The Future of Retail is Here
The conversation that retail is becoming more focused on e-commerce, personalization, sustainability and more integrated between offline and online channels is not news. Retailers have been planning for a digitally enabled future for some time.
And yet many are struggling to adapt to the pace of change, especially since the pandemic brought the digital future forward by several years. Having established operating models in the brick-and-mortar age, few retailers were fully prepared for the shift to be this fast and on this scale.
As such, in most retail businesses, there’s still a need to properly connect the dots between offline and online channels, and ensure that the switch to omnichannel shopping does not simply mean higher operating costs and lower profitability. With margins already wafer thin in many segments, the status quo is just unsustainable over the long term. To do that, they face the daunting task of transforming physical shopping into a new 21st-century channel that’s as enticing and efficient experience as ecommerce.
The store of tomorrow
The solution: retailers should commit to omnichannel operations just as wholeheartedly as they commit to omnichannel customer experiences. What does this mean in practice? It means rethinking everything about the retail store (its purpose, function and operating model) at a truly local level.
To help illustrate this idea of omnichannel shopping, Accenture has developed a new concept for the store of tomorrow. Designed for maximum adaptiveness, it’s applicable to all sectors of retail, from grocery to beauty to DIY and beyond.
The concept proposes splitting the retail store into three different modular components, which can be mixed and matched as required. These are: a space for browsing products and hosting other physical retail experiences, a space for digitally browsing and ordering commodities via digital displays, smartphones and other devices and a dark-store micro-fulfilment center for fulfilling both in-store and ecommerce orders.
The idea is to combine the speed and simplicity of digital shopping with the automated efficiency of modern warehousing, while putting a greater emphasis on the physical shopping experiences customers desire most.
Six key ingredients
Of course, the makeup of each store of tomorrow will depend on the particular retail sector, local market, customer needs and retailer objectives. However, we can be confident that every integrated store will make use of six key ingredients:
#1Integrated customer experience. Retailers should be looking to create a fully integrated model that streamlines, simplifies, speeds up and stitches together customer experiences across both digital and physical shopping channels. That includes joined up omnichannel shopping journeys, consistent and personalized promotions, digital payments in store and online, easier returns, and more flexible delivery options, among other capabilities.
#2 Optimized supply chain operations. Retailers should be looking to massively increase operational efficiency through automation, leveraging cloud technologies, including advanced data analytics like machine learning. They should also start to treat their stores as part of the wider fulfilment network, enabling new customer experiences (e.g. buy online pick up in-store, home delivery, etc.), while also optimizing overall network efficiency and responsiveness.
#3 Purposeful and skilled workforce. To support a truly integrated operating model, retailers need a diverse, adaptable and upskilled workforce. That means investing in training programs, equipping workers with the transferable future-focused skills they need to operate in an integrated omnichannel workplace. It also means building workplaces that are inclusive and able to maximize the value that each individual brings. As the retail industry manages the growing war for talent, these employee-focused capabilities will be crucial in differentiating the brand as an employer of choice in the market.
#4 Real-time edge technologies. Distributed edge technologies, combined with 5G cellular connectivity, enable retailers to process more data, faster, without needing to send it to the cloud. This opens up new possibilities for secure and real-time automated decision making across the retail store.
That could be anything from individualized wayfinding (i.e. real-time directions to the location of a desired product via a customer’s smartphone) to personalized offers and promotions (e.g. pop-up notifications on their devices as they walk past the relevant item). Retail associates, too, can be empowered with real-time insights into individual customers, enabling them to explore new kinds of data-driven sales experiences.
#5 Sustainability and social responsibility. A more integrated and efficient retail store is also a more sustainable store. This is critical – more and more consumers, investors, and employees expect retail to play a bigger part in getting to net zero. The store of tomorrow can help in numerous ways – from optimizing last-mile fulfilment to minimizing inventory wastage to helping customers make more sustainable choices by providing relevant information for individual products on smartphones and digital displays.
#6 Data-driven decision making. Real-time data capabilities – including both cloud-based and edge-based machine learning – are absolutely central to all aspects of the store of tomorrow. It is the data, ultimately, that powers the necessary transformation in both efficiency and customer experience. It means having the technology, the real-time insights, and the culture of data literacy across the business to gather, process, simulate, analyze and act on data to deliver customer relevance and optimized efficiency.
A vision of truly integrated retail
Brought together in the store of tomorrow, these capabilities promise to radically simplify customer experiences, while also offering retailers a vision of a future in which more ecommerce can also mean greater profitability.
That, ultimately, is the future of the retail store – a truly integrated omnichannel component in the retail network, one that’s both more profitable and more aligned with today’s customer needs.
About the Author: Lori Zumwinkle is senior managing director and North America lead for Accenture’s Retail industry group.