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“When we talk about omnichannel native, what we try to think about is a seamless path for the consumer. “ — Stewart Samuel, Director of Retail Futures, IGD
The pandemic fundamentally changed how we shop, with many people becoming accustomed to online and omnichannel shopping. Rather than eradicate shoppers’ interest in physical stores, though, this shift has raised their expectations for the in-store shopping experience.
This desire for compelling shopping experiences, combined with higher expectations for retailers’ technological capabilities, promises to reshape the future of stores.
Stewart Samuel, director of retail futures at the Institute of Grocery Distribution (IGD), joined the “Unpacking the Digital Shelf” podcast, “The Future of Stores,” to discuss what this means and how retailers can adapt.
Here’s what he had to say about how consumer expectations and retail technologies will change in-store shopping.
Now that almost everything can be purchased online, consumers need a good reason to go to a store. For many, that reason could be the unique experience that the store provides.
Features that set a store apart, like a novel interior design, creative seasonal merchandising, food service options, and other unique services, can make shoppers eager to pass through a store’s doors.
Engaging in-person shoppers is “about activating a lot of the different sensory elements, the things you can see, you can touch, you can smell,” Samuel says. “Foodservice plays a big part in this,” as well as “the broader store design.”
Creating spaces for shoppers to sit and relax is another strategy retailers are using to entice shoppers into their locations. Comfortable seating spaces allow shoppers to enjoy food service offerings or use a store’s Wi-Fi, turning stores into coworking or community spaces.
Samuel named the Ahold Delhaize flagship store in Philadelphia as an example of a retailer that’s especially adept at creating great shopping experiences. This store has an excellent selection of high-quality groceries, but it also has extensive food service offerings, including beer and wine, that consumers can enjoy in its food hall or on a rooftop patio.
“It's actually a bit of an experience to go to the store, and you can possibly have reasons to go to that store other than to complete your grocery shopping.” — Stewart Samuel, Director of Retail Futures, IGD
While not all Ahold Delhaize locations can feature as many creative elements as the flagship store can, Samuel explains that flagship locations can be useful for testing different types of shopping experiences.
The services or other experiential elements that are most well-received can then be rolled out on a smaller scale to other locations.
An essential aspect of great shopping experiences is their ability to become omnichannel. Consumers already assume many omnichannel features when they shop, such as in-store pickup or online stock updates.
If a store can’t meet these expectations, or if it does so too inefficiently, consumers might look elsewhere.
“When we talk about omnichannel native, what we try to think about is a seamless path for the consumer,” Samuel says. If omnichannel service isn’t seamless, “All the goodwill that's built up” between a consumer and a brand “can get destroyed in a moment.”
To address this, Samuel expects that new technologies will continue to be incorporated heavily into stores. For example, geofencing technology could soon be used to alert stores that shoppers are arriving to pick up orders, guaranteeing that an employee will be ready to greet them at the door with their purchase.
To examine more ways technology can merge in-store and digital experiences, Samuel turned to the Chinese grocery chain Freshippo, owned by retail giant Alibaba.
Freshippo stores are cash-free and highly automated, and both in-person and online consumers shop via an app.
Sixty-five percent of sales are completed digitally, with convenient short-term delivery for online orders, but consumers who browse it in person can still purchase food service prepped by ghost kitchens while benefiting from real-time in-app stock updates.
Real-time data processing is one of the key elements of Freshippo’s success. “It gives lots of transparency to the consumers, and then they [Freshippo] can use that data to continue to refine the store operation and the layout,” Samuel says.
Automated stores like Freshippo haven’t yet caught on in the West, but it remains to be seen whether that’s simply because Western shoppers enjoy traditional stores more or because no Western retailer has yet mastered omnichannel retail to the extent that Alibaba has.
In addition to omnichannel technologies, digital retail media is expected to become more prevalent in the stores of the future.
The digital media networks that spent the last several years developing creative approaches to grabbing online consumers’ attention are now using their expertise to put innovative media in stores.
Digital in-store media “is growing exponentially,” Samuel says. “Increasingly, we're seeing a lot of in-store screens being deployed, and they're being deployed in lots of different areas of the store … It's actually incredible, the different opportunities that branded manufacturers have to put their products in front of people in that physical environment.”
Traditional wall screens are among the potential homes for this new media, but far from the only ones. Samuel also spoke of screens built into “smart shopping carts” or even on the scanners used for self-checkout.
So far, the results of this type of expanded in-store media have been impressive, though Samuel cautioned that they may become less effective after the novelty wears off.
Digital retail media has also been used with some success in conjunction with retailers’ mobile apps. Subscribers to an app might receive notifications with personalized ads or get alerted to specific deals that may interest them.
Location tracking could even help stores send notifications about products a consumer happens to be standing near. “There's this fine balance, when you're in-store, between being helpful and being intrusive, and really striking that balance” will be crucial to whether app-based retail media takes off.
The possibilities of in-store digital media will only grow as technological capabilities grow. In particular, significant potential lies in the possibility of using artificial intelligence and machine learning to refine retail media. Successfully using these technologies could help retailers learn more about what individual shoppers are interested in and deliver more targeted media that’s genuinely helpful or interesting to shoppers.
As the function of in-person retail changes, retailers with the ability to invest in new technologies and enhanced shopper experiences may see the greatest growth. When asked about who the winners will be in this new retail landscape, Samuel says. “We are definitely seeing that scale helps … because what that scale does is enable the investment.”
Still, smaller retailers may be able to keep up with the aid of innovative startups “that are really democratizing technology for even the smallest retailers,” he adds.
Regardless of size or scale, it’s clear that prioritizing shopper experiences and technological advancement will emerge as major differentiators in the retail industry of the future.
To learn more about how Samuel expects in-person shopping will evolve in the future, listen to the full episode.
