The digitalized retail store – a conversion driver or a giant headache?

It might sound contradictory: speaking about “digitalized stores” as we still have the picture of traditional physical retail in our heads. And this is the point where it often comes to headaches: retailers are heavily making their minds up about options to digitize their business – but where shall they start and how can they get a (quick) return on investment? In this blogpost, I want to take a look on the current situation with a focus on a “step-by-step” approach of “setting the foundation” for a customer-driven digital roadmap. The second part is to follow later next week with a collection of sample use cases, best practices and new applications.

Step 1: lay the foundation

“Digital touch-points” such as displays, in-store kiosks or smart mirrors have one thing in common – they can only drive conversion if the promoted products are actually available. While this might sound like a simple truth, this is actually by far the biggest challenge for retailers. And thus this is the foundation to be laid as the minimum initial requirement.

Merchandise availability is key!

It is necessary that stock information across all systems is accurate and consistent. Only then conversion and a high customer satisfaction rate is guaranteed. Here, RFID and EPCIS standards are the key as RFID enables a high stock accuracy while EPCIS is a standardized protocol to exchange information on RFID events.

Step 2: play, measure, learn & adjust

A proper digital in-store application can hardly be a standard product as it needs to fit to the retailer’s business model – and more importantly – to the actual demand and expectations of the customers. To find out how customers react to offering new services, it needs a “playground” where you can test with a prototype in a manageable environment, measure the output, learn and adjust respectively. By starting small and actually innovating with customers and not for customers, a later scale-up is much more likely to be smooth and successful. This is often referred to as the “silicon valley approach”.

Step 3: scale up, but stay flexible

When a digital application has proven to be successful, it is the moment to scale up to the rest of the stores. However, as technology, consumer demand and the market are permanently changing, it is important to maintain a high degree of agility, which means e.g. to take away (internal) barriers – permanently – and reiterate with new approaches.

Conclusion

Albeit retail is changing massively, the predominant part of shopping is still being made in physical stores. Interacting with products and people, as well as the inspirational factor remain extremely important for many customers. At the same time, customers expect the convenience and permanent product availability they are used from online shopping.

Digitalization provides the opportunity to surprise, excite and inspire customers.

To meet this demand, many retailers research ways to digitize their business to enhance customer satisfaction and drive conversion. What truly surprises me here is that the majority of retailers does not follow the above steps. Especially the fundamental first step is often skipped with severe consequences. By starting any ‘digital store’ initiative without laying the foundation of having accurate and consistent stock data throughout all channels and touch-points, the promised conversion driver is very likely to cause giant headaches. Learn more about actual use cases in my next blogpost next week.

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About the author: Tom Vieweger

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