By Diana Morato, Chief Growth Officer, Sensei.
Despite the click & collect services existing pre-pandemic, in 2020 its competitive presence among retailers evolved the way consumers shop. Initially adopted because of safety factors, consumers have now become accustomed to the convenience of autonomy.
This proves to be a problem for legacy driven retailers who are losing market share. What’s worse is that despite 81% of retailers stating they are able to gather shopper insights they fall short on driving retail decisions from such data.
This lack of consumer knowledge coupled with the pandemic lead to total retail sales falling by 1.9% compared to 2019. Consumer autonomy was able to mitigate the downfalls of the pandemic but this behaviour is not permanent. On average, a person spends nearly two years of their life waiting in line. The realisation that queues are taxing consumers time and effort became apparent enough for online services to overtake in-store shopping. Thus, the time for retailers to embrace new technologies is now.
So how can retailers capitalise on this paradigm shift? What’s next for retail? Technological developments such as autonomous stores will drive the transformation of retail.
This is an issue that retailers, especially supermarkets, have been trying to combat for decades. The UK's retail and manufacturing sector currently wastes around 100,000 tonnes of edible food each year. This highlights the inefficient way many stores operate as a result of poor inventory management practices.
Not only that, but consumers have become particularly attuned with the ethical practices of retailers with which they choose to shop.
Autonomous stores' smart inventory management and convenience not only discontinues this behaviour but mitigates costs, and also communicates a retailers' commitment to behaving ethically. This is important when building favourability amongst younger consumers (typically Gen Z) who are becoming increasingly selective about their retail choices.
Consumers want autonomy
The future of retail will be consumer-oriented where solutions will be built around consumer wants, needs and desires. For example, as more consumers crave seamless experiences, automated shops become increasingly appealing. Autonomous stores like Continente Labs in Lisbon, integrate AI, sensors, and cameras to discreetly shadow movements that allow consumers to conveniently, and quickly roam in and out of stores.
With automated checkouts, the role of the retail worker is allowed to evolve for the betterment of shoppers and staff. Employees are no longer stuck behind a cashier all day. They will now be on the shop floor acting as ‘store advisors’, providing customers with on demand product advice and assistance.
It is important that we don’t leave anyone behind as we accelerate towards this retail innovation. Hence, we will see stores adopt a hybrid model before going fully checkoutless. This will mean that the stores will function as autonomous stores, however, in the interim, there will be an option for people that want to pay at a cashier. This is especially important when we look at the less digitally savvy, or those that might not have a digital device on their person.
Consumers receive the autonomy they desire but retailers are the real winners as they have the opportunity to learn and grow.
Retailers are better off with technology
Autonomous stores provide retailers with rich consumer insights. The surveillance technology provides information on which products consumers are interacting with and how much time they spend on them. This allows retailers to make more informed decisions about store layouts and shelving, to help maximise sales.
During the pandemic, many retailers were in survival mode, now that the economy is opening back up, retailers want to thrive. But the retail landscape is not the same as it was 18 months ago, so it must adapt to meet the needs of customers today. Autonomous stores have the potential to increase profit margins by nearly twice as much as traditional retail stores, thanks to the reduced labour costs and efficient product stocking process.
Not only does this maximise revenue, it provides opportunities for new players to stand a fighting chance on the high street. Setting up a store on the high street has traditionally required substantial operating costs but checkoutless stores are removing some of the barriers to entry.
For one, autonomous stores can run 24/7 and don’t require staff to be present. Secondly, by removing the cashiers, retailers are affording themselves more floor space for products - and in retail, space is key. Finally, automated stock management applications that checkoutless stores provide, allow for real time insights into stock counts. They are able to inform shop workers of the shelves that need replenishing. Therefore, making the inventory management process more efficient as it is no longer done manually.
One small step for technology, one giant leap for retailers.