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Technology In Retail Stores: A Double Edged Sword

R/T

Technology in retail stores can actually decrease our connection with a store. Picture this: You walk into a store and every inch of it is screaming for your attention. A notification dings on your phone welcoming you to the store while you stare at a series of digital screens with ads. You might feel like you’ve walked into a scene from The Minority Report. Technology is exciting and evolves all the time, so it’s understandable that stores want to adopt new technology. Smart retailers can leverage technology to enhance the customer experience and harvest useful data. As wonderful and life-changing as new technology and big data can be, retailers need to ensure that technology enhances the shopping experience without overwhelming the senses and sending consumers back to the safety of home – and the online shopping experience.

 

Technology = Progress?

Amazon opened its first Amazon Go store to the public in January 2018.  Reaction to the largely cashier-less store drew mixed reactions. Amazon Go was called “the store of the future”, a place where customers would simply select their items, bag them up, and go. All  payments are handled via the Amazon Go app. Amazon argues that this new format represents the beginning of a streamlined era for shoppers. Stores are equipped with a full set of sensors capable of detecting the movements of customers while shelves can detect when an item has been removed and deter shoplifters. The benefit to Amazon is also significant: the ability to harvest hours of data on shoppers. Early patent records indicate that Amazon would have the ability to segment shoppers by their physical characteristics: height, weight, sex, age and even race. All of this data would be stored alongside the customer shopping habits to be used to market directly to a consumer. The Amazon Go format sparked a debate, with many asking whether omnipresent technology in retail stores, from sensors to apps to machines, amounted to an invasion of privacy.

Additionally, in order to make a purchase every customer is required to download and sign into the Amazon Go app. If they’re not already Amazon customers, they have to create an account and enter payment information. When compared to paying with cash or inserting a credit card, is this experience really any more convenient for shoppers?

 

How Nike Built on the Strengths of Brick and Mortar

We’ve already replaced many in-person interactions with technology. At work, Skype and video conferences made it possible for people who are in different cities and countries to attend the same meeting. Despite these incredible advantages, the fact that companies still invest considerable resources in flying their executives to in person meetings speaks to the considerable gap between a video conference and actually being able to shake someone’s hand and look them in the eye. The same can be said of technology in retail stores. Online shopping has exploded but the in person experience still offers irreplaceable advantages.

An NRF study found that 73% of respondents visit stores for a specific purchase. In most cases, these customers could have made their purchases online. For this kind of person, a faceless shopping experience interacting with a kiosk pales in comparison to having humans on hand to help them find what they want and answer questions about the product they specifically came to buy. 44% of respondents to that same survey cited quality customer services as an important part of visiting a store. When it comes to shopping customers can do research and or read reviews of a product, but they still crave the opportunity to touch, feel and test products – something which is simply impossible online.

Shoppers frequently say they enjoy researching online and then purchasing in-store. This may be a sign that technology in retail stores should complement rather than replace the experience of handling goods in person. Big companies like Nike have also used a combination of in-store technology and real-world analog experiences to drive new megastores. Customers at Nike’s New York City flagship can test their new shoes by running on a high tech treadmill in front of digital monitors, which allow them to simulate a run in a variety of different environments. The store also includes a mini-basketball court where customers can play hoops. Nike succeeds because their high tech treadmill and basketball courts both share a common purpose: letting customers test drive the products. One emphasizes tech, the other just a hoop and a basketball.

 

How Velo Succeeded With Old School

Consider ways to build on the advantages of the brick and mortar experience that may not necessarily involve any technology at all. When Velo Cult, a San Diego shop, opened in Portland, consumers were skeptical that the store could compete on price or selection. Many local bike shops have been pushed out of the market by aggressive pricing from online retailers. According to Harvard Business Review, Velo found an innovative way to overcome those limitations and beat the online competition. Velo Cult opened in a huge building featuring a coffee shop, beer bar, and performance venue. Within months, local riders started to congregate in the shop, where they could host events and meetings and relax with a beer while watching bikes get repaired. This proved to be a profitable business model. This is an example of a retailer who used decidedly old school tools (coffee, beer and community) to build a loyal customer base without an aggressive deployment of technology.

This doesn’t mean retailers should shun big data and big tech; technology is great when it helps to streamline processes and offer customers more appealing choices. But before deploying in-store technology , it’s best to consider how that will change the way consumers browse and make their decisions. Take time to consider what your ideal customer likes, expects and most of all, needs. An IBM survey of 600 executives and 6,000 consumers on digital-experience technology showed that executives failed to understand what customers want. Use technology in retail stores to recreate the advantages of shopping online (faster and more convenient processes) while also providing memorable experiences and ability to touch and feel products that the digital world can’t.

If you’re curious about how machine learning can help improve store operations, read more here and here.

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