The web of retail interfaces
 

Until the mid-90s of the last century, retail was wonderfully linear and orderly. You shopped in a physical store (at a fixed location, the market or the familiar mobile shop), ordered from a mail order catalogue, perhaps phoned to order items (from the same catalogue or after seeing something on TV, in a newspaper or brochure) or bought at the door from a travelling salesman. It was all wonderfully structured, both for the customer and for the staff.

How different retail looks in 2018. In the current 'total retail' world, the number of retail touchpoints is continuously increasing, shopper behaviour is changing rapidly and - for that reason - it is not becoming any easier for store staff to (re-)discover and emphasize their role and added value.

What are the major retail interface trends now? Are they simply going to replace staff, are they complementary, or do they actually demonstrate the importance of human interactions in retail?

AI as the big accelerator
Artificial intelligence is widely regarded as the panacea that allows companies to improve decision-making, optimise processes, increase customer satisfaction and - ultimately - reduce costs and maximise profits? Research among 58 global retail companies with an average turnover of $9 billion shows that 91% of them already use AI. Nevertheless, it appears that retailers spend around 19% less on AI than the average of the 13 sectors that figured in the research (ranging from healthcare and automotive, to banking and energy).

It's no surprise that 68% of companies use AI in their IT departments. But it may well be a surprise to learn that in second place is customer service, with 32%

In which domains and touchpoints in retail is our contact with AI the most tangible?

  1. Digital Assistants (Conversational commerce)
  2. Robotising Retail
  3. (Semi-)staffless Stores

1. Digital Assistants (Conversational commerce)
The digital assistants of Amazon (Alexa), Google (Assistant), Apple (Siri), Microsoft (Cortana), Alibaba (AliGenie) and Tencent (Xiaowei) in particular are expected to be the driving force behind the immense rise of 'conversational commerce ' in the years to come. But you are going to see them in all sorts of forms, from your personal mobile assistant in smartphones, smartwatches, smart speakers (in 2017, American households already had 39 million smart speakers) and cars, to a variety of chatbots, but also in physical stores in the form of robots, smart mirrors, and talking shelves.

Voice interactions are seizing power
Comscore expects that by 2020 half of all searches will be voice searches. Currently, many of these searches are still being used to check the weather or to turn on music. Nevertheless, based on research among five thousand consumers in the US, Great Britain, France and Germany, Capgemini concluded that voice assistance will become the most common method of interaction with consumers over the next three years. In short, we are moving from 'tap & look' to 'speak & listen’.

 

Already 24% of consumers prefer to use a voice assistant than a website, while it is expected that this percentage will increase to 40% over the next three years. So will online players especially feel the bite of conversational commerce? Certainly not. It is expected that the share of physical stores in the spending mix will decrease from 59% to 45%. Within three years, 31% of consumers expect to prefer a voice assistant to visiting to a shop. 

And will that pay off?
It certainly will, because conversational commerce is a real money-maker. In 2015, a total of 1.9 billion dollars of sales were made in America using smart speakers. In 2017, that went up to 5 billion. It is expected that the share of voice assistants in our total spending will rise to 18% in the coming years. Perhaps this is still not very tangible, so here are some figures from practice: Amazon Echo users currently spend about 70% more at Amazon ($1,700 per year) than the average Amazon customer ($1,000 per year). [2] So in theory, Amazon will have a good business case if they decide to supply all their customers with a free Amazon Echo device with their next order.

Conversational commerce is turning the buying process upside down
The Dutch are still fans of supermarket folders. A trip to the supermarket always starts with working through a pile of folders to find out exactly where certain products are cheapest. So supermarkets are used to screaming out who has the lowest prices, most offers and best discounts. Conversational commerce is going to radically change this.

Why would I want to compare prices and buy only from one supermarket? I just ask my speech assistant to shop for my weekly list (with additional items) in the cheapest way and I see where the order comes from when it arrives at my door.

2. Robotising retail
Of course, we've all seen pictures of the fully robotic warehouses of Amazon and AliExpress, where an army of autonomous robots (45,000, in the case of Amazon) transports orders through the warehouses like a colony of ants. This is automation that is having a huge impact on the efficiency of the 'back-end' of retail organisations. But as consumers, we are going to be increasingly encountering robots in our shopper journeys.

Robots: from exciting gimmicks to smart aids
From Sephora's greeter robot Nao, to the Cafe X robotic arm that makes coffee for you, and from Best Buy's robot vending machine Chloe to Solebox's Solebot, robots in retail have so far been amusing gimmicks that enriched the shopping experience.

Nevertheless, the robotisation of retail is going to have a serious impact on the industry: the World Economic Forum predicts that 30-50% of retail jobs are likely to disappear in the coming decade due to in-store automation. In America alone, that could mean a loss of 7.5 million jobs. Where will robots increasingly support or replace staff?

  1. Customer Service
  2. Store operations
  3. Delivery

 

1. Customer service
The best-known (humanoid) retail robot is undoubtedly Pepper, the robot that was presented in 2014 by the Japanese company Softbank Robotics. He greets customers, entertains them, and can help them on their way in the first stage of their shopper journey.

The robot Reji / Regi Robo is very different. This comprehensive "Entirely Automated Robotic Checkout System" features smart baskets that automatically scan customers' purchases (by RFID). It also automatically packs the purchases in a carrier bag and makes it easier to pay. While Pepper replaces staff as a greeter, the management of the Lawson Panasonic-Mae Store (where you can find Regi) promises that their robot system helps allow employees to devote more time and personal attention to customers.

A wonderful third example is the smart shopping cart of JD.com's 7Fresh supermarket, which follows customers through the store at an appropriate distance so that they can have their hands free during shopping. This is a smart way of making shopping easier and giving customers the time and space to experience the store.

2. Store operations
Lowe's LowBot occupies the frontier between customer service and store operations. This store robot not only answers customers' questions and guides them to the right products, but also helps with scanning store stock. Lowe promises that LowBot is not meant to replace personnel, but to give them more time to advise customers.

Meanwhile, Walmart is now testing their robot Tally in 50 stores. This robot scans the shelves to determine the stock levels, but can also discover whether the prices on the shelf labels are correct, and whether labels might be missing. Not only can Tally carry out these simple, repetitive tasks much more accurately than a human being, but the robot is also three times faster.

3. Delivery
Although Amazon tested drones for delivering orders a number of years ago with Prime Air, Domino's is now taking major steps towards using robots to deliver 'overland', while JD.com became the first company to send orders to customers by autonomous delivery vans in 2017. The opportunities for delivering by robot are countless. Nonetheless, the regulations of local and national authorities in particular will have a significant say in whether these robots will also take off. San Francisco recently decided to restrict the freedoms of delivery robots.

Robotising retail. A big threat for some; for others an innovation that provides more convenience and entertainment.

3. (Semi-)staffless stores
At the end of 2016, it was Amazon Go that seriously put the fully 'unstaffed', frictionless store on the map for the first time. With the slogan 'No Lines, No Checkout (No, Seriously)', they launched their 'Just Walk Out' concept, where customers no longer have contact with employees in order to pay, but simply walk out of the store. The store automatically logs what you have bought and immediately adds this to your Amazon account. This gives the store a completely new interface.

 

Of course, there are also numerous initiatives in Asia to fully automate the physical store and make it frictionless. For example, there is Taobao's Tao Café ,where the baristas are still just flesh and blood, but the checkout is fully automated, using an app and a combination of object and facial recognition. Then there are Bingo Box's unmanned convenience stores, where payments still go through the app, but sensors register whether customers have properly paid for their purchases. And there are the almost completely autonomous mobile stores of Wheely's Moby Mart, where customers scan their own purchases with their smartphone. From all of these examples, it is clear that there is a lot of pioneering work with new shopping journeys in the Far East, where people are being assigned a role as a retail interface in the margin.

In South Korea, 7-Eleven is going a step further and eliminating the smartphone in the entire shopping process. Instead, shoppers scan their hand ('Handpay') on entry and when leaving the store. The payment follows fully automatically via direct debit. Here, however, sensors do not automatically register which items customers take with them, but the products have to be scanned briefly in a 360-degree product scanner.

The ultimate variant (which is also actually operational) seems to be the X-stores of JD.com. In these compact stores, customers can quickly do their convenience shopping (fruit, snacks and drinks) without having to perform one extra action. The shop recognises visitors (after an initial online registration) through facial recognition, automatically registers which items they have in their bag, basket or hand, and automatically debits the amount due as they leave the store.

There is one consolation: the store is (logically) not 100% staffless, but still depends on people for maintaining stocks. All the same, this dominant retail trend is crystal clear: in the years to come, retailers will look for ways to automate their stores more and more and make them as 'staffless' as possible (especially in operational areas), in order to give their shoppers the optimum 'frictionless' shopping experience. So is there still hope for the store employee?

And what about human contact?
Well, one thing is clear: gradually, all the technology has become available for completely automating and robotising shops. Yet, as human beings, we still seem to attach importance to human interaction in retail environments. So let's not put customer contact entirely in the hands of AI. Why not? An article in the Harvard Business Review by Ryan W. Buell (UPS Foundation Associate Professor of Service Management at the Technology and Operations Management Unit at Harvard Business School) makes a number of important points:

“(...) humans are inherently social creatures who get emotional value from seeing and interacting with one another. Research shows that taking away the opportunity for this kind of connection can undermine service performance.” 

In other words, we may well use smart technology to simplify and accelerate processes, but in the meantime the customer's feeling of service is being negatively influenced.

He states that wanting and granting service have an important emotional component that technology will never be able to offer. It is no accident that the Amazon Go store does not have checkout staff, but still has a team of employees who can greet, guide and advise customers.

The main recommendation in his argument is "Automate transactional interactions, while facilitating human connections.". Duly noted.

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