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Retail Dilemma – Defend yesterday's strengths or invest in innovation?

By Chris H. Petersen

Image Credit: Pixabay.com

You see it in the repeated in the headlines – bricks and mortar stores greatest strength is the staff on the floor. The one thing that ecommerce does offer is the ability to interact with human beings to get advice and assistance. What do today's customers really want? Do they really come to stores to engage with sales associates? Or, do they in fact prefer to get what they need from technology or their smartphones? What seems like a simple question is no longer simple or trivial. The future of retail stores hinges on where and how to make the best investments to increase relevancy for today's demanding customers.

Why this is important: Today's retailers walk a tightrope of defending yesterday's strengths versus innovating for tomorrow. Future success lies in finding ways to be increasing relevant for consumers who have become channel agnostic.

Retail stores are not going away. They are being reinvented.

Amazon made waves with innovative technology in Go stores. With the technology, customers can grab items and "go" without ever passing a cashier or checkout lane. The early indications are the customers are responding positively to the technology enabling them to bypass humans with no waiting in line. Amazon plans to launch six more Go stores.

Amazon is not the only innovator. Walmart has taken a different approach of building a "Scan and Go" smart phone app enabling you to scan items as you put them in the cart. The result is the same; you do not have to wait for staff and can bypass checkout lanes. So other than shelf stockers and a store manager, do retail stores of the future even need RSPs (Retail Sales People)?

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Retail is reinventing the stores of the future for channel agnostic customers who are self-reliant and technology oriented.

Survey Says – Shoppers want help from technology, not associates

A new customer survey by HRC Retail Advisory reports some rather startling findings. In essence, customers want to be left alone while shopping. According to the Survey:

95% of those surveyed do NOT want the help of a sale associate
Customers prefer to get advice from friends, family and social media
85% prefer to check prices through a scanner or phone versus an associate
76% rated an in-store app with personal recommendations as important
30% wanted to be able to pay an associate anywhere in the store (aka Apple)

A clear take away from the survey is that customers now expect technology to be a major part of their store experience. In cases where the technology meets their needs, customers report that they prefer using it over finding and engaging with a store associate.

The case for "Shirts on the Floor" – Apple, Best Buy and REI

Even though Apple stores are two decades old, they continue to amaze by producing more revenue per square foot than any other retailer in the US. Apple also has one of the highest numbers of associates per square foot. A large portion of Apple's success is their "hiring for smiles" approach and heavily investing in training associates to engage and assist shoppers.

Best Buy is another example of a retailer investing in their "Blue Shirts" on the sales floor, and their "Black Shirts" (Geek Squad) assisting customers at home. Best Buy's CEO and analysts have credited much of their success to the investment in staff who interface with customers. REI is yet another example of a specialty retailer where customers do in fact value human assistance. So, do investments in staff only work for specialty retail?

Image Credit: Pixabay.com

If the customer is always right, where should stores invest?

Today's customers are empowered by unprecedented access and information. They can literally shop anytime and everywhere, including on their smartphone while standing in the store aisle. The HRC Retail Advisory survey suggests that the best investments retailers can make is in technology which: provides critical information, enables online shopping anywhere, and automates the experience as much as possible, especially eliminating checkout wait lines.

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It is not a question of either technology or people. Retailers need to test what combination of solutions are relevant for their customers.

However, the old maximum that the "customer is always right" still rings true today. There are great examples of where customers value staff. Ace Hardware stores continue to thrive on their model as "helpful place" with knowledgeable staff. The reality is that the question is not "either or". While customers are increasingly, channel agnostic and more comfortable using their smartphone as their portal, they call on staff who are trained to help and engage.

Far too many retailers are making assumptions, or simply doubling down on what they know. More retailers need to ask their customers how to improve their experience. So many of these decisions regarding investments in people vs technology are measurable. When in doubt, retailers need to test what works best for their customers. Kudos to Macy's for testing VR and technology in selling furniture in their stores. The stakes are simply too high to guess where to invest. Just ask Toys R' Us.

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