After 3 Painful Years, How Can the Retail Industry Use Tech to Regain Its Footing?

BIZTECH: What’s your take on the state of retail right now?

ANCKETILL: Things are still very difficult for retailers. They are still challenged by the cost-of-living crisis, with consumers tightening their belts all over the world. Signs of the times include supply chain challenges and extreme weather disruptions, especially in the U.S. — and that’s a supply chain disruption extraordinaire. There are now significant parts of the U.S. that are challenged by extreme weather because of climate change, and that’s not going to go away.

As if that weren’t enough, we have staffing shortages. This has resulted from many things: COVID led to a desire for hybrid work, but certain workers, like in retail, have to work from a certain somewhere, whether they like it or not. And today, they don’t like it. Therefore, you have an even greater difficulty retaining workers. It’s an endemic issue that will be with us for some time.

Also, that hybrid work trend has led to the hollowing-out of many city centers. When people are not in the office five days a week, what happens to food and beverage and retail serving those areas?

My view overall? It’s not good.

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BIZTECH: How are retailers responding to these challenges?

ANCKETILL: Deploying technology to accrue efficiencies is essential. It’s something retailers have been doing for many years, but they’re realizing now that they need to speed that up. They’re seeking things like real-time, full-inventory transparency, allowing you to make local physical stores into micro fulfillment centers. This makes your physical estate work harder, so it’s not just a shop for the people who happen to be walking by; it’s now part of your e-commerce platform. The retailer Zara has a store mode on its app, for example, which allows a customer to see only the inventory in a given local store, which you can then reserve and pick up in half an hour.

They also need to identify the customer service options that are really important to consumers. That could be things like curbside pickup or special services for people with kids. It’s about finding the right customer experiences that people value and doubling down on those.

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BIZTECH: What lessons have retailers learned over the past three years and how are they applying them today?

ANCKETILL: Consumer behavior returned to normal somewhat more quickly than people expected. Once people were released back into the world, they did return to physical stores. That led to a bubble or two bursting, like the rapid-delivery trend.

However, people did learn that they could get almost anything delivered to their homes. There’s been a ratcheting up, which I think will be permanent, of increased expectation of e-commerce delivery being available from every retailer. There’s also an expectation of greater efficiency. We are now permanently used to the idea of things just being easy. People won’t go back.

BIZTECH: Are retailers deploying tech within stores to reinvent the in-store shopping experience?

ANCKETILL: Yes, we see retailers working to make their stores “sweat harder.” The physical store now has to be a media hub, and we’re seeing brands experiment with that. Nike, for example, in South Korea, has a green-screen studio right next to the changing room so bloggers, influencers and regular shoppers can show off the items they’re trying on and recommend them to their followers.

We’re also seeing good use of augmented reality for layering product and contextual information, through scanning a QR code, for example. That’s being used by Burberry, Nike and others. And we’re also seeing the beginnings of integration with the metaverse. It’s in the early days, but we see that some stores understand the connection between the metaverse the physical space. For example, Gucci had a physical exposition in Florence, but it also had a Roblox version, which 20 million people visited, where you could buy things like virtual handbags for your avatar.

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BIZTECH: Are you also seeing an increase in more prosaic in-store technology?

ANCKETILL: Oh, yes. If you had asked me that question two or three years ago, those kinds of things would have been on the outer edge of what retailers were doing. Those are moving now into more “basic hygiene” for retailers. For example, the idea that a customer doesn’t have the ability to deploy an app to scan a code to order an item in a color or size that isn’t physically in front of them on that day: That’s a fail. If you haven’t got that, you need to be working on it, and that is what a lot of retailers are working on because not everyone has those basic hygiene issues in place yet.

Of course, with COVID, there was a great interest in contactless payment. Whether that’s accomplished through scanning your own items or using the Amazon Go system with cameras and sensors all over the place and just walking out of the store, these ideas are going to get more and more popular.

There are fewer human associates to speak with, so I think we’re going to see more use of artificial intelligence for things like chatbots. But people today have to be able to help themselves, and that means having access to information through an app or scanning QR codes that lead to the augmentation of reality.

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BIZTECH: Are retailers using tech that’s not visible to customers to improve their in-store experiences?

ANCKETILL: Digital twinning is on the uptick. That can mean different things in different circumstances. Lowe’s is using it in prototype in the U.S., where they created digital twins of three of their physical stores. There is real-time data incoming on things like inventory and footfall and all the rest of it, and that allows the store to optimize systems and staffing.

You also have more use of basic computer vision, which can massively improve a store’s efficiency. A store associate can walk along an aisle holding a smartphone running the store’s app — the back-end version of the app for store associates — which allows you to scan a whole aisle, and be told what’s out of stock, what’s in the wrong place and so on. Computer vision is becoming another of those basic hygiene areas. They are not very sexy areas but they are extremely important.