What a retail store should be in an omnichannel world
IN AN omnichannel world, according to Fractal Analytics, which provides analytics solutions to some Fortune 500 companies, retailers are ought to be a combination of store retail and nonstore retail, integrating the online and offline advantages to provide customers with a seamless shopping experience across channels.
“As prices and inventory availability become more transparent, retailers will not survive just by being ‘pass through’ sellers of national brands. They will have to give consumers a reason to choose their stores over competitors,” Fractal Analytics says in a 2018 paper titled “Evolving the role of the retail store in an omnichannel world.”
“No longer will consumers shop at a retailer simply because it happens to be where a product is distributed. Retailers will need to offer deep product expertise and a unique product education.”
There isn’t just one, infallible way to bring new experiences to consumers; there are, in the words of Fractal Analytics, “enormous possibilities.” The company offers some scenarios: Customer making an online purchase but returning the product at the physical store; access to an in-store interactive screen that customers can use to browse through various products, read reviews of them and pick them up from the shelf; and in-store assistants carrying tablets with information about each customer and personalizing the shopping experience for that customer.
Some of the real-life examples Fractal Analytics gives include Amazon Go, a chain of grocery stores in the U.S. that employs a socalled “Just Walk Out” technology, allowing customers to bypass queues, and Oasis, a U.K. fashion retailer which has stores where sales associates are armed with iPads, available to give anyone on-the-spot, accurate and up-to-date product information.
“The iPad also acts as a cash register, making it easy for associates to ring you up from anywhere in the store. And the cherry on top? If it appears that something is out of stock, the staff can instantly place an online order for you to have the item shipped directly to your home. This is true seamless customer experience,” Fractal Analytics says.
The company argues that for many retailers, future store layouts will have to foster greater customer learning and experimentation, with technology fully integrated into how stores and employees engage customers, blurring the lines between the physical and the digital.
Its paper spotlights something called store remodeling, which it defines as a process of producing an incremental change in a store’s physical design to enhance customer experience.
“It is very difficult to accurately predict whether a store remodeling exercise will generate returns,” Fractal Analytics cautions. “The best way to know this for certain is to test the change in a subset of stores and based on the assessment, make a decision on whether it should be rolled out.”
“No longer will consumers shop at a retailer simply because it happens to be where a product is distributed. Retailers will need to offer deep product expertise and a unique product education.”
It cites an unnamed U.S. retailer that went on a remodeling experiment involving 27 of its stores, in which customer experiences lounges were introduced, changes to exterior signage were made and existing light systems were made “smart.”
The results were as follows: “22 stores generated a positive lift. Few experienced lifts more than 15% in sales. In addition, breakeven for large stores (sales greater than $10 million) was expected within 2.5 years whereas that for small stores (sales less than $5 million) was expected in 5-7 years. Based on the results, the retailer decided to prioritize remodeling for large stores.”
“Theroleoftheretailstoreremains essential for today’s consumers. Retailers that use technology to transform the in-store experience can capture new opportunities to create true omnichannel customer experiences,” Fractal Analytics says. However, creating seamless digital and in-store experiences require retailers to be innovative, digital savvy, and be willing to experiment.
“As in the case of the retailer that successfully remodeled its stores, those that take an intelligent approach to experimentation, powered by measurement and data, will drive real results, while minimizing risk. The opportunity is ripe for retailers that take smart action and strive to innovate. The leaders have already started. For those that haven’t, the time is now,” Fractal Analytics says.