Retailing in the Week Ahead – Week 36, 2019
Conventional wisdom has it that the inside perimeter of big stores is where services are positioned. These include the lottery tickets, tobacco lockers, newsstand, or a click & collect area, even cafés/restaurants. This makes sense in a world where security is a high concern in a big store shopping environment.
Store managers want to be sure that you do your shopping and pay for it before conducting other business. From a management perspective, this also makes sense: the store manager controls/owns everything within the security fences while third parties or other teams manage affairs outside those areas.
For many years, big-store operators have funded trials of various ways to escape this dilemma. Historically, the most promising have centred on the use of handheld units where a shopper picks up a scanner upon entering, scans each item for purchase before placing into the basket, then hands the unit to a staff member for a payment and security check before exiting.
Up until now, two challenges have emerged from these test-and-learns. First, only some shoppers are willing to shop this way. Second, to accommodate the tests, store designs don’t change that much. Typically, any change is minimal - all that is required is extra furniture to hold the scanning units and maybe a dedicated checkout area.
That’s now changing – but only in small stores. A number of retailers, including Casino, Albert Heijn and Amazon have been experimenting with ‘shop & go’ stores where the store is redesigned so as to completely remove old ways of shopping. In these new outlets, there are no checkouts or security zones. They have tackled both issues head on:
- To take advantage of the new stores, shoppers must adopt the new ways of shopping (normally using a mobile app)
- The store design assumes that cameras and other image recognition technologies will catch shoppers who try to take goods without proper and timely payment
What becomes interesting is that while payment systems are evolving with new technology, ‘automated’ or ‘predictive’ technologies are likewise moving forward. This means that one day retailers will be able to ‘guess’ shoppers’ needs when they visit stores - data opt-in/consent permitting. These estimates will emerge from analysis of diverse data points like prior purchases, online search behaviours as well as current location-specific factors like local weather conditions.
Ultimately, this signifies major potential opportunities for future big store reinvention. In this scenario, the store perimeter becomes a key element of the whole layout/amount of space allocation rather than being the current ‘dead zone’ given over to security cordons and tertiary services.
With retailers accelerating predictive R&D, suppliers should now begin rethinking how a future store might align services and categories in a more integrated way. If store managers can put aside security concerns, what might that store look like? And if technology can help them identify or predict when shoppers might want more of a holistic experience than just taking packs off a shelf, what might that mean for my category?
Take one example: a family adopts a new pet.
The past: A family visits their local hypermarket, walking aisle-by-aisle looking for everyday items and new items, consulting a checklist as they go. They then proceed to checkout. Post payment, they may pass a few service offers - such as pet insurance. They wished they’d noticed these, but now, burdened with full grocery bags, returning to the car is a greater imperative.
The future: The same family arrives at the hypermarket where the on-site salesperson trained on petcare is on hand to help them select items and discuss topics they may have forgotten, such as pet insurance. For a small fee, the retailer can also have a staff member pick and pack their regular ‘favourites’ so no extra time is lost.
Take a second example: business people want a quick lunch
The past: The business person goes to a proximity supermarket and sees long lunchtime queues. They decide to bypass the store and instead visit the nearby fast food quick service restaurant.
The future: Retailers reposition store elements at different times of day, making it attractive and easy to shop so that the business person can pick up a healthy lunch, at a reasonable price and get in and out quickly. The main feature of the store design is removing any obstacles to entering and exiting as rapidly as possible.
This ‘future’ may seem bizarre or distant. However, the pace of retail evolution is snowballing, with potentially game-changing new tests increasingly happening in the here and now, not in some distant future. We suggest that suppliers begin to look at two layers of evolution in their core markets: 1) the evolution of payment systems/checkout and 2) the evolution of collection systems (click & collect). Because when ‘checkout’ becomes security-free and ‘collection’ becomes automated or predictive, the retail environment will be a decidedly different space for us all.
If you did not have a chance yet, please also have a look at some of our big featured items from Week 35:
The future of impulse in European grocery
Co-op’s ‘Closer’ strategy: Shopper-first transformation in convenience retail
Summer of '69: Monetising historical moments
Why Alibaba’s first store in Europe matters
Are automated stores really the future of retail?
Good luck in the week ahead.
Ray Gaul – Ray.Gaul@Kantar.com and @KantarConsult or @RayGaul on Twitter plus LinkedIn.