The Store of the Future: A Digital and Emotional Destination

The store of the future offers customers personalized touches, experiences and services that differentiate it from just a place to buy goods. “The purpose of retail will no longer be to solely convert every customer into a buyer of goods but rather transform them into disciples of the brand itself,” writes Doug Stephens in his Retail Prophet blog. “The store maintains the potential to be that emotional center of gravity for the brand.” To this end, many stores are experimenting with offering interactive technology-laden experiences and a space to design and co-create goods with the personal assistance of experts.

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Personalization

Puma’s first-ever North American flagship in NYC offers shoppers an array of futuristic experiences, including in-depth customization. The store’s Puma x You customization studio enables shoppers to personalize Puma footwear, apparel and accessories using paints, dips, dyes, patchwork, embroidery, 3D-knitting, laser printing, pinning, material upcycling, and more. The store also launched Chinatown Market University, where shoppers can customize their Puma apparel, footwear and accessories using Chinatown Market’s state-of-the-art printing technology. The Chinatown Market team also teaches classes around various DIY and customization methods. Shoppers can also view products in four iMirrors positioned throughout the store. When customers interact with the RFID-powered iMirror "Discovery Wall," they can browse through all Puma inventory that is in close proximity to them. While browsing, users can also request a certain style and size right from the mirror. The information is sent to sales associates who will bring the requested items. Additionally, a lifestyle feed gathers information from PUMA's social media channels and displays it on the mirror, and the mirrors double as a selfie station. Users can take a selfie, add Puma stickers to it, and then send the photo directly to Puma's social channels.

Service

Services will help personalize the store of the future, but with a technological twist. Take beauty retailer Ulta for example. The retailer acquired GlamStreet and QM Scientific in 2018 to help it develop an innovation pipeline and move faster in developing its augmented reality offerings, something BRP found 29% of retailers plan to do in the next three years. Ulta’s AR innovation includes testing in-store Ulta digital stylists in six pilot stores. The tool is intended for associates in the salon or brow bars to show possibilities to customers in the store and offers virtual try-on for hair color, makeup, and eyebrow shaping.

CVS Building on the success of its pilot program, CVS plans to go live with 1,500 service-oriented HealthHUBs by the end of 2021. The three pilot stores in Houston, TX, were redesigned with more than 20% of the store dedicated to health services. HealthHUB's include:

“AI offers the ability to pair the vast amounts of data gathered on customers and their preferences and synthesize this information to help personalize the customer experience,” writes BRP. “Some retailers are experimenting with AI to offer purchasing suggestions based on answers to a series of questions.”

Artificial Intelligence

Powered by artificial intelligence (AI) the store of the future will be equipped to personalize the customer experience and manage operations like never before.

While AI’s usage in e-commerce is more prevalent, physical explorations of its potential are starting to pop up in retail stores.

Walmart Neighborhood Market in Levittown, NY, quietly transformed into Walmart’s new Intelligent Retail Lab (IRL) earlier this year, outfitted with AI-enabled cameras, interactive displays and a massive data center. The real-world shopping environment was designed to explore the possibilities AI can contribute to the store experience. IRL is set up to gather information about what’s happening inside the store through an array of sensors, cameras and processors. The tech is helping Walmart improve inventory availability by using real-time information. A combination of cameras and real-time analytics automatically trigger out-of-stock notifications to internal apps that alert associates. The technology can recognize minute difference in similar products, while simultaneously cross checking available inventory with upcoming sales demand. Before jumping to more futuristic concepts, the IRL team is starting with practical solutions like inventory management, as well as others like making sure shopping carts are available and registers are open. “You can’t be overly enamored with the shiny object element of AI,” CEO of IRL Mike Hanrahan cautions. “There are a lot of shiny objects out there that are doing things we think are unrealistic to scale and probably, long-term, not beneficial for the consumer.” It's also important to note, all this hardware is connected by enough cabling to scale Mt. Everest five times and enough processing power to download three years’ worth of music each second. Retailers must keep in mind a next-generation retail network infrastructure is needed to build the foundation for the store of the future.

In-Store Robotics

Another way Walmart is paving the path to the store of the future involves next-gen robotics. The retail behemoth is deploying in-store robots across its 5,000 US locations, including the rollout of 1,500 autonomous cleaning machines, 300 shelf-scanning robots, and 1,200 automated truck unloaders. The autonomous “Auto-C” floor scrubbers travel throughout the open parts of the store, leaving behind a clean floor, while “Auto-S” shelf-scanning robots scan items on shelves to help ensure availability, correct shelf location, and price accuracy. Working along with the shelf scanner bots, the 1,200 additional FAST Unloaders automatically scan and sort items unloaded from trucks based on priority and department. In a similar vein, Schnuck Markets’ and Giant Eagle have both deployed an autonomous shelf auditing and inventory analytics solution named Tally. Schnuck Markets’ added the shelf-scanning robot to at least 15 stores last year after piloting the tech in 2017, when Tally began capturing deeper, real-time insights into on-shelf operations at three Schnucks locations. “Tally has been instrumental in boosting the way our shelves are managed and how our stores function,” says Dave Steck, VP of IT, infrastructure and application development, Schnucks. Tally robots in Giant Eagle and Market District test stores traverse the floors multiple times per day, scanning approximately 35,000 products. Tally then sends detailed data reports to Giant Eagle store teams every 30 minutes that capture, report, and analyze the state and availability of merchandise. These reports help employees to focus on controllable out-of-stock and pricing situations, while optimizing each store’s product layout. Meanwhile, shoppers in Ahold Delhaize USA’s Stop & Shop and Giant/Martin’s stores are starting to see “Marty” roaming the aisles. The grocer is rolling out nearly 500 of the robots which Mashable reports cost $35,000 each. The in-store robots are used to identify hazards, such as spills, and provide reporting that enables corrective action from a human. While these robot use cases aren’t meant to interact with shoppers, some retailers are testing automation solutions that do engage with shoppers. BevMo! For example, tested an AI-powered robot BevBot! to help the specialty beverage retailer efficiently aggregate customer and store insight, and BevBot!’s platform can respond to and interact with customers in real time. “With higher expectations for personalized experiences, [younger customer segments] expect sales associates will cater to their needs,” BRP writes. “They don’t care if personalization is delivered by a human or a robot, as long as they get the information and service they expect. And many consumers actually seem to enjoy the novelty of the robot, as long as it offers efficient and quality service.”

The Store as a Fulfillment Hub

The store of the future is more than just a place to purchase goods. Tech-savvy retailers are already leveraging them as mini fulfillment centers. Ominchannel retailers are implementing ship-from-store capabilities, while buy online pickup in store (BOPIS) continues to grow rapidly. In fact, BOPIS increased from 53% in 2017 to 61% in 2018, and according to Gartner continues to show upward momentum this year. While BOPIS implementations continue to scale, the in-store experience is far from perfected. To discover which chains provide the best BOPIS experience, IHL Group deployed 300 secret shoppers to research and rank the top U.S. retailers for click-and-collect. “With this research, we found that almost all of these retailers have done a terrific job improving the online purchase experience,” explained Greg Buzek, president of IHL Group. “However, there is great work to be done in the store-level execution once the order is placed. This includes the time to pick the order, the time to notify the customer, and then the execution of the pickup at the physical store.” The research found, for example, while most retailers scored very well for the online portion of the process, it is around customer notification and communication where a big separation among retailers begins. The overall average for the 10 retailers surveyed was 5.9 hours from order completion to notification that the order was ready for pickup.

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Target credits its strategy to place stores at the center of fulfillment for its ability to offer a continually evolving menu of same-day services. “I think our decision years ago to put our stores at the center of our fulfillment strategy is paying off with accelerated growth,” says CEO Brian Cornell. Target’s same-day services consist of in-store pickup; drive-up, now at nearly 1,750 stores in all 50 states; and same-day delivery through Shipt. The chain’s same-day options are growing much faster than its digital sales, reports COO John Mulligan. As one of the first to market at scale, Target has had time to improve these services as well. Since the beginning of 2018, order picking efficiency for pickup and drive-up has increased more than 30%, while end-to-end labor efficiency for Target’s ship-from-store capability has also improved by more than 30% over that same period. “These are massive improvements which we realized through the natural scale efficiencies we see on higher volume, which are compounded by incorporating improved processes and technology,” says Mulligan. Moving to store fulfillment has not increased the frequency of split shipments, a worry for many retailers, according to Cornell. While Target’s store fulfillment continues to grow rapidly, the rate of split shipments this year is running lower both in Target’s stores and in total compared with last year.

Conclusion

Personalization, immersive digital experiences and services in stores, artificial intelligence, automation, inventory visibility and in-store fulfillment are all components retailers are implementing and testing now to develop the roadmap to the store of the future. It’s important to remember now, as these features are being built, each requires retailers to build a technology foundation today to support the store of tomorrow. Connected technologies lead to sophisticated environments which require the right network infrastructure to build upon. Cloud and edge computing provide a strategy for retailers to leverage their current infrastructures, but they also demand a next-generation retail network infrastructure.

Use the store to transform shoppers into devotees of the brand — and give them quick, easy solutions to share their loyalty with their social network. Pair AR experiences with personal assistants to provide a fully personalized experience. When exploring AI, start with the basics that will benefit the consumer, rather than unrealistic to scale, grandiose plans. In-store robots will help with various jobs in the store of the future — begin testing them now to see what use case works best with customers and operational needs. Get ahead of future delivery demands and develop ship-from-store capabilities now. Build a network now to support the store of tomorrow.

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