Whereas digital expertise has arguably pushed customers away from bodily shops, it additionally holds the important thing to bringing them again. By integrating digital components into small format areas, retailers can recreate the net purchasing experiences clients crave.
Photograph: Generated by AI. Adobe Inventory.
The comfort, countless aisles and personalised experiences supplied by on-line retailers have reshaped shopper conduct, drawing clients away from conventional retail shops and in direction of on-line retailers.
And with the pandemic bringing in-store purchasing to a halt for a lot of months, on-line purchasing shortly turned the default selection for a lot of — creating new challenges for retailers.
Regardless of in-store foot visitors being up 6.5% this yr, large division retailers like Macy’s, Nordstrom and Bloomingdale’s have continued to shutter their doorways. That is as a result of in contrast to their on-line counterparts, brick-and-mortar retailers must grapple with vital overhead prices, together with hire, utilities, inventory vary storage and staffing. And these bills, coupled with the necessity for in depth bodily stock and the problem of replicating the personalised on-line purchasing expertise, have made conventional retailer fashions much less sustainable.
As a substitute, retailers are reviewing their footprint and leaning into small format shops. In these areas, that are a fraction of the scale of big-box shops, retailers can present higher service and a extra curated number of merchandise with out the additional overhead prices.
However even with the benefits of small format shops, retailers nonetheless face a number of challenges. As an illustration, customers nonetheless aren’t assured the identical degree of personalised suggestions they get when purchasing on-line. These smaller areas additionally restrict product choices in comparison with bigger shops and their decreased backroom measurement restricts the quantity of stock the shop can maintain.
So how can retailers tackle the shortcomings of small format shops whereas sustaining their core advantages? The answer lies with digital expertise.
Whereas digital expertise has arguably pushed customers away from bodily shops, it additionally holds the important thing to bringing them again. By integrating digital components into small format areas, retailers can recreate the net purchasing experiences clients crave whereas preserving the advantages of in-store purchasing comparable to having the ability to see, really feel and take a look at on merchandise.
Listed below are 3 ways retailers can leverage digital applied sciences to optimize small format areas:
Use AI to reinforce the client journey
On-line, retailers have mastered the artwork of utilizing algorithms to foretell buyer needs. In-store experiences, alternatively, usually lack this degree of customization. Whereas employees can present suggestions, these interactions might be inconsistent and sometimes hindered by elements like time constraints and associates’ lack of detailed product data.
Retailers try to bridge this personalization hole with small format shops. With a extra targeted and curated product choice, gross sales associates can higher perceive the merchandise and supply extra detailed suggestions. However in contrast to bigger shops that may accommodate a bigger workforce, small shops usually have a lean staffing, that means that in peak hours or sudden rushes, associates might wrestle to offer personalised service to each buyer.
To raised assist employees effectivity, retailers can incorporate AI expertise into their small format shops. With practically six in 10 customers (59%) interested by utilizing AI purposes once they store, incorporating this digital expertise into the bodily retail area cannot solely bridge the hole between on-line and in-store purchasing, but in addition present customers with a singular and novel expertise they can not get elsewhere – all whereas releasing up employees time to allow them to give attention to constructing deeper and extra significant interactions with customers.
From the second a client begins utilizing the AI expertise, whether or not it is on their telephone or a retailer interface, they’ll obtain real-time personalised suggestions based mostly on their present looking patterns, product interactions and even previous buy historical past. These suggestions assist information clients in direction of merchandise which can be completely aligned with their type preferences.
By figuring out upselling and cross-selling alternatives, AI will increase clients’ basket sizes and additional drives income. As clients proceed to interact with the expertise, they will obtain much more personalised product suggestions, additional enhancing their purchasing expertise, driving repeat enterprise.
Digital self-service can assist showcase product stock
In contrast to their on-line counterparts, bodily shops have restricted area to show product choices. That is a good greater problem with small format shops as they need to continually rotate show areas to showcase their whole assortment of merchandise. This limitation means a loss on each direct prices — misplaced gross sales from clients who cannot discover what they need — and alternative prices — lacking out on further gross sales as a result of they don’t seem to be conscious of the complete product vary.
With digital platforms strategically positioned all through the aisles, retailers can provide customers entry to their whole product ecosystem, no matter whether or not the particular gadgets or sizes are bodily obtainable in-store. Buyers can have the power to seek out precisely what they’re on the lookout for, even when it isn’t on show, and even present them merchandise they did not know they wanted — preserving them from leaving the shop with out shopping for.
One retailer that has efficiently finished that is Australian specialty retailer chain Between the Flags. With places surrounding world-famous Bondi Seaside, Between the Flags is the go-to vacation spot for locals and vacationers looking for fashionable Australian Sheepskin Boots. Whereas its smaller shops had been supreme for the seashore, Between the Flags discovered that it was not possible to showcase your entire assortment of trainers in simply 6 toes of obtainable show area. The restricted room additionally made it tough to trace buyer preferences for particular types, leading to wasted backroom stock devoted to slow-selling boots.
To unravel for these points, Between the Flags labored with digital retail platform tutch to position a show with an interactive display screen straight close to the boots. The platform shortly drew clients in to discover your entire boot assortment — obtainable each in-store and on-line. Because the platform started studying extra about clients’ preferences, it additionally started making real-time personalised suggestions about different gadgets within the retailer. Consequently, Between the Flags elevated its total income by 64%.
Built-in expertise can compile insights to trace what clients purchase
Restricted backroom area in small format shops necessitates stocking merchandise that clients actively search. But it surely’s laborious for retailers to take action in the event that they depend on outdated stock monitoring or plain instinct.
With digital applied sciences comparable to self-service platforms and cellular units, retailers can compile insights as to which merchandise clients are shopping for — and which of them they don’t seem to be . This fashion, they’ll make knowledgeable choices about stock administration, making certain that fashionable gadgets are at all times in inventory whereas minimizing wasted area on slow-moving merchandise.
With Between the Flags, tutch’s digital platforms helped them perceive which sheepskin boot types had been hottest and which weren’t. They had been then capable of leverage their restricted area successfully by stocking the preferred boots in-store whereas concurrently providing on-line ordering for others, leveraging their restricted area successfully. Consequently, they decreased total inventory holdings by 28% whereas nonetheless providing the complete assortment for on-line ordering.
Small format shops have emerged as a viable response to the challenges posed by on-line purchasing. By seamlessly integrating digital applied sciences, these areas can supply the most effective of each worlds: the comfort and personalization of on-line purchasing mixed with the tactile expertise of in-store looking. Collectively, these mark step one towards a future the place the bodily and digital retail experiences converge to fulfill customers’ calls for for a constructive purchasing expertise.
