There’s no question – the retail industry is experiencing a massive transition. The convenience and affordability of online commerce is placing immense pressure on brick and mortar retailers. According to the Department of Commerce, online retail has grown 300% between 2000 and 2018. During the same period, department store sales have fallen by almost 50%. In 2018, 5,864 brick and mortar stores closed, in 2019 5,994 stores closed in the first 3 months. There are two drivers of these changes – the first are technological advances and second are changes in consumer behavior. The retailers that can figure out both will thrive, those who can’t figure it out, will most likely be out of business.
One of the most interesting transitions comes from the concept of necessity. With online retailers like Amazon being price-competitive, convenient and ubiquitous, most consumers don’t necessarily have to visit brick and mortar retail stores anymore. Leaving your home or office and visiting a store is no longer a necessity.
Today, people visit retail stores for an experience.
In-Store Experience
It’s not all doom and gloom for brick and mortar retailers… some are thriving. These are the companies that have figured out how to deliver a service or an experience that is not available online. They have figured out ways to integrate their online business with their brick and mortar footprint. They are delivering experiences that make shoppers want to leave their homes and visit the store. Here are some unique ways that brick and mortar retailers are delivering an experience.
Specialized Associates
There is no substitute for a human connection. Successful retailers employ friendly, knowledgeable people to staff their retail locations. Nike calls them ‘Athletes’, Apple calls them ‘Geniuses’ but the formula is consistent. These are highly-trained people that are excited about their subject matter, are well-informed and can offer an expert opinion to the shopper. People enable the experience.
Specialized Experiences
Another successful formula for drawing people to brick and mortar retail is to offer an experience they can’t get online. Examples of this include the rock climbing wall at REI’s flagship store, the technology classes that Apple offers in store, or the indoor basketball courts at Nike’s flagship, where shoppers can try out the shoes before buying. Experiences can also be tied to aesthetics. Almost everyone has fond memories of visiting their favorite toy store, browsing the aisles and examining the products. This is the kind of experience that can’t effectively be replicated online.
Guideship Locations
An interesting trend is the idea of online-only retailers expanding to brick and mortar. There are several successful retailers, in clothing for example, that have followed this formula. No matter how exhaustive the fitting guide on their website, there is no substitute for trying on clothes. Some of these companies have implemented the concept of a “guideship location”, these are brick and mortar stores with almost no inventory that are there for fitting clothes and consulting with stylists. The location will have all of their sizes and styles, often in a single color, that a customer can try on. The order is then placed and the product is delivered to their home.
Gathering Space
It used to be the case where you’d get in trouble for “loitering” at a retail store. In today’s world, retailers want you to loiter, because studies say that the longer you spend at the store, the more you buy. By offering an aesthetically-pleasing environment where customers can work, check their social media and even order a coffee or a bite to eat, retailers create loyal customers that spend more money.
Frictionless Shopping
What is worse than standing in a long line for a retailer to ultimately take your money? How many times have you decided to abandon your purchase and just leave in order to avoid this misery? Consumers want a frictionless shopping experience – easy to find product, easy to get answers to their questions and easy to check out.
Technology as an enabler
Technology is the driving force in the next generation retail experience. The retail technology sector is complex and fragmented. There isn’t a single vendor that can provide the end-to-end technology stack to enable the experiences listed in the prior section. The fragmented nature of this business makes it extremely difficult to architect, implement and support retail technology stacks. For the most successful retailers like REI, Apple and Nike, much of their in-store technology is developed internally but large teams of in-house DevOps, Software Engineers and Architects.
What follows are some of the enabling technologies that are behind the next-generation retail experiences.
Network Infrastructure – Wired, Wireless and Cellular
Every building needs a strong foundation. Almost every next generation retail experience is dependent on fast, reliable network infrastructure. Today’s shopper is hyper-connected and expects the technology to work easily and on demand. As soon as a screen times out, a picture takes too long to load or an app fails to download, they will abandon the experience.
Store Connectivity
The connectivity market is rapidly changing as network traffic patterns shift dramatically. Point of sale, inventory management and workforce management applications traditionally lived in the private center. These applications are moving rapidly to Software as a Service (examples include Workday, Toast, Salesforce.com) or they are being hosted in public cloud (AWS, Azure, GCP). Whether the applications move to SaaS or Public Cloud, the traffic is no longer going to a private data center. Branch traffic is now destined to the Internet. This changes the game in terms of providers. MPLS vendors like ATT, CenturyLink and Verizon used to command a premium for their private network services. With the shift of traffic patterns to the internet and the advent of software-defined WAN, these expensive private circuits are being replaced with cheaper, faster direct internet circuits.
When looking at store connectivity, retail technologists need to ask a couple of key questions:
- What are my traffic patterns and where do my applications live?
- What are my store uptime requirements and do I need redundant circuits?
- What are my traffic expectations? And do I need excess bandwidth for guest wireless services?
In-Store Wireless Connectivity
Ubiquitous, high performing, reliable wireless connectivity enables almost every in-store experience. If the wireless doesn’t work, nothing else will. The following are examples of how wireless connectivity can be used to enable experiences.
Many retailers are looking for ways to encourage shoppers to download and use their smartphone application while in the store. In order to maximize the quality of experience, that application should download quickly and perform reliably. Wireless performance is essential for a quality experience.
Aside from basic connectivity, retailers are using wireless connectivity for shopper analytics, RFID systems that enable inventory management, cashier-less checkout, and theft avoidance.
There are several factors that enable a successful wireless deployment. The first is infrastructure. The quantity and quality of access points and sound design principals play key roles in WiFi deployments. Many large retailers have dedicated teams that evaluate new technology and apply design best practices to their wireless deployments.
In-store cellular is another consideration when designing the next generation retail experience. In many locations, it becomes necessary to augment cellular connectivity inside of the retail location. Cellular operators optimize their connectivity for large outdoor areas. If a retailer wants shoppers to spend periods of time in the store, connectivity is an essential part of the equation. Mircocellular networks and Distributed Antennas Systems can extend outdoor cellular connectivity into the store.
Video Surveillance
Much like wireless connectivity, video surveillance infrastructure can be purposed to serve multiple functions within the retail store.
Shopper Analytics
Retailers crave data about their customers. Buzz words like Big Data and Data Science are repeated over and over at industry conferences and trade shows. Almost every retailer collects information about their customers online behavior, but what about their in-store behavior? Most retailers have limited information about shopper behavior beyond basic counters that keep track of how many visitors a store has in any period of time.
It is possible to use video surveillance technology and wireless connectivity analysis to gain powerful insights into shopper behavior such as where shoppers are spending time (dwell time) and the success of a current campaign or display.
How We Can Help
Layer 10 helps our clients leverage technology to differentiate and optimize their spaces. Through user design thinking, we help design, build, manage and support large-scale projects to achieve your vision.
Layer 10’s team has decades of combined experience in IT systems, engineering and management consulting. We help commercial, residential, hospital and municipal clients to cultivate collaboration and community through smart building and smart city solutions.