If any one player has highlighted the massive level of change taking place in the retail sector it’s Amazon
Their launch of Amazon Go, and the purchase of Whole Foods, potentially mark a watershed in the industry. We are all now massively aware of the impact that technology is going to have on the in-store shopping experience, and that the status quo of established players can no longer be relied on to set the agenda.
The key issue for retailers is how they embrace technology to deliver the right customer experience for their market. Competing with Amazon is tough. They have substantial capital and operational advantages, greenfield sites in which to experiment, and the luxury of getting things wrong without jeopardising core revenue streams. This has enabled them to develop and implement frictionless checkout with Amazon Go and integrate Wholefoods with Amazon Prime to build convenience through home delivery and further establish brand loyalty. Established retailers need to make their changes to the customer experience “in flight”, ensuring a joined up online and offline experience, taking their established customer base with them, sweating existing technology assets, not risking cash flow through the till, and delivering rapid ROI. But in an environment where to do nothing is simply not an option, what strategies can retailers adopt to revolutionise their customer experience?
Take the battle to the edge
Focusing on retail edge technology – that part of the technology experience that operates outside the corporate data centre – provides a way forward. With edge technology, information processing, content collection and delivery are placed closer to the sources of data, and closer to customers and store operations. In retail terms, this means enabling new IT capabilities in-store, in a way that delivers the control and flexibility of cloud-based services.
Importantly, in the case of the traditional retailer with existing infrastructure and technology investment, they need to work out how their existing stores can be leveraged and adapted to focus on reducing costs and increasing convenience.
Innovation is critical
Innovation is crucial to survival for today’s large-scale retailer. Retailers acknowledge the need to experiment with new service and experience offerings in store and roll them out quickly once proven. And this experimentation needs to be conducted in a controlled environment, with full knowledge of the exact local circumstances in which they will need to
succeed. But this can be a real challenge for retailers, especially those with large store estates over a highly distributed geography. Store IT has been designed for a different age and is a major barrier to rolling out innovation.
Overcoming this challenge means retailers need to perform experiments in low risk environments knowing these can be replicated and evolved rapidly across a store estate, at will. This naturally enables retailers to adopt new technologies quicker than before, and to keep up with the pace of change.
The IT estate also needs to be treated as an integrated whole, rather than as a collection of disparate devices. In this environment applications can be created centrally and then distributed, delta updates and patches can be centrally managed, and all possible support functions carried out at the centre and automated to reduce support costs. Solutions which employ this approach move away from the management of individual stores to the management of a store ecosystem, which in turn makes the whole infrastructure significantly more agile and cost-effective.
Leverage the point of sale
The point of sale (POS) sits at the heart of the store and is a key determining factor in the delivery of a convenient shopping experience. Lengthy, slow queues, out-of-action lanes, or temperamental self-checkout machines, all scare customers away and cause untold frustration. While a seamless payment process, be it self-service, traditional till or via tablet with a roving store associate will have the opposite effect.
This is why, if retailers want to keep pace with the likes of Amazon, they must focus on the POS experience as a top priority. There is no one fix-all solution here as audience preferences are broad. The less friction during the purchasing journey, the more satisfied customers will be.
Conclusion
Amazon have introduced a new reality to the retail industry. This should be seen by established retailers as an opportunity – an opportunity to reassess how they optimise innovation and customer convenience in-store. There will be many different ways of rising to this challenge, and retailers should adopt and adapt technology according to their own business needs. What can be guaranteed, however, is that a change is here, and all retailers need to act to stay competitive. Embracing retail edge technology to drive down store costs and enable better customer experiences is instrumental to remaining competitive and answering the Amazon challenge
About the Author
Nick East is co-founder and CEO of Zynstra, the award winning leader in purpose built retail edge software. Zynstra is transforming edge computing for retailers. Its intelligent infrastructure delivers high reliability and flexibility, with powerful automation capabilities that reduce cost in every store. Nick was previously part of Cramer from start-up through to its $425m acquisition by Amdocs, where he was subsequently GM of their OSS division.
