The role of the store must evolve away from simply offering a wide range of products, competitive prices and proximity to local catchments. To differentiate, the store will increasingly become a physical portal for brand engagement and product experiences—a place where consumers can learn, co-work, socialize, be inspired, and experiment with new products. Toys R Us Japan is one example of a business moving away from a big-box store business model to focusing on offering a unique customer experience through the power of the Internet of Things (IoT).
Edge by Ascential has identified four key characteristics of the Store of the Future. It:
The growth of e-commerce—fueled by new technology—is driving the need to offer frictionless O2O store environments. “These newly emerging digital technologies, they blur the boundaries between online and offline areas,” says Brian Chung, APJC Business Development Lead for Retail Industry. “That is the key critical element that all the brick-and-mortar spaces should look at in the first place.”
For omnichannel retailers with convenient store locations, click-and-collect and other in-store pickup facilities are a key priority, especially in the search for profitable last-mile fulfillment.
Digital engagement in the store can also help retailers provide added-value customer service, while optimizing backend operations. For example, sensors can monitor food temperature for product freshness, energy efficiency, and queue management, and inform workforce planning.
Retailers around the world are now increasing investment to reposition their stores in a way that centers on these four elements. Best-in-class case studies include Walmart, Carrefour and Alibaba.
Walmart is transforming its business to become a digital leader, particularly through expansion of online grocery pickup. It will extend grocery pickup to 3,000 locations across the US during 2019, providing convenient solutions for shoppers and a more profitable route to e-commerce that leverages existing store real estate.
Walmart is also investing in automated solutions such as pickup towers, supply chain robotics, and partnerships with third-party delivery companies, to improve both store and supply chain profitability.
Carrefour is repositioning its store real estate as part of its transformation plan, “Carrefour 2022,” which includes investing in small stores and repurposing space in Carrefour’s hypermarkets.
Given that hypermarkets account for more than half its global sales, investing in the Store of the Future is critical for Carrefour, and it consistently ranks best in class across all four areas of our framework (experiential, social, frictionless, and curated).
This includes experiential counters and merchandising; social meeting hubs and bars in stores; product ranges tailored to the area; and in-store digital displays.
E-commerce giants like Alibaba are also investing in physical stores, and its Hema format in China is setting the global benchmark for digital-first stores.
To access additional information about products, customers scan product barcodes using the Hema app. They can also order products online and have them delivered in 30 minutes (within a 1.8-mile radius).
Perhaps most importantly, these stores focus on fresh food, featuring a variety of service counters offering different cuisines, as well as comprehensive produce and seafood areas. This highlights the importance of the physical store as an experiential way for shoppers to touch, taste, smell, and feel products before purchasing.
JD.com is building out a ‘boundaryless retail’ concept to reach consumers wherever and whenever they shop. To achieve this, it is planning to open 1,000 new 7Fresh supermarkets in China over the next five years.
These stores combine the benefits of a physical store environment with JD.com’s technology and back-end systems. This includes using customer profiles to optimize the store layout, and positioning ‘magic mirrors’ above the shelves, which provide product information on a screen when products are selected.
R Us Japan was facing significant competition from online retailers. So it decided to adapt its business model for the future and focus on creating a personalized customer experience—online and off. But building this experience requires data.
The company worked with Cisco partner Flow Solutions to leverage Cisco Meraki solutions and IoT capabilities such as people counting and demographic monitoring. When combined with point-of-sale and staffing data, this built a clear picture of how people use their stores. Now, Toys R Us Japan can start to integrate this information with data from its online store to create a powerful, holistic customer experience for the future.
Retailers in the food industry know that ensuring consistent quality of service and impeccable food safety can be challenging. “If you’ve got just one or two stores, it’s easy—you can just go in,” says Alan Seigrist, CFO, Energybox. “But when you start talking about 50 or even 100 stores, it becomes an extremely difficult challenge.”
Couche-Tard, the largest independent convenience store operator in the US, has 12,500 stores. So it enlisted Cisco partner Energybox to help it improve the consistency of service by using IoT technology to connect and automate every store.
Thanks to Cisco IoT capabilities, Couche-Tard now has a close understanding of what’s happening in each individual store. It can gather data from each one—and even manufacturers—to help it ensure back-end operations are running smoothly, save energy, and improve the customer experience.