Frictionless Retail Focuses on Shopping

Going Frictionless: Retailers Must Focus on Shopping, Not Buying

Kyle Ferlic
Retail Analyst

In Logile’s last blog post on the United Kingdom’s (UK) high street and the global state of brick-and-mortar, I reviewed how the face of retail (i.e., physical store locations) must transform if organizations desire to be relevant moving forward. Retailers who go without omnichannel retailing, fantastic store experiences, in-store planning, excellent customer service and powerfully subtle technology will be left behind amid a wake of thousands of store closings. Mobile disruption is also a factor.

It is not only singular stores that suffer from the cost of slow adaptation; retail conglomerates are failing to attract consumers, too. In 2018, Retail Analyst and Forbes Contributor Pamela Danziger1 described the decline of the once-frequented indoor shopping mall. “Mall vacancies are at a seven year high,” she remarked. The reason this fascinates is because malls were originally designed to be centers of connection, offering a venue for public encounters.2 In other words, malls were intended for fantastic experiences, which are paramount for the future of brick-and-mortar.3 What happened?

“The age-old model where people had to go to the store to buy something has been cut,” Danziger1 remarked; “now the decision to go to the store is a decision to go shopping, because buying something—anything—is faster, easier and infinitely more convenient done online.” What is Danziger saying? Online retailers, who offer both tremendous convenience and mass customization, have created a chasm between buying and shopping. Shopping in a digital age means consumers no longer want to travel somewhere only to purchase items. They want purchasing to be secondary to experience. This leads us into today’s topic: frictionless retail.

If online retailers are offering convenience plus customization, physical retailers are pursuing experience plus customization. According to retail experts like Oliver Chen, a managing director at Cowen and Company, this strategy is paying off. Chen4 talks about the future of retail being more experiential: “inclusive is the new exclusive…luxury goods are more mainstream and there is greater focus on self-care and personalization.” Experience plus customization can only be done through methods like frictionless retail, which involves “digitizing business processes and employing IoT [Internet of Things] technologies…to optimize everything from product design…to the customers’ in-store shopping experience.”5

From a consumer’s perspective, frictionless retail reduces in-store wait time and pain points while offering a personalized experience, often resultant from tools that collect and crunch customer-centric data. Hyper-personalization mixed with outstanding service in a physical setting sounds daunting. Yet, businesses pursuing operational excellence and retail technology are ahead of the curve. The two go hand-in-hand for brick-and-mortar: “the role of technology in-store has to be to support these [surprising and delightful] experiences,” said David Walmsley,3 CCO at the UK’s House of Fraser.

Walmsley3 took his statement further. “Technology in and of itself is rather sterile, and there have been too many instances in recent years of retailers getting carried away with gadgets and widgets that do not focus on the set of actual customer desires.” Walmsley is saying technology itself will never be the final answer for organizations to provide experience plus customization; retail shall always need a human element. As long as customers continue journeying to stores for the experience, operational excellence will be foundational for removing underlying friction.

Up to this point, our discussion on frictionless retail has been conceptual. Here is a real-world example. In a recent blog post, Walmart’s Matt Smith6 discussed a state-of-the-art Long Island store called the Intelligent Retail Lab (IRL). Through tremendous numbers of servers, cameras, sensors and cables (enough to “scale Mt. Everest five times”), Walmart will use artificial intelligence (AI) to revolutionize its inventory system. The purpose is simple: “customers can be confident their products will be there,” said IRL CEO Mike Hanrahan.6 He went on to caution readers not to be “overly enamored” with AI, as in-store improvements should be practical.

In a frictionless environment, practical means retailers use advanced technology to support excellent operations and vice versa. Catch the reciprocal relationship here. To apply this idea, retail leaders might begin with an opportunity assessment and waste (i.e. friction) removal. With waste removed, the retailer can implement a labor model and best methods to make labor efficient and trackable. After a labor model is in place, the retailer can budget more effectively and utilize labor plans to supplement its service model. Additionally, companies might implement forecasting, staffing and scheduling solutions that put the right people in the right place at the right time.

When employees are scheduled effectively, they showcase higher morale; this reduces friction from the customer experience because employees become more engaging.7 With task execution management and re-forecasting technology, real-time demand fluctuations, such as unexpected weather, can initiate real-time resource reallocations. This offers customers the service and products they need regardless of the circumstances. These are only a few examples that illustrate how operations and technology usher in frictionless retail.

Contrastingly, some organizations focus on end-user solutions alone to go frictionless, like virtual reality in fitting rooms and beacon technology to count foot traffic. These tools can be incredibly useful when supported with healthy operations. However, for customers looking to shop versus just buy, they will expect to engage with humans at high service levels. As long as retailers use employees, pairing operational excellence with technology to go frictionless will be tantamount. Like Jose Neves,3 CEO of the UK’s Farfetch and London boutique Browns commented, “fashion isn’t downloadable.”

In ending, global organizations of many kinds are seeing the benefits of frictionless retail, from manufacturing to showrooming. Offering customers the experience and personalization they desire by reducing pain points should be on the top of the future-thinking retailer’s priority list. We recommend beginning with operational excellence and combining it with technology solutions to supplement the process. For those who do, a frictionless future is not out of reach.

References

  1. Danziger, P. N. (2018, October 14). The fall of the mall and how to make them rise again [Blog post]. Forbes.com. Retrieved from https://www.forbes.com/sites/pamdanziger/2018/10/14/the-fall-of-the-mall-and-three-ways-to-make-them-rise-again/#234f71252a26
  2. Pinsker, J. (2017, September 14). The future of retail is stores that aren’t stores [Blog post]. TheAtlantic.com. Retrieved from https://www.theatlantic.com/business/archive/2017/09/future-retail-experiences-juice-bars/539751/
  3. Bearne, S. (2017, January 25). What does the store of the future look like? [Blog post]. TheGuardian.com. Retrieved from https://www.theguardian.com/media-network/2017/jan/25/what-store-future-look-like-retail-technology
  4. Bandaranayake, N. (2019, January 7). Convenience, culture and curation: Innovations that transform retail [Blog post]. NRF.com. Retrieved from https://nrf.com/blog/convenience-culture-and-curation-innovations-transform-retail
  5. Kirby, S. (2016, June 27). Using the Internet of Things to achieve “frictionless retail” [Blog post]. RISNews.com. Retrieved from https://risnews.com/using-internet-things-achieve-frictionless-retail
  6. Smith, M. (2019, April 25). Walmart’s new Intelligent Retail Lab shows a glimpse into the future of retail, IRL [Blog post]. News.Walmart.com. Retrieved from https://news.walmart.com/2019/04/25/walmarts-new-intelligent-retail-lab-shows-a-glimpse-into-the-future-of-retail-irl
  7. Ton, Z. (2012). Why “good jobs” are good for retailers [White paper]. Harvard Business Review. Retrieved from https://hbr.org/2012/01/why-good-jobs-are-good-for-retailers