The impact of self-driving vehicles on retail and location strategy
From fantasy to reality
Developments in autonomous driving are speeding up. The chance you will ‘drive’ an automated vehicle yourself in 5 to 10 years is probably much bigger than you can imagine right now. The impact of innovative mobility solutions on society will be huge and is already recognized by most industries as well as governments. Recently the Dutch cabinet accepted a bill that enables experiments with automated vehicles on Dutch roads without a real person present. All of this helps to move self-driving cars from fantasy to reality. Now could this impact retail and location strategy?
Less people have access to parking space because of urbanization, and a growing number of people also believe car ownership does not contribute to a sustainable lifestyle. Fully autonomous or self-driving vehicles will probably change the entire mobility ecosystem. Not only by optimizing traffic flows, collision avoidance or more efficient vehicle usage. Also parking can be much more efficient and effective as cars can be parked outside of the city or don’t even have to be parked at all in case of continuous car sharing.
Impact on retail
A question that might be of interest to you is how retail will be impacted by automated ways of mobility? Let me share some thoughts with you.
- Increasing catchment areas
I expect consumers who are currently not able to drive cars (e.g. elderly, children or disabled people) and thus are kind of forced to visit nearby shopping centers, will be able ánd willing to travel a much longer distance to go (fun) shopping when driverless cars are available. As a result catchment areas increase dramatically and shopping centers really have to be even more distinctive and of really high quality in order to continue attracting consumers.
- Extraordinary levels of customer service
Driverless cars can also contribute to drive customers to the stores. Imagine the opportunities, if you as a retailer could send a self-driving car to pick customers from their home for a store visit and return them back home. This would result in providing extraordinary levels of customer service and possibilities to create commitment to your store before, during and after the ride.
- Delivery time
Another customer demand that retailers are facing is delivery time. Customers expect their delivery at hours which are perceived by employees as unsociable and odd. For retailers it is difficult finding employees who can pick and deliver at such odd times. Picking and delivering objects, will soon become fully automated. The machines will happily work day and night, allowing packages to be delivered on demand when it’s convenient for the customer. This long wait for goods and inconvenient delivery hours is one of the main reasons holding online shopping back. In the midst of the decline of functional retail, experiential retail — including entertainment, shopping for fine goods, dining, “seeing and being seen,” etc.— will likely continue to become even more relevant.
- Neighborhood centers
And picture self-driving mobile vending machines, driving around stocked full of the most common bought goods. Rushing to the shop for some (forgotten) bread, milk, beer etc. could belong to the past as corner shops become mobile. In the Netherlands we have a unique retail landscape in the sense that there is a clear hierarchy from city centers, to large and medium sized shopping centers in suburbs to small neighborhood centers in residential areas. Retail parks and malls being rather scarce. Small scale neighborhood centers are already heavily depending on supermarkets and free parking. So if online ordered groceries can be delivered at home anytime and goods you may have forgotten become available through before mentioned self-driving mobile vending machines, why do we still need neighborhood centers in the future?
For retailers self-driving vehicles can have a great impact on location decisions. To name a few:
- The widespread mantra ‘No parking, no business’ is disappearing. All you need is a convenient ‘Stop & Go-area’ near your store or shopping center.
- Since parking and congestion problems will belong to the past inner-city locations become suitable for a larger amount of retailers.
- Retail stores become ‘showrooms’ rather than local inventory distribution points. Seeing and buying products in the store is still possible, but an automated vehicle is probably delivering it to your home same day or even same hour from a nearby warehouse. As such less space is needed for in-store stock. These changing space requirements give retailers (legal) possibilities to look at different types - small scale - locations.
- Autonomous cars operating as fleets and maintained and refueled at central locations will make existing gas stations and convenience stores obsolete or suitable for redevelopment, let’s say into highly accessible pick-up-points or ‘collaboration hubs’ for people who want to meet their colleagues in person.
- Nondrivers are not ‘forced’ to take the bus, subway, train or bike anymore to cover longer distances. This will impact footfall and therefore (convenience) stores and F&B formulas at public transport hubs or along busy radial streets - depending on large numbers of bikers during rush hours. Instead, convenience stores will probably start to pop-up at busy ‘on and off boarding locations’ for autonomous cars like educational institutions, city centers or CBD-areas.
From fantasy to reality
If you think this is all still a dream… it is already happening! In the Netherlands a large food company is testing a delivery robot at Universities. When a student orders food online, the robot will deliver the food and provide the student with a code to unlock the storage box for access. In future, the robot will be also preparing the food, maybe even en route if there exists a large distance to the customer. Shopping and visiting restaurants will continue but will be easier…no bags to carry and no car to park. From fantasy to reality; what a perspective!