Future, interrupted: The new store of tomorrow and how retailers can adapt

Published January 26, 2021


When 2020 dawned, retailers were buzzing about the “store of the future” and what it might look like. The excitement was palpable: so many new technologies. So many ways to connect the shopper journey. So many opportunities to differentiate a retail brand.

Then, the pandemic. Suddenly, retailers were less concerned about the store of the future and more about surviving in the present. About pivoting quickly to new fulfillment models, new ways of operating, new regulations.

Retailers are still dealing with the fallout of that unpredictable year of change. As 2021 picks up steam, some of those changes are likely permanent. And it’s being driven by the biggest change of all: the shift in consumer buying behaviors.

Think about how your days look now. You’re likely at home. Maybe working via Zoom and Webex. If you’re like many people, you’re buying online, having items delivered or picking them up curbside or in-store. You could be thinking about safety, convenience and the availability of inventory essential to your household. (And that’s been one of the biggest shopper shifts amid COVID-19: loyalty. Consumers are less loyal to brands and more in favor of what’s available on the shelves.)

Which consumer behaviors are likely to last—and why

Again, it’s about safety, convenience and availability. So, consumers are likely to continue using technologies that offer that, from contactless payment to e-commerce to buy-online-pickup-in-store (BOPIS). Retailers will be focusing on deploying technologies like these to enable a simpler, more intuitive and connected experience for shoppers while reducing the complexity and cost of serving.

And consumers are on board. According to McKinsey, some two-thirds of consumers have tried new shopping methods—and a full 65 percent plan to continue.

“There have been some intermediate changes arising from the pandemic, such as Plexiglas partitions in stores, which may or may not stay once the pandemic subsides,” said David Wilkinson, president and general manager of NCR Retail. “But as a consumer, we all want the convenience of contactless payments, online ordering, retailers knowing our preferences. Those things are going to stay. These technologies were already starting to increase in adoption and the pandemic just accelerated it. And it’s creating challenges for retailers.”

Download this: Rolling with today’s retail disruptions? Get the infographic for a big-picture view of three macro-forces that are changing how stores operate.

Beyond contactless: 3 areas of tech focus for retailers

Wilkinson advises global retailers to take a three-pronged approach to their digital retail transformation plans to meet these changing expectations. The goal? To meet customers where they are while simplifying the retail operation. To do so means focusing on these three areas:

1. The outside-of-store experience – Making it seamless for consumers to use any device and any channel to shop at any time.

2. In-store technologies – From assisted to self-checkout to kiosks, finding new ways to serve customers inside the store and meeting them where they are. Read more: See how Northgate Market overcame channel chaos and unified customer experience

3. Hyper-personalization – Being able to recognize a shopper as an individual and use their shopping data and preferences to deliver personalized recommendations, offers, loyalty rewards and more.

“But as a consumer, we all want the convenience of contactless payments, online ordering, retailers knowing our preferences. Those things are going to stay.” — David Wilkinson, president & GM of NCR Retail.

When it comes to specific technologies, Wilkinson says retailers should continue to focus on mobile and online, whether enabling a consumer device or purpose-built device in store. Computer vision and artificial intelligence will also play critical roles, with a multitude of applications and use cases from improving checkout speed and guest experience to facial recognition payment and loyalty, shrink reduction and frictionless commerce.

The most important technology? The kind that keeps all the other tech available.

There’s already a lot of technology inside the store, and that’s only going to increase. So it’s critical for retailers to pay attention to Internet of Things (IoT)-based services and use them to make sure every connected device, from point-of-sale terminals and inventory robots to a walk-in cooler sensor, are running like they should—and that any failures are identified and resolved before the retailer or their customer even knows.

Keep reading: Store technology that manages itself? See how digital connected services work.

That’s because, in an era of shrinking loyalty and hungry competition, the customer experience has to be the best it can be; device outages can interrupt it and cost a retailer precious loyalty.

“Availability of technology is just like a store associate showing up for their shift,” Wilkinson said. “The technology has to be available; it’s critical to driving the end-to-end experience. It’s important for retailers to ensure the connectivity of the devices in store and have the ability to remotely monitor and maintain the technology.”

Previously, even as recently as five years ago, that connectivity wasn’t as critical. Retailers could rely on individual, discrete pieces of technology with custom integrations. But the proliferation of new technologies and demand for new experiences means retailers must be able to connect their devices into an ecosystem and have visibility and control of it all in real time to achieve the best customer experience and operational efficiency gains.

Keep reading: What is break/fix? And why are so many retailers sticking with it?

“The technology has to be available; it’s critical to driving the end-to-end experience. It’s important for retailers to ensure the connectivity of the devices in store and have the ability to remotely monitor and maintain the technology.” — David Wilkinson, NCR Retail.

Moving from point-of-sale to a platform for flexibility

“We’ve got to create flexibility in IT,” Wilkinson said. “Ten years ago, you could build a piece of retail technology on an island and it was okay; you could manage with point-to-point, bespoke integration. But it gets unwieldy as other new technologies come in, coupled with a faster pace of adoption.”

That’s why more retailers are adopting a platform approach and taking advantage of open technology ecosystems. It delivers the flexibility they need to add new, exciting technologies—and those technologies are emerging all the time. Indeed, one April 2020 report found there were over 4,200 in-store retail technology startups receiving billions in investments.

Retailers need to have a platform flexible enough to plug in these new technologies, be able to test them and turn them off and on easily. Retailers are also building their own custom applications and those they can completely control. They don’t want a third-party to own their loyalty experience, for example, especially one that requires them to create a separate, bespoke experience that doesn’t integrate with their point of sale—and that the customer has to leave your platform to interact with.

Core vs. context: How to approach investing in a time of rapid change

But investing in new technologies can come with a hefty price tag. And this in an industry that already underspends on store technology. Add razor-thin margins and retailers are understandably hesitant to make huge investments when the industry keeps changing.

That’s why retailers need to focus on smart platform investments that maximize flexibility. So, yes, retailers still have to invest. But gone are the days of one-off investments that take five or seven years to materialize into ROI. With a platform approach, that return comes much faster and the initial technology cost curve is lower, too. Retailers can finally stop worrying that they’ll have to make expensive investments only to see that, at the end, the market has moved on. Because the platform approach delivers the most important benefit of all for retailers who are frustrated by the pace of change: flexibility.

It means looking at a retailer’s core business versus context. Investing in technology to run the store and serve consumers better isn’t always core to what a retailer does. So it’s important to think about the context to make efficient investment decisions about how to design and run the store using technology. Having the right tech partner helps because they can spend 100% of the time focusing on the technology while the retailer focuses on differentiating the customer experience.

All eyes on store IT

Speaking of teamwork, that’s another way store operations are changing—and shaping the new store of the future. Previously, a store brand’s teams were siloed; store ops was store ops, marketing was marketing, customer experience was customer experience, IT was IT.

But now, the people in the meeting rooms are changing, as are the discussions. The chief experience officer is leaning on technology to enable the store experience and create simple, fast shopping and checkout. Business and ops teams are also driving the need for change, focusing on technology to drive everything from inventory to labor. And all of these teams are leaning into the business of store IT, sandwiching the store’s IT team in the middle.

In fact, it’s difficult to imagine any retail challenges that don’t have an IT component. That’s night-and-day different from just five or so years ago. And it changes how technology partners need to work with retailers; the right tech partners understand the shifting dynamics and priorities in the retail organization, and must be able to develop strategies for technology that deliver on multiple objectives for the different stakeholders across the value chain.

The right technology partners understand the shifting dynamics and priorities in the retail organization, and must be able to develop strategies for technology that deliver on multiple objectives for the different stakeholders across the value chain.

The new face of the store of the future

So will the new store of the future still have Plexiglas dividers and floor markers? That’s hard to say. What’s clear is that it’s technology enabled, flexible and agile. It’s increasingly frictionless and focused on key technologies like computer vision, IoT monitoring, real-time inventory gathering and emerging experiences like augmented reality inside the store.

Likely, the store of the future will focus heavily on:

  • Micro-fulfillment via online and BOPIS – This will be a big push, alongside the need for accurate real-time inventory gathering, tracking and reporting, whether via computer vision or RFID enabled devices.
  • Creating customer design-centric stores that serve customers where and how they want to be served. That includes alternate checkout models. Today, for example, checkout is at the front of the store. But tomorrow, that may change as consumer buying habits shift.
  • Self-checkout to meet customers where they are. Customers have flocked to self-checkout amid the pandemic. In a 2020 NCR survey, 49% of consumers said they’ll “probably” or “definitely” use self-checkout more often. Another survey found 75% of people are likely to use grocery or convenience store self-checkouts.
  • Hyper-personalization in-store – Now that everyone is accustomed to shopping online, they expect the same kind of personalized, intuitive experience in other areas and that will increasingly include in-store. The store of the future will recognize and engage shoppers as they move through the aisles. Picking up spaghetti sauce and pasta? Maybe you’ll get an alert on your phone that you’ve got a new coupon for meatballs, red wine or salad kits in your app—and you can scan, check out and pay in that same mobile experience.

“This notion of hyper-personalization in real time is what consumers want; you’re voting every day when you shop online,” Wilkinson said. “You want to be able to pre-build shopping lists. Get served real-time promotions. Use your loyalty program. All in store. So the barriers of siloed channels have to be broken down. And that’s why we advocate for the platform approach—to break those siloes and allow those seamless experiences to occur.”

A platform for the future—no matter what it brings

And that’s the biggest technology approach that will underpin the store of the future: platforming. The benefits are already visible for retailers who invested in open ecosystems, APIs and services; they’re the ones who adapted quickly and could turn on, test and scale new experiences faster.

“Technology has moved beyond just having a point-of-sale system that you have to do bespoke, one off integrations to,” Wilkinson said. “It just doesn’t give you the ability to react and adapt. And that’s going to be key for retailers even after the pandemic is gone. Because there will always be something new to disrupt the industry, to react to. The key to surviving is having a next-gen retail platform that allows you to adapt quickly—no matter how the market or your shoppers change.”

Get a big-picture look at how retailers are rolling with the changes. Download our latest infographic to explore three macro-forces…and how to adapt.

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