When it comes to the functionality of age-old brick-and-mortar stores, this does not hold good anymore.
Not in 2019.
Brands like Barnes & Noble, Barneys, and Toys R Us died because they didn’t embrace technology due to lack of expertise on consumer behavior, ineffective communication and targeting, slow checkouts, and high operational costs thereby resulting in a slump in sales.
A traditional brick-and-mortar store fails to effectively target the pain points of the retailer business: adopt a single-dimensional business model, fail to segment and target the mass, compete on price and quality only, store layouts, and visual merchandising.
Consumers these days prefer an omnichannel shopping experience. The concept “affordable” has shifted to “worth the cost” over the years. Not to forget, the stiff competition retailers face by small and large eCommerce brands.
So, what is the solution to this impending issue that has sent several businesses spiraling down?
The ever-changing technology has changed consumer behavior creating different needs and incentives for retailers. According to a study by Szczecin University, consumer behavior has changed over the years based on their needs, mechanisms of market analytics, buying motives, and technology.
The digital disruption has finally led to retailers like Macy’s and Target’s embracing technologies such as IoT, AI, and proximity marketing solutions and import them into in-store shopping to create a seamless and omnichannel shopping experience for users.
The decrease in the cost of software, hardware, and installation of these technologies has decreased drastically over the years allowing retailers to make the digital transition.
A smart retail store leverages a number of technologies including –
Near-Field Communication (NFC)
IoT and Artificial Intelligence (AI)
Investing in a smart retail store is relatively cheaper. Proximity marketing solutions such as beacons and geofencing and technologies such as NFC tags and QR Codes cost less than $70, whereas setting up a retail store costs anywhere between $2000 – $50,000.
These technologies are easy to install, bring in high sales and revenue, and allows brands to set up their online platforms in hours.
Retailers need shopper-centric smart technology to stay ahead of the game. Smart retail stores are a testament to every retailer’s omnichannel strategy, as the digital technology attempts to hit the right note at every touchpoint of the consumer’s buying journey.
The ability to collect, share, and process large quantities of data has led to some substantial elevation in the designs of business models. Having said that what is the ideal formula for a smart retail store leveraging proximity marketing solutions and other relevant technologies?
How to create a smart retail store leveraging technology
A smart retail store not only addresses all the touchpoints of the target audience but also gives them a reason to visit the store often, ultimately letting retailers consume a bigger slice of the pie.
Here are some of the ways a basic brick-and-mortar store can transform into a smart retail store –
Simply put, a smart mirror is a two-way mirror with an electronic display fitted behind the glass. Depending on the prototype of the business, the mirror can display different kinds of information in the form of widgets, weather, recommendations, and similar purchases.
These mirrors are used in various industries like retail, automotive, residential, and healthcare to name a few. The functionality of a smart mirror depends on its utility entirely. In the field of retail, smart mirrors are being implemented to suggest customers with trending outfits, cosmetic products, recommendations to other products based on their taste, and previews.
Shoppers can interact with the mirrors to change the color of the light, select different outfits and sizes.
If the shopper likes the product the smart mirror shows, using beacon signals, the mirror also suggests the position of the product in the store.
QR Codes embedded into the product page on the smart mirror can further help shoppers with their purchases. Shoppers can scan the QR Code that directs them to a payment gateway to complete their purchase, pick up their product through beacon signaling, and walk away from the store without any hiccups.
The smart mirror uses a smart engine that accurately analyzes the person in front of it and provides insights based on their gender, age, looks, and style. Using these parameters, the mirror makes personalized recommendations. For example, the mirror suggests a lipstick based on their matching dress or scarf.
When the shopper is happy with a product and wants to purchase, the mirror displays a QR Code allowing them to purchase the product either on Sephora’s website or helps them locate the product in the closeby Sephora stores.
Smart tags or smart labels are being implemented in various retail industry verticals to stay ahead of the game.
A smart label provides detailed information about items on store shelves, ensuring authenticity and supply-chain integrity, whilst creating fresh opportunities for retailers to interact with the customers.
A smart label can also educate the users about the origin and manufacturing of the product, vouching for its authenticity. This instills a sense of trust in shoppers as it promotes brand transparency.
Roy W. Bjorlin for the industry magazine Flexible Packaging in 2016 wrote, “By some estimates, smart labels which incorporate electronic function at the item level can grow from a near-standing start to more than $5 billion by 2020.”
He also adds, “smart labels that can gather metrics and provide important insights to brands will fuel that growth dramatically.”
How do they work?
Radio Frequency Identification (RFID) technology is the technology behind smart labels. They encompass electronically stored information because of which items are uniquely identified using electromagnetic fields.
Near-Field Communication (NFC) is also leveraged for smart labels that allows communication between two electronic devices at a range of just a few centimeters. NFC allows data to be uploaded from a smart label to any smartphone at any point in the supply chain.
Smart labels have QR Codes that are printed directly on packages, pallets or shipping containers that can be scanned. The QR Code upon scanning directs the user to provide them insightful data.
Using beacons, geofencing, and NFC tags, retailers can connect with shoppers to cater to their needs with personalized offers and deals, and increase in-store visits.
Retailers can make use of highly-tailored and timely push-notifications to drive customers to their stores. These can be based on –
1. Tracking customers’ past in-store activity
Beacons can help retailers gauge their customers’ visit time in sections of their stores via mobile apps which can help send tailored and highly time-sensitive notifications about products.
2. Real-time location of the shopper
Proximity marketing solutions like beacons and geofencing can alert retailers of their customers’ real-time location in the store. This can help retailers address the shoppers’ concerns regarding any certain product and help them with their confusion.
Retailers can send customized greetings to their shoppers as soon as they step inside the stores. Not just this, they can also send them timely notifications, deals, and greetings based on their past searches and likes. This encourages shoppers to take a look inside the store and incentivizes them to purchase their favorite products.
4. Personalized recommendations
Location-based tools like beacons, geofencing, and NFC tags when embedded into a mobile application can provide a plethora of information that can be sent to an analytics engine to delve deeper into a shopper’s behavior. This can be further combined with the shopper’s click behavior and can be run against the in-store inventory to provide specialized unified recommendations.
Macy’s has consistently outthrown its competitors by using shopper behavior to provide highly customized personalized alerts to shoppers who have their Shopkick app installed on their phones.
Smart fitting rooms help shoppers obtain the products they want, whilst also helping the retailer employees with useful relevant data.
A smart fitting room is equipped with a smart mirror. When a shopper enters a smart fitting room, the RFID or NFC reader from the smart mirror captures the item details and displays it on the smart mirror along with additional color, size, and pattern options. The customer can then send an e-request for additional assistance that alerts the employees via their apps on a smart device. The associate responds to the request and using beacons, they can locate the requested item easily to hand it over to the customer.
Brands like Ralph and Lauren and Rebecca Minkoff in New York and Tommy Hilfiger in London have already leveraged smart fitting rooms in their stores.
The scan-and-go technology can really elevate the shopping experience. This technology is pushed by leveraging several other technologies like NFC tags, QR Codes, and beacons. The scan-and-go technology improves the experience by offering flexible and multiple options to scan, bag, and bill the product.
Many retailers have their own apps that simplify this process. Mobile applications facilitate a self-checkout option by using the mobile camera to scan the QR Code on the product to process the transaction. The payment can be completed by using NFC payments to purchase the products.
No checkout in this area is possible without apps that integrate with store shelves and cameras, alerting the associates in case of out-of-stock or mislocation of merchandise.
The customer can also load their digital wallets leveraged by QR Codes to complete the transaction. The total balance of the wallet is deducted as and when the customer scans QR code-embedded products and adds it to their carts.
For shoppers, this technology helps them save time and effort. Retailers can allot less space and less manpower for the checkout process. Not just this, this advanced checkout option also ensures price accuracy and a reduced amount of shrinkage with the automated check-out process.
Amazon’s grocery chain Amazon Go is a prime example of self-check-out technology. Shoppers can enter an Amazon Go store by downloading their app. Once inside, shoppers can add items to their virtual cart by scanning items via QR Codes. The payment transaction is completed after they step out of the store using their pre-loaded digital wallets.
Today’s technological solutions to answer the issues faced by retailers leverages hundreds of attributes at the individual shopper level. Through artificial intelligence, IoT, location-based tools such as beacons, NFC tags, and geofencing, retailers can upsell, attract, and cross-sell highly targeted items whilst maximizing retention.
So, what are the benefits?
Higher conversion rate and maximized checkout capacity. It also boosts customer loyalty and improves customer retention, ultimately generating repeat business.
Retailers can provide a smooth omnichannel shopping experience with minimal friction with better visibility of the retailer on social media.
Conversion of successful visitor to buyer using effective consultative engagements, social inputs, and informative insights. This, in turn, gives them a chance to improve the customer portfolio, thereby increasing average transaction values.
By providing the right kind of insights about a customer profile, store associates can play a consultative role using their in-store apps. They can also provide hyper-personalized recommendations leading to more engagement and conversion.
Smart retail stores improve in-store navigation. Employees can use the in-store app to nudge the customers in a specific route, encouraging them to try on complementary products, thereby opening up cross-selling opportunities.
Retailers can also amp up the in-store and online purchase by implementing the Buy Online Pick-Up In-Store solution. Customers can browse for their products online and pick them up in-store. Clothing brands like Zara, H&M, and Asos enable customers to hop between in-store and online platforms seamlessly.
Tech-enabled delivery services and logistics can help retailers witness growth through the creation of digitally enhanced cross-channel platforms which can help retailers to satisfy the ever-growing needs and demands of consumers.
Retailer brands that run multiple franchises can run A/B tests on introductory locations to test out store alterations in real-time.
With the help of technologies such as IoT, beacon technology, NFC tags, QR Codes and geofencing, the retail sector is anticipated to grow in leaps. According to McKinsey, these disruptive technologies are forecast to have a $6.2 trillion effect on the economy by 2025, and one of the key industries it will have such an impact is in retail.
As more and more retailers become attuned to the power of technology-enabled stores, adopting strategies that showcase hot selling products, offering customized deals and discounts, share timely information, and social media dashboards are being normalized.
Designing a smart retail store can be as simple as starting with 3D printed WiFi access QR Codes that allow shoppers to connect to your WiFi without the hassle of obtaining or typing in a cumbersome password.
Developments in technology and physical changes in stores means retailers can reach and analyze highly specific target audience with increasing precision. Anticipating consumer needs, tracking inventory in real-time, receiving consumer feedback with effective methods directly with individual shoppers are game-changing for in-store retail arenas.
In-store shopping is not declining, but rather being redesigned with innovation in technology filling in as the scaffold between physical retail locations and new-age consumers.
A number of realtors of all sizes have already leveraged the technology of QR Codes, beacons, NFC tags, and geofencing in real estate such as Coldwell Banker, RE/Max, and JLL amongst others as their mobile marketing strategy. These real estate companies have not only tasted immense success but, also, achieved a high ROI with customer retention.