From June 1 2020, the government will allow non-essential UK retailers to begin re-opening. What can they expect? Look no further than US stores who are already opening their doors.
Customers are finding a very different environment to the one they last saw a few weeks ago. They've never had store staff check their temperature at the door, as Apple's team are now doing. In-person beauty consultations in most department stores are off the table. Some retailers are asking customers to shop by appointment, and curbside order pickups are common. Don't be surprised if the store assistant asks you to rip your own receipt - from behind a perspex screen.
Retailers shouldn't expect things to return to normal overnight, if ever. Measures like these might work in the short term, but in the longer term, things will have to change more profoundly to accommodate the new normal. Technology like Microsoft's cloud-based services will be crucial in helping retailers adapt and thrive.
The UK government has advised retailers to observe social distancing rules for the foreseeable future, recommending measures ranging from store layout reviews and separation screens to limiting in-store customer numbers and suspending some services. Those queues normally reserved for Apple stores the night before a new phone launch could be a permanent fixture outside some stores as they struggle to cope.
COVID-19 also exposed a resilience problem with just-in-time supply chains, throwing retailers into disarray. Retailers spent years tightening their supply chains to drive more efficiencies into inventory management, but it can cause problems when consumer buying habits fluctuate from expected norms. Nielsen documented a dramatic uptick in sales of selected goods such as hand sanitisers and toilet paper as panicking consumers hoarded them in 'pandemic pantries'. They can expect a corresponding trough in future sales as customers use what they bought, it added, but only in some goods. A pandemic throws a massive spanner in an already complex mechanism.
Retailers juggling these challenges face another hurdle: talent management. They must keep employees safe and happy in a socially distanced world, altering the way that they deal with customers and each other. No wonder stores are struggling to cope.
A new way to pay
It's not all grim. In a world already disrupted by ecommerce, retailers are used to adapting. They will rise to meet these challenges too, and technology can help. Let's look at how retail can use it to lean into a COVID-19 world.
Firstly, let's dispel a myth: the pandemic won't kill the physical store. Customers still need them as forums for product discovery and experience based inspiration, but their format and purpose will change. Technology will play a role in that.
One aspect of retail stores ripe for change is the point of sale. Retail counters have been taking cash payments for almost ten millennia. A year ago, they were simply outdated. Today, many will consider them downright dangerous. Customers worry about transmitting disease are turning away from cash payments, which halved in the first days following the lockdown. Chip-and-pin based credit cards aren't much better, because customers must handle PIN entry pads and retail employees must clean them.
The UK government joined the WHO in advising retailers to adopt contactless payment technology, and the British Retail Consortium has responded by increasing the allowed limit for these transactions. Across the Atlantic, 37% of retailers have seen contactless payments spike during the pandemic.
Retailers can innovate in several ways, using not only credit cards for tap-and-go terminals but also phone and watch apps. NFS is not the only payment option. The QR code is an ideal mobile payment mechanism for health-conscious customers who can point their phones at one from up to six feet away.
Mobile phone payment apps are also perfect platforms for broader digital engagement. They can fold in extra features including pre-pickup mobile ordering (which can also help with social distancing) and loyalty points. Starbucks was a big early adopter in blending phone-based payments with value-added extras. It now boasts the most popular loyalty app, with 48% of users regularly using it.
This innovation doesn't just stop at the point of sale. Retailers can also protect employees while driving new efficiencies into their stores using smart product displays that can adjust pricing on the fly. They can update price displays automatically in response to increasing competition and changing conditions. This is especially important in fast-moving consumer goods (FMCG) retail, where chains are so competitive that they'll adjust intraday pricing based on what their representatives see in rival stores. It also eliminates manual changes at the shelf, which supports social distancing initiatives.
Smart displays with built-in sensors can also tell when stock is out, enabling staff to respond quickly and precisely while minimising time on the shop floor. These could also send real-time inventory data to stock management systems running in Microsoft's cloud.
Amazon Go leads the way
Some of these innovations have found their way into a project pioneered by Amazon: whole-store automation. Its Amazon Go stores offer FMCG without any point of sale system at all.
Customers entering the store scan a QR code which logs the event in their Amazon Go app. The store uses machine learning and computer vision, the same technologies found in self-driving cars, to recognize users as they shop. It senses what the customer takes from weight-sensitive shelves and then logs those products on the user's account. It then charges their Amazon account when they walk out of the store. This eliminates cumbersome, costly physical checkouts, enabling customers to simply walk out of the store. Not only is this a safer way to shop during a health crisis, but it also creates huge opportunities for loyalty points and other rewards. These are fuelled by advanced analytics from online and offline purchases that enable the company to segment customers at unprecedented levels.
Retailers also have an opportunity to change the way that they fulfil orders. As customers move to cashless payments and the checkout becomes an anachronism, the idea of lugging products home may also disappear. Why should customers cart heavy shopping around a mall when the retailer could deliver it to the customers' door? That's not only safer in a post-pandemic world, but more convenient.
Home delivery also simplifies inventory management. Stock availability will become less of an issue with retailers deploying modern IT platforms, like Microsoft’s Dynamics 365 Retail, that provide holistic inventory management across every stock silo (in store and central/regional warehouse centers) enabling stores to still sell an item even if it isn't locally in stock. Retailers will build out expertise in pick-and-pack fulfilment, and according to Deloitte may end up allocating space in some stores as micro-fulfilment centres for fast delivery to customers in densely-populated areas.
A new store experience
Developments like these will move stores from transactional spaces to experiential ones as they use technology to wow customers in new ways.
For many retailers, this will begin with digital product demonstrations. With vendor help, they'll supercharge product displays with interactive kiosks and even holographic store assistants that can interact with customers and explain products and merchandise.
Many experiences will migrate to mobile apps built to interact with in-store assets using mixed reality. Some retailers are already leading the field. Lacoste created a mobile app that customers could use to virtually try on shoes.
American Apparel, a pioneer in this space, began experimenting with mobile early on. Its app interacts with in-store displays, enabling visitors to scan them and bring up more detailed information about products, change colours dynamically, and read customer reviews. It's a great example of a retailer tackling the showrooming problem head on.
Stores ranging from Timberland to Charlotte Tilbury have used augmented reality 'magic mirrors' that let visitors try on clothes and makeup.
The rush to build new kinds of in-store interaction might also accelerate other technologies such as beacons. With the customer's permission, these use Bluetooth technology to locate their smartphone in the store. They can help retailers to personalise shopping experiences, offering customers tailored information and special offers when they approach displays.
So, where does this leave retail staff? Just as virtual spaces won't replace physical ones, holograms and beacons won't replace people. What these technologies will do is elevate retail employees to concierge-style, relationship-building roles where they get to know customers. Retail workers will be more consultative, adding far more value than just bringing shoes in different sizes.
Let's get to work
These are all fantastic opportunities, but retailers can't just drop them into stores independently. They need a strong modern technology foundation to really take advantage of them. That means breaking down data silos, ensuring that back-end systems support data interoperability not just between different stores, but between physical and ecommerce channels.
That's where cloud services can help. Using Microsoft's cloud-based application suites such as Dynamics 365 and the Power Platform, retailers can create end-to-end workflows that unite online and offline processes across a common data architecture. It gives them full visibility into their customers' activities, and full supply chain management capabilities. No product or customer need be left behind.
A cashless, objectless retail environment also means better support for mobile users with world-class apps. Mobile is where customers live, so this will be a primary connection channel with the customer both inside and outside the store. Developing mobile apps needn't be as difficult as it once was. Microsoft's Power Apps offer drag-and-drop functionality to quickly pilot customer experiences.
When a customer buys a product online and wants to return it at their local store, tomorrow's retail assistants will know who they are and fully understand their purchase history thanks to Microsoft's back-end integration and customer relationship management technology. They'll be able to handle that product return and go further, perhaps suggesting a different product and customising an offer based on the customer's purchase history.
When customers call into the retailer's contact centre (or send an SMS, WhatsApp message, or Tweet), agents will be able to respond quickly, even if working from home on lockdown, thanks to cloud-based systems that scale rapidly in response to volatile peaks in demand. And when the next nationwide emergency rocks the economy, retailers will be ready with integrated supply chain systems that not only automate product ordering but use big data to make better predictions, cushioning them against fluctuations in supply and demand.
Retailers have a lot of work to do as they prepare their operations for a post-pandemic economy, but the apps and infrastructure to help them are waiting in the cloud. Contact us today to explore the possibilities, discover “the art of the possible” and turn one of the biggest challenges in recent history into an unprecedented opportunity.
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