Few topics are as hot in retailing as the concept of the “Store of the Future.” It conjures rosy pictures of high-end amenities for attracting consumers who come for the pleasant surroundings and can’t wait to open their wallets. The transactions pass through a unified commerce platform behind the scenes that integrates physical, online and mobile shopping activities. Retailers can then closely track customer behavior to create informative buyer “personas.”
By applying real-time analytics with results displayed on tablets, roaming sales associates intelligently address the specific needs of each customer and recommend products and services he or she can’t resist buying.
“We think this is a wave that will transform retail,” says Ken Morris, principal at Boston Retail Partners, a consulting firm.
Although this vision is far from being fully realized, important pieces of the concept are already reaching fruition. For example, a study by RSR Research found that 55 percent of retailers have implemented mobile strategies — a pillar of future storefronts — to help serve customers in physical locations.
“The bottom line is retailers have an interest in driving traffic indoors, and mobile apps are supporting that effort,” says Paula Rosenblum, managing partner at RSR Research.
Similarly, research by Boston Retail Partners shows that retailers are rethinking their traditional, fixed-position point-of-sale (POS) terminals, says Brian Brunk, a principal at the firm. For example, 69 percent of store executives plan to have mobile POS in place by 2018.
“They want to be shoulder to shoulder with customers to create this persona experience,” Brunk says.
But industry experts say the latest and greatest technology — whether on showroom floors or providing support in back offices — doesn’t guarantee that sales will grow or that customers will become more loyal. To ensure success, retailers must create an effective business and implementation strategy designed to deliver quick wins today and to create a foundation for future innovations. Analysts say five steps can set the stage for success.
Step 1: Identify Which Technology Will Deliver the Biggest Impact
Ironically, to make the right technology choices, retailers must initially look beyond hardware and software. “In general, if storefront modernization is an IT-only project, it’s going to fail,” Brunk says. “The business vision must inform IT decisions.”
To help align a retailer’s business vision with its technology roadmap, companies can get help from expert partners, such as a business management consultant who specializes in retail or a value-added reseller who demonstrates an understanding of retail requirements.
Step 2: Build a Strong Communications Foundation
High-performing, reliable and secure networks provide the core of retail modernizations. Unfortunately, many companies must retool the communications pipelines they currently have in place. The good news is that today’s business networking services provide Voice over IP telephony through a single high-speed fiber or copper connection that replaces the legacy phone lines running in many retail facilities. These services can also bundle reliable Internet connections and offer managed Wi-Fi services.
Step 3: Centralize for Success
Retail analysts consider centralized information management and transaction processing essential components for modern retailing.
“The omnichannel phenomenon implies having a single view of customers, a single view of orders and a single view of inventory,” Rosenblum says. “The simplest way to make sure your information is consistent across all channels and all consumer touch points is to have one source of data.”
To do that, some companies are moving to enhanced product information management (PIM) and digital asset management systems. “What’s important is that the information be easily accessible and easily distributed,” Rosenblum says.
Similarly, with a central commerce platform, retailers can support mobile, online and in-store experiences with a shared shopping cart that serves all the customer channels, Brunk says.
One way to jump-start centralization is to choose a single cloud-based solution that manages all online and physical channels. The cloud also reduces the need for separate hardware and software in each physical store, which not only results in excessive costs for redundant technology but makes it difficult for retailers to share and protect information across facilities, Brunk adds.
Step 4: Use Pilots to Fail Quickly and Move On
Retailers are under pressure to modernize, but at the same time they must maintain high levels of customer service. This leaves little room for error when making changes to customer-facing systems, where one glitch can abruptly quash a sale and drive shoppers to competitors.
Many retailers implement pilot projects that test new systems and sales concepts in a small number of outlets. “Pilot something on a small scale, understand what works for the store and its customers, then decide what the future may hold for other locations,” advises Luke Wilwerding, director of interactive solutions at Elo Touch Solutions, a vendor of digital signage for the retail industry.
Step 5: Use Metrics for Continuous Improvement
Retailers can’t evolve their storefronts without first having clear business metrics to assess the value of current efforts. RSR Research identified the key performance indicators used by the industry’s most successful companies and found that tracking average transaction value topped the list. Other important data points included the percentage changes in comparable store sales and customer satisfaction.
Indicators such as these help stores determine how best to allocate limited resources as the pressure for innovation intensifies. “Companies must figure out what their metrics are telling them in terms of the success of each implementation,” says Wilwerding. “Then they can choose the technology that makes the most sense for their environment.”