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The Retail Store of the Future

Americans love to shop. It’s no secret that measures of how much—such as dollars spent and year-over-year spending patterns—are keys to understanding the nation’s economic health.

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Americans love to shop. It’s no secret that measures of how much—such as dollars spent and year-over-year spending patterns—are keys to understanding the nation’s economic health. While that truth isn’t likely to change, the shopping experience itself is changing rapidly. Indeed, the shopping experience of tomorrow will be a lot different from today’s.

Retailers are adapting quickly. They are seizing new ways to attract customers, engaging them before and after they arrive in their stores. They are multiplying potential customer touch points through a variety of targeted methods including electronic media and social networking. Perhaps most importantly, they are discovering new ways to enhance customer loyalty by increasing their ability to stay connected after the sale.

At the heart of this transformation are Internet-based technologies and networks that can extend the shopping experience outside the traditional bricks and mortar environment. Harnessing them for maximum business impact represents a major opportunity for retailers, underlined by the dynamics of the new shopping tastes of the connected consumer. In a report by PricewaterhouseCoopers and TNS Retail, the “next generation of consumers contains a more tech-savvy and more diverse group that holds different values than its parents.” The report goes on to say that the “one-size-fits-all approach of the mass chain store format will not be viable. Stores able to respond to individual tastes will become dominant.”1

In this new environment, effective online strategies are critical. According to market research firm Forrester, by 2013 more than 50 percent of all retail transactions will be affected by the Web. Consumers have more access points than ever before and are demanding convenience, choice, and variety in their shopping experiences. Companies will need to continually shift spending towards enabling online channels or risk losing their competitive positions. The future will be about delivering a customer experience that seamlessly transitions between online and offline channels, no matter where individual transactions take place.

A second trend is real-time analytics. In order to create customized shopping experiences, retailers will by necessity process ever more information through their networks, tailoring interactions to individual customers. According to Nigel Fenwick at Forrester, “socially empowered customers are also influencing retail merchandising, with a major shift in increased reliance on technology to analyze rapidly changing consumer trends as they happen, which empowers retail merchandisers to make quick decisions.”2

A third trend is the extension of the shopping experience that goes beyond the store to reach consumers before they go through the doors, and after they are finished shopping. PSFK’s recent report, “The Future of Retail,” describes a new retail environment where store fronts and mobile applications build relationships even before the customer steps in the door and walks down the shopping aisle. Moreover, once inside, interactive displays and mobile applications will enable retailers to customize each experience, deliver superior customer service, and glean valuable customer feedback for the person’s next purchase.3

At the heart of this experience is technology—technology that increases a sales associate’s ability to help customers and close sales. As demonstrated through these trends, much of the technology revolves around a store’s ability to securely manage multiple flows of information across multiple networks. The following are just a few of the developments that are either in stores today or coming to stores in the near future.

In-Store Shopping Assistant and Kiosks – Shoppers enter stores today with more knowledge than ever before. Retailers can embrace this rather than fear it by providing relevant product information through multiple possible channels. For example, it is likely that a store will offer patrons an in-store shopping assistant via their mobile devices. Consumers will walk down the aisles and as they see items they want, scan the products with their mobile devices either through camera barcode readers or the camera itself. With the barcode or picture, a dedicated store application will display product descriptions, reviews, and “how to” videos to demonstrate the product in action. For those who do not have mobile devices, one will be provided via a dedicated booth or through customer service.

A frequent point of frustration among consumers is the inability to get in-store assistance. In the retail store of the future, that problem may disappear. Live customer support kiosks were one of the newest technologies showcased at the National Retail Federation convention in January. A customer picks up a telephone at a kiosk and is immediately connected through live video to an expert. The expert is armed with a variety of tools to satisfy customer questions, ranging from store maps to product details, inventory status, and access to the Web.

Electronic Shopping List – Mobile applications will also serve as in-store “e-shopping carts,” allowing consumers to place items there instead of lugging them around the store. When it is time to go, consumers can decide to purchase the items and take them home, or to have the store deliver them from their online store.

In-Store Electronic Concierge – At the end of every aisle and throughout the store, consumers will find touch screen displays. By tapping the screen and searching for an item, the electronic concierge will tell the consumer where the item is, and in the event it is out of stock, which nearby stores have it.

Mobile Ordering, Local Pickup – Consumers are busier than ever with lots of shopping to do and not much time in which to do it. Retailers will help consumers save time by enabling them to make purchases using their laptops and mobile devices, securely transmitting data to the store for order processing. By the time customers get to the store, their purchases will be waiting.

Video Employee Learning Centers – Since consumers now have product information at their fingertips, retail staff will have to be more knowledgeable than ever. If an employee doesn’t know the answer to a customer’s question, it is increasingly likely the customer will be turned off to a sale. To give staff the knowledge they need to help retailers succeed, before every shift store employees will check in at an interactive video display area. There they will hear about the day’s promotions and get updates on the store’s activities. Additionally, employees can text in questions and get answers back from management via their cell phones.

Automated Inventory Management – IInventory management will be automated. Goods will be on automated inventory aracks so that management always knows when and what to order. Branch stores will ‘talk’ to each other, enabling managers to quickly and easily shift inventory from one store to another to make sure they optimize supply across stores.

Transaction-Based Video Surveillance – Video monitoring for security and to reduce shrinkage and sales irregularities will be based on activity. For example, video capture would occur when there is a ‘no sale’ transaction at a register or when certain inventory is accessed. By making video capture activity-based, management will not have to weed through hours of tapes to find out what happened with inventory or at the cash register. This will not only reduce shrinkage, but also will help gather marketing intelligence on what does and does not appeal to customers.

Security of Multiple Data Streams, Multiple Networks – All of the data running through multiple data streams and networks needs to be secure. Payment Card Industry (PCI) compliance requires a high level of security for each transaction and the ability to guard against threats both wired and wireless. Information needs to be able to flow securely and efficiently with built-in redundancy. Self- configuring VPNs and firewalls using intelligent routers will make the whole process of becoming and staying PCI compliant easier.

At Hughes, we’re working with many of the leading names in retail to build this new technology infrastructure that will support the retail store and shopping experience of the future. And because these technologies are so important, we are building them with increased reliability, higher performance, and greater security than ever before. For over a generation we have helped the world’s leading retailers use information technology as a competitive advantage. As retailers become more sophisticated in the use of technology to boost sales and increase their store’s efficiency, Hughes is well-positioned to help retailers build their own “store of the future.”