North American consumers are returning to brick-and-mortar stores, spending 64.4% of their essentials budget in-store in 2022[1]. After two years of almost exclusively online activity however, some of their habits have changed for good. Visitors to physical stores now expect levels of choice, service and experience that live up to the online experience.
Physical retailers are therefore challenged with building an in-depth understanding of not just their customers, but the inventory in-store and how customers interact with it. In the digital realm, where every click is tracked, this is relatively simple. Say a customer logs on to buy a green shirt but settles for a blue one as the green wasn’t available in their size. It’s possible to track each stage of that process and know that it’s time to order more green shirts so the customer gets exactly what they want next time. In a traditional physical store, it’s only the end result – the purchase of a blue shirt – that gets tracked, and more of the wrong color gets ordered as a result.
So, brick-and-mortar stores must now figure out how to capture this more detailed and nuanced data, and turn it into insights that can help enhance the customer experience. Then they must add all this information to an already complex inventory management strategy while navigating perennial operational challenges from shrinkage to labor shortages.
The good news is that the tools are available today that can help retailers shift to a more digitally led physical retail environment. For instance, in-store sensors can help track everything from foot traffic around the space, to stock levels, to the quality and condition of perishable goods. Integration with retailers’ online properties helps create a smooth transition from digital to real-world shopping and deliver an enhanced, tailored customer experience. And tools like artificial intelligence (AI) and robotics help automate processes and free up store associates to focus on customer-facing tasks. These tools must of course be implemented in a way that customers and employees accept and are comfortable with, and that conforms with state or federal legal requirements.
In-store insights to optimize supply chain strategy
As part of the digitization of the in-store customer experience, customers are using their local stores in a much more diverse way than previously. While many customers still come in, make a purchase and leave with their item(s), others like to order online and pick up in store. Some even prefer to order online and have the store deliver (often as an outsourced service), without even setting foot in store themselves. This flexibility around customer service and experience gives physical retailers an advantage over their online-only counterparts but at the same time it means that physical stores must now also think and operate like warehouses or distribution centers. This has huge implications for how they run their supply chain and inventory management. It may be necessary to hold more stock on-premises, making it more important than ever to optimize storage space by ordering only the right stock at the right time.
Emerging technologies enable innovation
Technological innovations make it possible to track and analyze the interplay between in-store customer experience and inventory levels to help get this balance right. For example, in One Stop convenience stores in the UK, store owners are able to automate stock tracking to streamline logistics and improve both customer and employee experience[2].
In other use cases, computer vision and sensor technologies help monitor customers’ behavior patterns and heatmap traffic movement throughout the store. By applying analytics and AI to this traffic data, physical store managers can start to replicate insights that are typically easier to gather online, such as identifying products that are often looked at but rarely bought, or even products that are ignored completely.
Sensors can also be used to ensure that environmental conditions, such as temperature and humidity are maintained at optimum levels when transporting and displaying perishable items, so the product reaches the customer in the best possible condition.
We can see this in action at Town Talk, a Texas-based grocer that specializes in collecting and selling on groceries and restaurant supplies. The company combined demographic data with video and sensor information about shopper location and shelf contents to gain near-real-time insights about shopping behaviors, buying preferences, outage notifications, and demand forecasting. This helped optimize its marketing, operations and merchandizing, enabling it to hit its 2021 sales targets two months early[3].
Automation and robotics are also important tools. They can, for example, help support administrative tasks (like handling click and collect orders) that add to customer convenience, freeing up busy store associates to focus on serving customers. Robotics could also be used to autonomously monitor inventory levels and even re-stock shelves when necessary, so staff can focus on customer-facing activities. This has been shown to result in a 20% drop in out-of-stock items[4] while also improving business results[5].
Digital lessons for the physical store
As consumers continue to opt for simplicity and speed in their everyday shopping experiences, some do still come into the store wanting to spend time there and have fun – especially when looking for larger, higher value purchases. In either case, traditional retailers must ensure their inventory and supply chain models are sophisticated enough to provide a great in-store experience. Investment in digital transformation will significantly help retailers overcome these challenges and enable them to exceed shopper expectations while increasing profitability. Retailers that use emerging technologies to apply the Customer Experience (CX) lessons learned online to the brick-and-mortar experience are well placed to retain customer loyalty while optimizing supply chain efficiency.
Find out more about how emerging technologies can help retailers improve the supply chain to keep up with customer expectations and demand. Read this e-guide: Customer Experience and Store Operations: Two Sides of the Same Coin, based on a study on the largest retailers in the world.
[1] https://www.intel.com/content/www/us/en/newsroom/news/intel-unveils-global-retail-study.html
[2] https://www.intel.co.uk/content/www/uk/en/internet-of-things/iot-solutions/retail/flooid-onestop-intel-solution-video.html
[3] https://www.intel.com/content/www/us/en/customer-spotlight/stories/town-talk-foods-customer-story.html
[4] https://www.intelrealsense.com/retail-automation-using-robotics/
[5] https://www.insight.tech/retail/ai-robots-transform-e-commerce-fulfillment#main-content
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