What retail technology has in store has been saved
What retail technology has in store
Shaping the physical retail experience
What lies ahead for physical retail stores? How can retailers adapt and succeed in a rapidly changing world? Discover how retail technology can help deliver a thriving in-store experience.
Retailers have replaced the upheavals of the COVID-19 pandemic—social distancing, rapid shifts in shopping behaviors, and supply chain fluctuations—with new worries in 2023: Supply chain challenges refuse to abate, and customers are increasingly value conscious as inflationary pressures impact wallets. In this environment, leading retailers are evaluating the future of their physical retail stores and the retail technology investments that can help them stay competitive. Conditioned to interact with retailers in multiple channels, customers now expect product pricing, availability, detailed information at a glance, and—notwithstanding supply chain backups—orders readily available for pickup or delivery. However, customers are not avoiding the store entirely as many did during the height of the pandemic; contrary to some predictions, consumers are far from ready to do all their shopping on retail apps and websites. As in-person shopping and consumers’ appetites for immediacy increases, retailers are responding by simultaneously enhancing existing physical retail stores and opening new ones with increased in-store and curbside offerings as quickly as the tight labor market allows.
Consumers’ expectations around how they interact with stores at which they shop—from ready product visibility and streamlined checkout in the store to a full range of curbside and delivery options beyond the four physical walls—are straining existing capabilities and challenging physical retail orthodoxies. To capitalize on these changing expectations and retain their footing, retailers need to execute for today while innovating for tomorrow—navigating the intersection of store strategy, operational excellence, effective talent management, data, and enabling store technology.
Retailers need to challenge the one-size-fits-all approach to their physical retail stores. Using a single layout or set of offerings will rarely match the needs of customers across geographies or demographics. Industry leaders are rethinking store formats and service capabilities, modifying to serve customers where and how they want to shop. Retailers need to optimize and standardize activities to drive efficiencies and maximize time allocated to create customer value while also attracting, training, and empowering their workforces to deliver “moments that matter” for their customers. And finally, the focus of this brief: They can leverage emerging technological innovation and a store technology platform to support business objectives to enable the future vision of the physical retail store and how work is done.
New store technology to underpin the brick-and-mortar of today … and tomorrow
Leading retailers are taking advantage of marketplace shifts and new store technology to position themselves as shoppers’ go-to, all-in-one destinations. Catering to a customer’s full set of needs in a single visit has prompted retailers to reconsider their medium- to long-term strategies in three areas: customer experience, associate experience, and operational excellence. Most retailers will require investing in next-generation retail technology solutions across all three to emerge as all-in-one destinations.
However, one way to a successful evolution is avoiding getting caught in the trap of investing in a use-case-driven approach. Instead, retailers should develop a holistic view of enabling capabilities that need to be delivered through retail technology. Investments must support a necessary set of enabling technologies that power the improved experiences and operations that reinforce the overall customer journey, associate experience, and business strategy. Retailers need to fundamentally transform the speed, ease, and economics of how they deliver solutions to stores.
Core-enabling store technology for an adaptable ecosystem
Advancements in foundational technology are enabling retailers to operate their stores in ways that were impossible 10 years ago. Rather than build one-off technology solutions for specific use cases, however, retailers should equip their stores to prepare for—and adapt to—changes that both can and cannot be anticipated today. We believe that by investing in a reliable infrastructure and distributed-data platform now, retailers can reduce complexity, inertia, and costs in the long term. In turn, they’ll be able to activate new real-time solutions that impact associate experience, customer experience, and the bottom line. Retailers should build a scalable and flexible ecosystem with strong foundational capabilities that support current and future experiences.
The store ecosystem of the future will use multiple enabling technologies to deliver increased value. Here we outline four that we believe will be integral: artificial intelligence (AI), Internet of Things (IoT), digital integration, and edge computing/5G.
Product engineering opportunity levers
Enabling the store for the future with retail technology
The technology-aided retail enterprise needs to enable the broad set of use cases and capabilities—and encompass a scalable, flexible infrastructure and ecosystem of solution partners.
Moving forward into the future of physical retail
To continue to accelerate and enable stores for the future, we believe retail leaders should take the following actions to ensure they move forward in a cost-effective and scalable manner:
- Set the strategy: Create and align on long-term ambitions and vision along with tangible business goals. Develop the guiding principles for store technology, and identify the technical gaps and inhibitors most likely to hinder the company’s journey.
- Build technology foundation: Establish a strong technological foundation to enable store architecture strategy success. Understand the integrations and dependencies of solutions/use cases, platform services, and infrastructure—both constraints and opportunities.
- Operationalize the strategy: Create dedicated environment(s) to test new and in-flight retail initiatives, with a strong recommendation for a “real” store. Since innovation is iterative, prototype and search for enablers via rapid testing. Pilot prototypes and gather feedback, refining offerings, and then scale, pivot, or exit initiatives.
As we’ve said many times, the future of retail will still be grounded in physical retail stores. Retailers that win amid today’s ever-shifting headwinds will prioritize near-term investments in the technology platforms and capabilities that will support their future customers, associates, and operational strategies.
Additionally, the authors would like to thank Cody Thompson and Cam Parker for their contributions to this research.
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