storm through its vast product offering and worldwide service. Amazon’s undeniable success has shaped the digital retail industry so much that brand name itself is almost synonymous with ‘ecommerce’. With that in mind, it was a shock reveal when the tech giant announced their launch of a physical retail store in January 2018. Amazon Go was set on transforming the real-world shopping experience, but not before the global ecommerce giant learnt its lessons from its leading position in the digital shopping space.

 

The Amazon Go stores use tracking as a way of monitoring customers’ movements throughout the store rather than traditional staff-based customer monitoring. Taking this into the real world allows Amazon to harness their digital footprint to personalise and make the service incredibly efficient. This is a similar premise to the one they take online, using cutting-edge analytics to track products regularly looked at and analysing the route they took to get to a product, online. This informs the products that the consumer will then see, maximising utility to the customer, and sales for the store.

 

As 2020 marks the second anniversary of Amazon Go, the 25th concept store opened in Seattle as a fully fledged Amazon Go Grocery store. This digital supermarket inhabits over 10,000sq ft of advanced tracking technology which caters to the “just walk out” business model of the Amazon Go brand. The store is equipped with technologies such as automated POS systems, image recognition technology, wireless networks and computer vision cameras. Its overwhelming reliance on robotics and smart analytics puts emphasis on the undeniable merging of the online and high-street retailer experience. Being the first of this type, it sets a precedent that cashierless concept stores like this could prove successful enough to implement by the wider industry.

 

The use of machine learning and customer-centric AI is as prevalent in the store as it is in the way retailers analyse customers online. Facial recognition software has quickly become a staple of innovative retailers, coupled with the integration of cutting-edge tracking software to carefully manage consumer data and better consumers’ experiences. This tailored approach is starting to become more popular. Chinese ecommerce giant Alibaba has taken tracking and tailoring to a whole new level in its Hema stores which and offers its own Hema mobile app, allowing customers to scan, search store products and recipe ideas, then automatically builds a shopping list based on this data for free home delivery. These Alibaba Hema stores are just one example of a hybrid of physical and digital retailing that has proven immensely successful, with online sales of this nature producing over 60 per cent of Alibaba Hema’s total orders.The investment in technology that allows them to make decisions from customer-based insights is more attractive than investing in the equivalent real world solution of staff recording customers with clipboards and stopwatches in order to record the necessary data to make these conclusions.

 

Whilst the Amazon Go store is the current pinnacle of what can be created with careful collaboration between technology and retail, there are actionable lessons that all sizes of retailers can take from them. In recent years, we have seen a surge in physical concept stores led by digital integration. In China, JD.com launched its 7Fresh store which uses digital screens and consumer data to recommend items as part of their smart shopping basket concept which automatically follows customers around the store.

 

Data analytics could be central to rescuing the high-street from its widely reported lowering sales. The use of analytics (in its various formats) is central to the customer-centric approach that retailers are taking in order to better optimise and facilitate customer loyalty and engagement, particularly with the millennial demographic.

 

As shown by Amazon Go stores, data-led analytics are now at the forefront of retail technology. Data is the defining resource for all businesses in the modern age, people’s movement/ history/ trends playing a key role in the placement of in-store merchandise and products, in supporting better experiences, and in tweaking all elements of the physical space and staffing needs to create a totally tailored and optimised experience.

 

Behaviour analytics

Whilst it has become commonplace for companies to use the behavioural habits of those online as the basis for the advertising/ placement of digital products, this has just begun to become a trend in the physical retail space. More businesses are now using video and sensor analysis to track customer behaviour in retail spaces. If a retail outlet can pinpoint where a customer is inclined to go when they enter the store, then they are able to actively alter the products placed there, so that customers are more likely to purchase more appropriate or profitable products. Similarly, if customers in a low-traffic area are engaging with a particular piece of visual merchandising, then analytics can guide store owners into placing this display in a place with maximum footfall.

 

The benefits of in-store technology like video intelligence products has become so clear now that retailers are able to use a process of sentiment analysis. This allows retailers to recognise the way people are engaging with a particular product. In-turn, this streamlines the process of cutting and/or increasing the amount of products being supplied to stores. In the case of franchises, this will be beneficial to both the store and the company.

 

Staff scheduling

The use of data has always been a key way for companies to decide how to optimise staff hours efficiently. It’s no use employing staff in the absence of sufficient customers. However, in recent years there has been an influx of data-based visuals that clearly set out and show the value of staff hours. This allows senior management to instantly see metrics such as conversion, sales and footfall. Whilst the Amazon Go stores rely solely on technology, when Alibaba Hema was launched, the digital integration included a ceiling-mounted conveyor belt system to streamline order picking so staff are allocated only where and when they are required throughout merchandising. The integration of these metrics into an easily usable dashboard not only helps retailers make the correct staffing decisions whilst reducing overstaffing, it also allows staff to track their own progress on shifts, therefore encouraging staff to push for more sales etc.

 

Risk assessment

Particular types of data analytics can be very useful in assessing particular risk areas of businesses. In the physical sense, video data plays a crucial role in collecting insights in where staff could potentially be put at harm. If a warehouse owner is able to pinpoint a particular spot that has seen people injured, then they are able to actively reduce the amount of people in this area and dissect why people are being put at risk.

 

Video technology is relied upon to combat theft and reduce scanning errors. Particularly in large retail stores and at busy trading periods, basic monitoring has failed retailers in the past; theft and clerical POS errors can be extremely costly and can be combated by innovative technology. Supermarket giant, Walmart revealed that they are using AI-powered cameras as part of their wide-scale surveillance programme to analyse behaviour and track scanning errors and reduce theft.

 

To conclude, Amazon has long been a tech giant, dominating the online retail scene with an offering surpassing anything the internet had ever seen before its rise. However, it is the practices they undertook whilst being the most used web page on the internet which has given them the basis to move their expertise into physical retail. Many have followed by imitating these smart concept stores. Just two years after the launch of Amazon Go, 7Eleven launched their first cashierless store in February 2020, Sainsbury’s debuted their SmartShop Scan app and first ‘till-free’ store and Alibaba Hema stores have robotically automated restaurants as well as cashierless checkouts.

 

Rather unsurprisingly, Amazon is the first to implement their digital business model into a physical structure in such a large-scale capacity like its most recent launch of the Amazon Go Grocery supermarket. Data is the next step in the evolution of customer services and business model, allowing companies to streamline on processes and maximise profits.

 

Nigel Ashman is president of Onvu Retail

 

Main image courtesy of Amazon

 

Author image courtesy of Nigel Ashman/Onvu Retail

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