The COVID-19 pandemic has boosted online sales and e-commerce, meaning that the digitalization of the retail sector is necessary to connect with an increasingly connected consumer.
Digital transformation has arrived in the retail sector. We are now witnessing the birth of smart stores, thanks to the digitization of physical stores. Major retailers are transforming their spaces with technology, creating a new digital communication channel with customers.
The Background of Retail Digitalization
At the end of 2016, Amazon kicked off a new concept for physical stores with the launch of Amazon Go. This marked the arrival of digital transformation in the retail sector. Now, we are seeing the emergence of smart stores, thanks to the digitization of physical stores. Major retailers are transforming their spaces with technology, creating a new digital communication channel with customers.
It's not just about replacing paper signage with digital displays. It's about offering customers a unique and enriching experience that blends the physical and digital worlds, taking advantage of the strengths of each.
What is Retail?
Retail or digital retail refers to a series of experiences that allow the consumer to easily navigate and interact with an e-commerce platform through different stages of purchase. In addition to websites, digital retail also includes commercial digital content displayed at points of sale or public places through digital devices like touchscreens, LCD or LED panels, among others.
The World Has Changed: Consumers Trust Online Sales
Consumers are increasingly trusting online sales, but they demand better conditions and guarantees for returns, security in electronic payments, and excellence in delivery times, modes, and conditions.
They also demand ease of use for websites and apps, as well as seamless connection between physical stores and online channels.
The market has changed so much that what was once a future trend is now a business necessity. In this new context, businesses need new communication channels, both analog (sales by phone) and digital.
Technology as a Key Element
Technology has become a crucial part of the customer experience. A new generation of highly digitalized consumers has emerged, leaving behind the habits of traditional consumers. This new consumer, from "Generation Z", seeks a unique and personalized experience in stores that goes beyond the quality of the products offered.
Companies Prepared for New Consumers
Considering this new consumer, retailers must ensure they meet all their needs and even anticipate their expectations. The focus now is on digitizing stores to provide customers with a unique and differentiated experience that increases their loyalty.
In this regard, retailers are undergoing an intense digital transformation to offer their customers exactly what they need. It's worth mentioning the delicate situation of physical stores, as they are the only point of direct contact between the consumer and the retailer. Therefore, failing to provide the service the customer expects could lead to the loss of trust in the brand.
Retail Digitalization to Optimize Your Sales
Thanks to smartphones, businesses can create services and products that are centered around the individual. Merchants can gain significant advantages from the information produced through customer interactions with connected objects.
They can use this information to enhance the brand experience and benefit the business. For example, using sensors to track customer flow inside stores can help managers improve product distribution and develop positioning strategies—placing high-demand products in areas with higher customer traffic.
Other possibilities to enhance the in-store experience include:
- Offering automatic product payment via a sensor at the exit door or a scanner placed in the shopping cart, eliminating the need to go through checkout.
- Installing barcode scanners in-store or on the shopping cart to provide information about product prices, composition, or related products.
- Smart mirrors allowing customers to virtually try on clothes.
- Robots with touchscreens so customers can check the availability of the products they are interested in.
- Smart shopping carts that guide customers through aisles based on their digital shopping list.
- Allowing customers to request assistance directly from their smartphones.
Challenges Facing Retail Digitalization
First, despite the uncertainty some companies feel regarding digitalization, it seems essential to invest in technologies that allow personalized service for each customer (both physical and virtual). The goal is to achieve positive feedback that improves the business reputation, as well as turning collected data into relevant information that benefits the company.
Some studies indicate that investment in large-scale digital technologies will intensify over the next two years. In fact, the vast majority of retailers claim they will implement new technologies in their stores.
Ways to Streamline Retail Digitalization
Interaction
- Touchscreens: These enhance in-store interaction and offer the appropriate Point of Sale (POS) materials. Through them, customers can navigate a safe and closed environment. In addition, sales assistants are increasingly using tablets to provide better service. The possibilities are endless: discovering the latest trends, viewing photos and videos of collections, accessing catalogs, making purchases, or creating a ticket for checkout, recommending products based on a selected item, or using barcode readers, among others.
- Satisfaction surveys: Smart stores also interact with customers through on-screen satisfaction surveys.
- Other forms of interaction include QR codes, clickable paper, social media data feeds, website links, or special discounts at checkout via barcode photos.
- Similarly, systems like queue managers can optimize processes and customer experience. McDonald's is a good example of store digitization with self-service kiosks.
Customization
Personalization is essential for improving returns, relevance, and customer experience in smart stores. Any digital tool generates data that can be analyzed to achieve better sales and experience outcomes. Some options include:
- Content management systems (CMS): These allow the creation of rules to personalize content. For example, based on the day of the week, time of day, store location, product margins or stock levels, etc.
- Facial recognition cameras: This technology identifies the gender and age range of the person in front of the screen. After recognition, it shows the most relevant communication for that individual. If a digital screen is installed in the store window with cameras, we can track street traffic, how many people look at the window, how long they stay, and how many enter the store. A smart way to learn about the effectiveness of our communication.
- Bluetooth devices: These allow unique identification of a mobile device via wireless Bluetooth technology. This way, if the customer has our app installed, we can send personalized notifications.
- Wi-Fi antennas: These can also launch notifications, if the customer is connected to our network. This technology has been used by hotels for a long time.
- Artificial Intelligence (AI): There are already AI systems that personalize content based on different variables in real-time. For example, according to the products being sold now (integrated with the point of sale or POS system). Also, based on the digital communication that has the highest level of attention (via facial recognition cameras). All connected with external systems for weather prediction, location, time, or day of the week.
Real-Time Interaction
Achieving what we want at the exact moment we want it is crucial at the point of sale. This is the moment of truth. For this reason, it is important for smart stores to integrate technology and infrastructure and use all the information available to provide a personalized, two-way experience in real-time.
Ultimately, retail digitalization is a necessary step for any business looking to position itself in the new technological landscape and cater to new consumer types. For this reason, it is a wise decision to invest in consultancy for this new type of growth. Don’t hesitate to contact our advisors.
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