Deloitte study predicts ‘Store 3.0’
While the in-store experience is still important to many shoppers, greater consumer adoption of emerging technologies is undoubtedly reshaping the retail landscape. Today, stores are just one part of a larger, more connected consumer experience. For retailers, this means they must rethink how they can transform stores, strategies and operating models into a store of the future: Store 3.0.
“Retailers need to re-examine and reconfigure their talent, physical space and store operations to meet or exceed customer expectations. A strategy that aligns these dimensions and is enabled by the right technology solutions can help retailers deliver a tailored experience for their customers. It is an experience that begins before customers enter the physical store and continues long after they leave,” according to a report by Deloitte titled “The Next Evolution: Store 3.0.”
As the virtual world increasingly weaves its way into the physical store to create an integrated experience, it is important for retailers to re-evaluate future store counts and footprints to effectively respond to future sales channel trends. In fact, the survey found that the percentage of sales generated by traditional brick-and-mortar stores is expected to significantly decline over the next five years, from 91% to 63% of sales.
The Deloitte study was conducted in September 2011 among 39 retail executives to better understand how they are adapting their brick-and-mortar stores to a next-generation format. Those retail executives surveyed had revenues ranging from less than $50 million to more than $10 billion annually across several industry segments.
The study found that few retailers are leading the way to a Store 3.0 environment, but are instead wrestling with how to create a well-integrated future store strategy and are unsure about the roles and responsibilities of their sales associates in this new retail environment. Deloitte acknowledged that the solution is not a one-size-fits-all approach but did suggest several steps retailers can take to help them differentiate the customer experience.
It all begins with a strong information technology infrastructure. While many retailers believe IT strategy and investment should be a top priority, only 18% said they are ahead of the curve. Many are playing catch-up or are taking a wait-and-see approach. However, that will likely change as respondents said they are looking to create or expand senior leadership committees, executive leadership positions and governance processes three to five years from now to focus on emerging technologies and to incorporate them into stores. As retailers look to shift their budget priority to emerging technologies, it will come at the expense of store infrastructure, the report noted.
Many respondents said that Wi-Fi-enabled solutions, loyalty program signup, SKU availability checks and product information are planned or in pilot; however, researchers recommend that retail stores also be Wi-Fi-enabled. Nearly one-third of retail executives said they have no plans to provide Wi-Fi capability in stores.
“Retail stores should be Wi-Fi-enabled for these applications to work smoothly. Product SKU checks, mobile checkout, customer loyalty information and other applications would be right in the palm of the sales associate’s hand,” the report stated. “Plus, it would allow customers visiting stores to use their mobile devices to connect to the retailer’s brand, access product information and reviews, or share their purchases and experiences through social networking sites.”
According to the report, retailers also must invest in emerging and viable technologies to support future store strategies. Some technologies to consider include:
Customer-facing, in-store applications, such as a virtual look-book on a tablet;
Mobile point of sale; and
Augmented reality applications.
As consumers increasingly demand a more personalized shopping experience, sales associates become even more critical. This means that retailers must invest in employee training, education, compensation and career development options to increase product and technical knowledge. It also means arming them with the right technology.
Researchers suggest that retailers consider investments in sales-generating and profit-increasing tools, such as real-time store-monitoring platforms, to identify unserved customers; employee-facing, in-store applications to help connect customers to the brand and to sales associates; and real-time store monitoring platforms to manage efficiencies in operations.