Blog AI & ML

What No One Else Is Telling You About CX: The Key To In-Store Retail

Nabil Bukhari Executive Vice President, Products Published 8 Jan 2020

If you believe the headlines, then you’d assume traditional brick-and-mortar stores have been destroyed by the likes of Amazon and the recent wave of e-commerce startups. Online shopping has taken over. Stores are antiquated. Long live digital!

But that only tells 14% of the story. That is, 86% of worldwide retail sales still happen in stores.

Although Amazon continues to have an incredible impact on the retail industry by reshaping business models and spawning new customer expectations, the reality is more nuanced than what these headlines claim. Just this September, Apple reopened its flagship store on Fifth Avenue to a massive crowd of eager customers. Nike has more than 1,100 stores it operates all over the world. In fact, Amazon — the world’s largest e-commerce company — is opening its own brick-and-mortar shops!

Even if the death of physical retail is greatly exaggerated, retailers can’t rely on the same playbook they’ve used for decades. No matter where they shop, consumers want personalization, digitization, mobility, greater convenience and speed, and product reviews and comparisons.

So the trick for retailers today is implementing those elements in-store, which means combining digital experiences with the in-store environment. In other words, you need to achieve unified retail commerce.

Forward-leaning retailers like Walmart and Sephora were first adopters in this space and started investing in their in-store experience, focusing on automation, digital payments and mobile applications. Why? Because those are the most tangible technological improvements companies can make, serving as an immediate boon to both the business’s efficiency and the customer’s experience. Customer experience, or CX, is often lauded as the holy grail of retail, so it’s where many brands place outsized focus. Location-based offers, self-checkout, digital signage and other innovations can bolster the customer experience.

But automating the customer experience cannot — and should not — be the end goal. It’s merely the first step on a retailer’s digital journey. It’s time for retailers to additionally focus on applying technology to improve what they’ve been struggling to get right for decades: back-end operations.

Back-end technology may not be as visible or exciting as customer-facing technology, but it’s what provides the assurance that all of those new forward-looking, customer-facing technologies will work.

The stores of the future will live and die by the operational back end. Let me offer a couple of examples why.

In grocery stores, food waste is a massive issue. Grocers lose an average of $70 million every year due to spoilage. That’s why stores like Kroger are deploying IoT-enabled sensors to monitor the temperature of food and ensure it doesn’t spoil.

But there’s another type of “spoilage” in business — these new IoT devices quickly open up a new potential attack vector for retailers. To help protect against breaches and provide much-needed security assurance, grocers can invest in machine learning and AI-based anomaly detection that can quickly identify and isolate abnormal network traffic. This back-end investment helps to proactively remediate potential threats, safeguard data and protect your business’s reputation.

Retailers like Walmart are adopting electronic shelf labels (ESL) to electronically display the pricing of products. A recent report estimates the global ESL market will reach $1.92 billion by 2025. This technology helps retailers manage stock, enable dynamic pricing and deliver enhanced shopping experiences.

Yet, ESL systems also require the assurance that the network is reliably working — and that you can communicate to all of the connected devices from a remote location. If a retailer tries to update prices, but the system fails, the store would legally need to observe the price that was displayed, whether it was the price it intended to display or not. Network reliability hiccups quickly lead to bottom-line implications. And then there is the “small” task of powering these electronic shelf labels reliably and cost-effectively. There, too, modern networks can help, but more on that in a later article.

Retailers continuously tout their commitment to CX, but they consistently struggle to optimize the back end that underpins and enables it. Investment in back-end operations that provide assurance and reliability are essential for retailers to evolve CX — and, more importantly, outmaneuver their competition.

In the near term, there are steps retailers can take to augment their networks and prepare for the new technologies set to modernize stores. To start, prioritize highly available and scalable Wi-Fi. New IoT devices and immersive applications will be dead on arrival without reliable connectivity. Additionally, it’s important to make the data that traverses your network work harder. Retailers are often sitting on troves of valuable customer data coming over in-store wireless networks, and that will only increase with more IoT devices entering stores. It’s critical to invest in analytics solutions that help you understand customers’ preferences and then make personalized, contextualized offers. Retailers can also leverage analytics to inform location-based services, RFID and ESL to reduce friction in a shopping journey.

But because of innovations in cloud management, AI and ML, the future is even brighter, and the possibilities are greater. Technology and network infrastructure can now optimize themselves, creating an environment that enables retailers to leverage IoT sensors or ESL without concerns or human interference. In the next article in this series, we’ll further illustrate this concept, and we will look at how retailers can optimize the cost of designing, procuring and deploying the store of the future.

This blog was originally posted on Forbes.com on December 30, 2019.

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