Source: https://www.retaildive.com

A return to brick-and-mortar locations is pushing retailers to be innovative as they juggle customer experience with labor efficiency.

 

With the wave of COVID-19 pandemic restrictions and store closures at its end, 2022 has largely meant a return to brick-and-mortar retail.

Given the pullback in e-commerce spend and retailers losing sales amid inflationary pressures, overall technology budgets might not be at the height they once were. This leaves in-store innovation in a predicament.

Global retail technology investment dropped 43% to $13.2 billion in Q2 2022 compared to about $23 billion in Q1 2022, according to a report from CB Insights in July. Additionally, retail tech deals were down 21% quarter over quarter, and only seven companies went public compared to 11 in the previous quarter.

However, in-store technology and innovation aren’t exactly dead. Shoppers may have eased their online buying habits to a degree, but brick-and-mortar stores aren’t immune to the longevity of digital transformation. In fact, the store management technology sector saw an increase in funding during Q2 with a 25% quarter-over-quarter bump to $3 billion compared to $2.4 billion in Q1, according to CB Insights.

Retailers can still benefit from innovating with convenience and might want to look at in-store personalization to differentiate themselves in the market, according to a Deloitte report from Rob Harrold and Adam York.

What types of technology brought convenience and personalization to the in-store experience this year? And which ones have the potential to stick around?

 

1. BOPIS

Buy online, pick up in store services continue to be sought after even as pandemic restrictions have waned. In March, data from Insider Intelligence predicted that U.S. shoppers will spend $95.87 million on BOPIS this year — a 19.4% increase year over year.

BOPIS, which is sometimes known as click and collect, seemed like a win-win during pandemic restrictions, as shoppers could support physical brick-and-mortar stores without having to spend time in closed public spaces.

The holidays have the potential to show BOPIS’ strength. This season 39% of shoppers expect BOPIS to account for 50% or more of their shopping, according to a report by Bluedot shared with Retail Dive.

That said, overall interest has somewhat decreased since 2020. About 78% of shoppers plan to use BOPIS in some regard this season, which is down slightly from 81% in 2020, according to Bluedot.

Not all consumers are more likely to use the option though. Millennial males in urban environments are more likely to use BOPIS, according to data from Morning Consult. Shoppers in higher-income households are also more inclined to use this purchasing option.

While several retailers added BOPIS and have reported positive results from the service — including Target, Sally Beauty and Office Depot — others are just now jumping on board. Five Below last month released its own buy online, pick up in store program.

BOPIS requires technology or a system that makes it efficient and successful for all parties involved, which is something many retailers are focused on.

Retailers are “starting to think about productivity, efficiency and cost that is top of mind for everybody,” Lokesh Ohri, a principal in Deloitte’s digital practice, told Retail Dive. “Buy online, pickup in store and all the tech involved around doing that efficiently at the store level, either picking front of house or backup backroom … has stuck around and is scaling pretty fast.”

 

2. QR codes

That weird little black-and-white square that looks like a Rorschach test? Yes, retailers — not just restaurants — are using those.

QR codes are square barcodes that can be scanned using mobile phone cameras to be directed to more information or payment portals. The technology was actually invented decades ago, but quickly garnered adoption during the COVID-19 pandemic when menus and person-to-person payments were pushed aside.

“It’s become ubiquitous in the market,” Ohri said. “But if you and I were speaking seven years ago, there wasn’t this big hype about QR codes.”

QR codes have the potential to be a way in which customers can discover more information about a product, according to Ohri, who added it “gives them better insights into buying that product, into making that decision and into comparing information across other products.”

In January, Walmart launched an interactive store prototype at its incubator location in Arkansas that featured QR codes along with other in-store technology to help “create opportunities for digital exploration,” the company said at the time. Instacart last month began rolling out QR codes as part of an expanded connected technology suite of products with partner retailers. Additionally, Amazon included the technology in its first fashion retail location this May, where the codes provide more information on sizes and reviews.

EThese cases show that QR codes can deliver personalization for shoppers who might want recommendations based on what they’re inquiring about, but also create a level of convenience for associates who can spend more of their time on operational tasks.

 

3. Store operations

In line with Ohri’s belief that retailers are thinking more about efficiency and productivity, the technology behind store management and operations continues to grow.

That encompasses anything from technology that helps automate tasks — freeing up labor — to using more data-driven approaches to understanding stock levels.

The top equity deals in the retail store management sector for Q1 this year involved a $500 million deal for inventory optimization company Relex Solutions, according to another CB Insights from April. Retail unicorn Swiftly Systems — an e-commerce technology company now focusing on brick-and-mortar optimization — got its second $100 million investment in September. For Q2, a wholesale marketplace platform for retailers to connect with brands took the top spot in the quarter with $416 million.

Labor management is top of mind for everyone right now with the potential to use technology for cost savings, according to Ohri.

“They’re looking at labor management, communication, compliance store tasks, store audits, and using digital tools to simplify, as well as standardize those activities,” Ohri said. “So things that used to take 11 to 13 hours to do are now taking eight hours to do.”

A unique approach to store management technology is Lowe’s digital twin store. In September, the home improvement retailer announced it was experimenting with a digital replica of a store where associates can interact with and visualize store data. The concept was first introduced to two locations and allows associates to use augmented reality headsets for a variety of tasks, such as viewing items available on higher shelves instead of needing to climb a ladder.

 

4. Fitting room enhancements

Plenty of brands have experimented this year with enhancing the fitting room experience.

H&M started using a smart mirror in some COS stores in May, where customers can get personalized styling recommendations from the mirror as it senses what products — including their size and color — shoppers brought in. Customers can request new items to be sent to their dressing room without needing to leave the space. The retailer also started testing mirrors on the showroom floor that can assist with virtual try-ons, as well as returns.

Similarly, Savage x Fenty opened its first store in Las Vegas this January, which has fitting rooms with digital kiosks that shoppers can use to scan products to check prices and see similar items.

This approach might be considered a way to free up associate time. However, it might not be that simple despite its increased adoption.

“I don’t see virtual fitting rooms work as well as we can always want them to work,” Ohri said. “I find that anyone who’s ever deployed them … they will tell you that the number of associate activities actually didn’t go down. Because first, consumers need to learn how to use that tablet, because it’s usually not as intuitive. Second, they need help with the products that they have anyway. And third, they’re kind of really concerned about the data and the privacy. So it actually has increased associated tasks at store rather than reduce them.”

Original source: www.salesforce.com

Don’t let margins be the Grinch that steals Christmas.

This era of inflationary pressure is unique because the cost of goods is rising faster than what can reasonably be passed on to consumers. 

School’s out and temperatures are heating up. So is the economy. With rising gas prices, food shortages, skyrocketing interest rates and ever-present inflation, consumers are worried and will likely shift their buying behavior. And that means retailers are worried, too. In the face of uniquely challenging factors, the stars are aligning to deliver another “unprecedented” holiday season for the retail industry. How will Salesforce’s 2022 holiday shopping predictions shake out?

As we look beyond the pandemic, we’re seeing online shopping demand level off, with consumers finding a new balance between digital and physical channels. We’ve already predicted that the modest growth of the 2021 holiday shopping season could foreshadow this year, with our first-quarter data showing a 3% year-over-year decrease in global digital sales. But, given the significant surge of the last two years, there’s no cause for alarm relative to the health of online shopping.

We also can’t ignore inflationary pressures. In the first quarter, the average selling price (ASP) increased by 11% in the U.S. and shoppers placed 12% fewer orders worldwide compared to the same period in 2021. An early peek at second-quarter data indicates this trend is accelerating, with April and May showing a 7% increase in ASP on top of a 17% increase during the same period in 2021. This scenario sets up a battle across all sectors of the economy for brands looking to tap into consumer wallets as they shop for fewer items at fewer retailers. 

Profitable differentiation will shape holiday shopping

Despite these economic headwinds, it’s no secret that the industry is seeing continued growth. In fact, record inflation has historically been a tailwind in catapulting revenues. But this era of inflationary pressure is unique because the cost of goods is rising faster than what can be reasonably passed on to consumers. In 2022, the trillion-dollar question is how do brands and retailers maintain growth, but do it profitably with an omnichannel approach?

Here are the key factors putting pressure on margins today:

• Increasing product costs: The Producer Price Index (or cost of goods) is still seeing double-digit spikes from a year ago, meaning that inflation will continue to rise. That will push selling prices even higher for the rest of the year.
• Increasing first- and last-mile costs: Gas and diesel prices are expected to continue rising, making fulfillment and returns more costly. (Some retailers are already charging for online returns to offset some of these costs.)
• Inventory shortages and overages: Food and raw material shortages are expected to worsen, adding more uncertainty to the tenuous global supply chain. Still, inventory surplus due to overbuying in 2021 has left companies with too much product on hand. They don’t want those big liabilities left on balance sheets.
• Declining consumption: Higher prices are driving down consumption. According to Salesforce research, 51% of consumers plan to purchase fewer holiday gifts this year. 
• Consumer fears: Consumers already feel pessimistic about the economy, especially in the U.S. Consumer sentiment is at its lowest level since the metric was first tracked in the 1970s. This means consumers could pull back further on discretionary spending as they anticipate challenging economic conditions ahead. 

We estimate that these economic challenges put $1.4 trillion in margins at stake for global retailers. But retailers can still achieve growth and profit if they plan early. Here are our five holiday shopping predictions to consider as you develop your strategy for the season: 

Prediction 1: Shoppers will buy even earlier to avoid price hikes

While shopping sprees leading up to Black Friday happened before 2020, more and more shoppers bought in early November over the last two years due to inventory and supply chain issues. But this year, the main motivating factor driving early purchases will be inflation. According to Salesforce research, 42% more shoppers worldwide and 37% more in the U.S. plan to start buying gifts earlier – the No. 1 behavioral change this holiday due to inflation. They hope to snag their holiday gifts before prices rise too much.

While we predict that the ASP (average selling price) will increase monthly between 8% and 12% for the remainder of 2022, there is a silver lining for holiday shoppers: the return of discounting. 

The inventory crisis of 2021 drove retail buyers to purchase too much in certain categories. Now that this 2021 inventory has finally reached warehouses, retailers have a new inventory problem: too much product, many in the wrong categories. 

Now, to increase inventory turn and remove excess stock from their balance sheets, retailers will likely launch a highly promotional season starting in late summer. In fact, Amazon’s Prime Days on July 12-13 could be the official start to this year’s holiday promotional calendar. But don’t fret – a rising tide lifts all ships: the annual Prime Day event is the perfect time to launch your own campaign in the dog days of summer. Retailers other than Amazon historically see growth nearly double during Prime Day compared to the periods just before and after the event as shoppers get a jump on holiday shopping. 

How to make the most of your promotional season?

• Participate in Prime Day. Not selling on Amazon? No problem. Prime Day shoppers engage across a myriad of brands and retailers outside of Amazon during the event. Don’t sit out on the Amazon halo effect.
• Don’t play discount chicken. Consumers likely are going to be holding on to their wallets until they are absolutely sure they’re getting a great deal. Focus early campaigns on scarcity, exclusivity, and sustainability to avoid discounting too early and too often.
• Prepare your site for early and late demand. Cyber Week demand has been spilling out into early November and late December (mostly due to the rise in buy-online-pickup-in-store). Ensure your site is prepared to handle demand across the season.

Prediction 2: Loyalty shifts to value

In 2020 and 2021, customer loyalty saw a huge shift to convenience and safety as consumers demanded a frictionless experience – often buying online from home and having the order fulfilled in or from the store. Now, as inflation rises, consumer loyalty is shifting again — this time to experience and value. 

In fact, according to Salesforce research, half of all shoppers will switch brands this holiday due to pricing. This means that 2.5 billion shoppers worldwide could ditch their brand for a lower-priced competitor. Some product categories – including luxury brands, grocery, and department stores – are more susceptible to waning loyalty due to price sensitivity (either high prices or significant increases in prices).

Pricing and discounting strategies will be more crucial than ever to holiday success, as 17% of global shoppers (850 million) and 15% of U.S. shoppers (31 million) are unsure if they will buy any gifts this year. How can your business compete in an economy with an increasingly price-conscious shopper? Try these tactics to help capture your share of holiday revenue:

• Personalization: High- and low-income shoppers are facing two increasingly different economic realities. As low-income shoppers pull back on discretionary spending, higher-income audiences have yet to curb their pandemic shopping habits. By leaning into intelligent segmentation and personalization – driven by artificial intelligence – retailers can ensure they deliver the right product at the right price at the right time to the right customer. 
• Digital marketplaces: With 16% of shoppers saying they will increase their use of digital marketplaces this holiday, marketplaces such as Tmall, Mercado Libre, and Google Shopping allow consumers to easily compare prices, navigate deals, and ensure quick shipping. Consider marketplace approaches this holiday to expand assortments on your site or offer products on third-party platforms.

Prediction 3: Physical stores will drive growth across all channels

Last year, stores had a significant impact on digital sales, with store associates expanding their roles to become fulfillment experts, service agents, social influencers, and digital stylists. In fact, 60% of digital orders are now influenced by the store – whether demand is generated or fulfilled. This year, with stores fully operational once again, we’ll see consumers gravitate to physical locations in even greater numbers. 

There’s real opportunity for retailers with both physical and digital stores to grow faster than digital natives and e-commerce brands. Merging shopping across both digital and physical spaces enhances the value of each channel. We predict that retailers with physical stores will grow online sales at a rate 1.5 times faster than those without.

While there is an upside for those with brick-and-mortar locations, there also are potential operational challenges as well:

• Experience versus cost: Consumers are gravitating to stores for the in-person experience they’ve missed. The downside for retailers? Labor costs have skyrocketed. The pressure on labor costs may only continue to mount this winter as we predict workers will face a nearly 200% increase in costs to work – on gas, meals, and clothing. Any increases in laborer wages will also eat directly into margins if not managed effectively.
• Demand versus inefficiencies: Physical channels experienced a significant boost over the past two years due to creative store fulfillment options like  buy-online-pickup-in-store. Online fulfillment through physical channels will continue to propel the store’s growth. But unresolved inefficiencies threaten to undermine this lift. For example, store associates should get measured on fulfillment metrics if they are picking and shipping. And perhaps we should measure social engagement if these brand advocates are asked to be influencers.
• Service versus complexity: Stores will once again be customer service destinations this holiday – whether shoppers interact in a physical store or via text, email, chat, or video. The trend of routing queries to local associates will continue to accelerate. Based on our research, 25% more customer service engagements this holiday – both physically or virtually – will involve associates compared to 2019. To maximize these opportunities, retailers must arm store associates with digital tools and online access. This may mean addressing the reality that associates access an average of 14 different applications daily – compounding labor and efficiency challenges.

Prediction 4: Shoppers will gravitate toward sustainable options

The cost of doing business is not only becoming more expensive, it’s also becoming more complicated. Over the last two years, new expectations have increased in importance to consumers – trust and impact. We’ve found that 88% percent of consumers now expect brands and retailers to clearly state their values. And shockingly, 64% will stop doing business with a company if corporate values don’t align with their own. 

This is especially true when it comes to the environment. According to Salesforce research, 83% of shoppers will seek out sustainable brands and products this holiday. In fact, after a company’s treatment of customers and employees, its environmental practices are the top factor influencing buying decisions, placing the importance of sustainability initiatives ahead of actions around racial and economic justice. 

But while consumers have long claimed they preferred sustainable goods, that didn’t always prove out in their buying behavior. Our latest research suggests that this has shifted, with 42% of shoppers saying they will consider paying more for sustainable shipping options or select a longer delivery window. How else can you attract the environmentally savvy shopper in an era of price sensitivity? The answer is two-fold:

• Consumers crave transparency. Be up front about your company’s climate action plan and ongoing performance. While shipping, real estate, and raw materials are important factors, our research tells us that packaging and labeling transparency are the top two sustainability factors that earn trust. 
• Don’t price out consumers. Yes, consumers will pay more, but they won’t pay that much more. The sweet spot is keeping premiums under $2 for shipping. And for those unable to pay, most show a preference for accepting longer delivery times, so give them options at checkout.

Consumers expect brands to be honest about their carbon footprint, so be prepared to account for your emissions. We are still in the early innings, though, so don’t despair. Today, 81 of the Digital Commerce 360 top 100 online global retailers publicly report sustainability initiatives regularly. However, based on our analysis, only 23% will promote sustainable practices – in shipping options, on the homepage, or within the product detail page – this holiday season.

Prediction 5: Retailers will test NFT drops

Every holiday shopping season, a handful of items become the “it” gifts everyone wants to give. This season’s hot collectibles come straight out of the metaverse. In fact, 46% of shoppers said they would consider purchasing non-fungible tokens (NFTs), a digital asset that represents something unique or scarce stored on a blockchain. This could be a virtual version of a real item or a digital collectible. Younger shoppers particularly are drawn to “digital twins” — a digital version of a physical good. Gen Z is four times more likely than Gen X to buy a physical good if it is paired with a digital twin this holiday.

Nonetheless, NFT purchases are still in an exploratory phase. And while the market for digital assets is small, expect retailers and brands to test new ideas and capitalize on the buzz this holiday season. Based on our estimates, we predict that approximately half a million NFTs will be purchased from retailers and brands between November and December, with a potential total market value of $54 million. While we are a bit measured on the seasonal impact of NFTs, some shoppers will seize what they see as unique opportunities: 

• Loyalty and access: While only 12% of consumers say they’ve purchased an NFT, this market is poised for growth – 45% of consumers report interest in buying one. Consumers will gift NFTs this holiday primarily for the exclusive access many offer to communities, products, and physical experiences. In fact, 19% of Gen Z say a top reason for purchasing NFTs is to be more involved with the brands offering them.
• Value and ownership: In light of the current economic challenges, consumers see digital assets as more than just something to show off to friends. Salesforce research found that the No. 1 reason consumers want to buy an NFT is the potential for a return on the investment. It’s this generation’s equivalent to the savings bond – with the hope of higher upside!
• Identity and control: While not a major driver this holiday season, the next evolution in this market – people managing their own digital identities – will put consumers in the driver’s seat. NFTs are stored on a blockchain that makes it easy to syndicate consumer information (like profile, loyalty, transaction history, and preferences). It also allows the data to be applied across various retailers and gives consumers more control over their online identities, which they can share with their favorite brands. Why? Like a loyalty program, consumers share this data in exchange for things like deals, access, and perks.

Put our holiday shopping predictions to work

For retailers, 2022 is about playing the long game. Economic challenges and shifting consumer preferences mean that leading with a data-driven strategy will be critical to reacting to conditions in real time. And while we can’t stop inflation, we can recession-proof our businesses by improving profitability and solving for operational inefficiencies. 

Fuente original: foodretail.es

Original source: resource.co

While technology has become present in many areas of daily life, the Covid-19 pandemic has accelerated the digitization process, breaking paradigms and pushing for change within organizations. For retail, adopting new technologies has become essential to address changes in consumer buying behavior and expectations. These challenges present the duality of adapting and becoming leaders or falling behind by failing to identify opportunities to evolve to a new normal.

As usual, to gain a competitive advantage, the first step is to identify the challenges posed by the market to gain insights and translate a potential crisis into an opportunity. Retailers who are able to respond appropriately to these 3 challenges will be the winners.

Omnichannel experience

During the pandemic, retail experienced moments of high uncertainty where e-commerce gained strength, growing 2 to 5 times faster than before the pandemic, according to McKinsey. Today, consumers already accustomed to online commerce want to return to physical stores and bring new expectations. According to David Lancefield, Director Software Solutions EMEA at Zebra Technologies, “The pandemic drove consumers away from physical stores and drove a multitude of omnichannel services, such as in-store pickup, online returns, and in-store packaging and shipping. Thus, physical stores face the challenge of fulfilling online purchase deliveries and in-store pickup (or click & collect). This service is here to stay, and in-store staff is feeling the pressure to satisfy the customer experience remotely, adding new functions and tasks to their daily work. Retailers must be able to create efficient processes and deliver the right tools to support their teams in meeting their objectives.

In-store execution

Omni-channel brings with it a second challenge at the in-store execution level. Now that consumers are connected with the online experience, they can quickly access product information, pricing, and promotions. Today’s consumers expect consistency across all channels and touchpoints, especially pricing and promotions. However, studies show that 60% of promotional displays are not executed correctly at the point of sale, affecting the customer experience. To improve the performance of merchandising implementations, store personnel must have all the relevant information at their fingertips, with clear and precise instructions that provide the basis for perfect execution. In our experience, achieving the correct in-store execution, complying with visual merchandising guidelines, and the right stocks can increase sales by 3.8%.

Store staffing

The great resignation has been a complex issue to handle in general, but the retail world has been strongly affected, with a staff turnover rate close to 70%. This brings three challenges: attracting talent, retaining it, and getting the job done with efficient use of resources. The new normality brings with it changes in the paradigm of the working world, where it is now necessary to adapt the means of communication and technology, so that store personnel feel a real connection with their work and have the tools to carry out their daily tasks. The challenge is optimizing and automating processes that simplify the work on the sales floor, freeing up time for high-value activities such as customer interaction.

The pandemic has accelerated digital transformation, especially in the way consumers shop. Technological developments accompany this evolution to streamline processes and support in-store staff in meeting these new challenges. It is now up to retailers to make strategic decisions regarding the technologies that will benefit them most in terms of efficiency, productivity, and customer experience.