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The evolution of the physical store

Will these 'store of the future' concepts be successful?

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As shopping online for food and groceries becomes increasingly convenient and commonplace, bricks and mortar stores must rapidly evolve and innovate to remain relevant. Over recent months, we've seen lots of new ‘store of the future’ concepts launched around the world. How many of these will prove a success, and what do they tell us about the future of retailing?

In early 2016 Walmart opened its first hybrid ‘Seiyu’ store in Tokyo, Japan, designed to satisfy digital and physical shopping needs in one location. There is a traditional convenience grocery store on the first floor and an online grocery warehouse (dark store) on the second. This makes the distribution system efficient but prevents online fulfilment from interrupting physical shoppers.

Source: Walmart

Subsequently, Amazon opened its first digitally enabled convenience store last month in Seattle, called Amazon Go. The retailer claims to have created the world’s most advanced in-store shopping technology, known as ‘Just Walk Out’.

This detects when products are taken from or returned to shelves, like the minibar in some hotel rooms. Shoppers’ accounts are automatically charged, meaning people can walk out the store without queuing to pay. The Amazon Go store is currently only for Amazon employees but will open to the public soon.

In the same month, Italy’s largest supermarket chain, Coop, unveiled its ‘supermarket of the future’. The store is sited on the Bicocca University campus in Milan and is based on a concept previously showcased at the Milan Expo. Products are arranged on large, interactive tables where a movement of the hand triggers information about the product on an overhead monitor. This way, shoppers can find out about each product’s origins, nutritional information and sustainability credentials, plus advice on related products and promotions.

Another concept to catch our eye is an unmanned store in Sweden. This never closes and doesn’t require staff to remain open. It is accessible through a smartphone ID app, which opens the doors to registered customers. The app also functions as a scanner to approve each purchase and the shopper then gets invoiced.

Cost-effective convenience

All these new stores are designed to make the shopping experience more convenient. Both Amazon Go and the unmanned store in Sweden speed up the experience by removing the need for checkouts.

Two-thirds (63%) of UK shoppers say that a speedy experience at the checkout is very important to them (IGD ShopperVista) so removing the checkout altogether would be a big gain. It also frees up space for new features and fixtures and gives staff the opportunity to spend more time helping and inspiring shoppers.

Although retailing is a more highly skilled occupation than many people give it credit for, there certainly are some routine, time-consuming tasks involved. These are the areas that are likely to be automated over time as robots become more capable and affordable.

Source: Simbe Robotics

For example, US retailer Target has tested an in-store robot that tracks inventory on store shelves, while in Japan, Aeon is rolling out radio frequency identification (RFID) and in-store robotics technology to improve merchandise availability. The robot will automate the inventory cycle counting process to eliminate human-error, reduce operational costs and shift what used to be an employee task to value-added activities where they can better serve the shopper.

The idea of in-store robots may seem like a big step but 80% of UK shoppers say they would like technology to help them in some form with their food shopping in future (IGD ShopperVista) so if introduced sympathetically, customers should be receptive. Ideally, it will free up shop staff to provide a more personal service.

In-store inspiration

Physical stores will always be best for instant gratification and we are seeing stores experiment in various ways to enhance the experience, concentrating in particular on visual appeal, product freshness, provenance and health.

Albert Heijn reopened its XL supermarket in Purmerend, claiming to offer ‘in-store farming’ for the first time in the Netherlands. Shoppers can choose from 12 varieties of herbs to harvest from growing beds inside the store.

In the Philippines, Robinsons Supermarkets puts health and wellness at the heart of its store designs with such novel features as ‘squeeze your own orange juice’ using pedal power by riding a bike. Robinsons and some other retailers, such as Walgreens in the US, have begun to discriminate in favour of healthy products through discounts and reward schemes.

Meanwhile, Cooperative in Denmark has introduced dinner for tonight ‘grab bags’ at the front of its stores. These contain fresh ingredients with a recipe to cook a meal for two. The menu changes daily to keep the offer exciting and the idea is now being picked up by some UK retailers.

What next?

The digital world advances at lightning speed and the online shopping experience will keep improving. Some products will be replenished automatically in future as sensors in our homes detect the need for another delivery. This will make it even more challenging for physical stores to remain relevant and engaging.

We therefore expect the stores of the future to merge the physical and digital worlds, to create a much more absorbing experience featuring fresh food, new products, special events and more ways to taste, learn and discover. Experts will be on hand to give advice and deliver a personal service, while new digital solutions will help make shopping less of a chore.

Our Store of the Future analysis was featured in The Guardian https://www.theguardian.com/media-network/2017/jan/25/what-store-future-look-like-retail-technology

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