Retailers need to scale up their in-store automation platforms in order to meet shoppers' growing willingness to shift their purchases to brick and mortar shops with automated technologies, or they will miss out to their higher-tech rivals, a new Capgemini study shows.
More than two-thirds of millennials are willing to shift purchases to a store with automated technologies if they have a positive experience, but only 40% of retailers consider automation a strategic imperative, the consulting firm found in a survey it presented during the National Retail Federation (NRF) trade show in New York this week.
To close that gap, retailers need to prioritize automation that creates positive consumer experiences, rather than using the technology simply as a cost saving exercise, according to a report from the firm's Capgemini Research Institute. The report, "Smart Stores - Rebooting the retail store through in-store automation," surveyed over 5,000 consumers and 500 retail executives across North America, Europe, and Asia.
More highly automated stores will help drive greater efficiency throughout the supply chain, not just at the retail storefront, the firm said. Additional benefits could include a lower cost to deliver options like click-and-collect, buy-online-pickup-in-store (BOPIS) orders, and curbside pickups. The approach could also help retailers avoid "shrinkage," stockouts, and store operating costs, Capgemini predicts.
One of the survey's core findings revealed that a majority (59%) of consumers who have previously visited stores with automation said they would be willing to shift their in-store purchases from a retailer without automation technologies, to one that offers them. And that figure rose to 67% for millennials, who are currently in the generation spanning 22-36 year-olds.
The reason that shoppers are willing to experiment with store automation is that the technology can solve some of the "pain points" that have frustrated consumers for years—long checkout queues (66%), difficulty in locating products (60%), and products being out of stock (56%), the survey found.
Store automation can provide cures for all those ills, Shannon Warner, Capgemini North America's vice president of retail and consumer products, said at a breakfast presentation at NRF today. The reason is that automation removes friction from the shopping experience, leading to increased customer visits, higher sales, and more time spent in the store, Warner said.
Capgemini offered two real-world examples of how store automation is already changing shoppers habits in two pilot cases recently launched in Norway and in the U.S.
In Norway, the country's second-largest grocery chain opened an autonomous concept store seven months ago, according to Jorgen Moltu, project manager at Coop, which runs 1,250 stores. Coop operates the test store as a facility that is "ordinary by day, special at night," when the shop stays open all night long after its human employees have gone home from their shifts between 7am and 11pm, he said.
During the overnight hours, customers who have downloaded an app to their smartphones can shop throughout the store then use self-checkout aisles to purchase their goods. All the while, cameras monitor the shoppers to avoid overcrowding by fire codes, discourage shoplifting, and enforce age identification checks for purchases of items like tobacco and pain medications.
The system takes a bit of learning for new shoppers, he admitted. "The first time, it is a bit painful, since the average customer doesn't attend NRF," Moltu said. "Even adding the requirement that need to have the app raises the bar; they just want to buy their bread or frozen pizza." But repeat customers soon become comfortable with the arrangement, and night sales now make up 5% of the store's total sales.
In another example, the midwestern grocery chain Meijer has opened a series of small-footprint stores that offer only self-checkout aisles. With a size of just 35,000 square feet, they are dwarfed by the chain's usual big box displacement sites of 200,000 square feet and above. But their diminutive scale allows them to be more nimble, said Kristen Williams, vice president for consumer and digital technology at Meijer. Each store is customized for its local neighborhood, stocking locally sourced foods from regional vendors such as nearby bread bakers, cookie shops, or sushi restaurants.