Retail Technology Simplifies Business
Ever since Orson Wells made his infamous 1938 radio broadcast of “The War of the Worlds” we have been taught to fear technology. Remember “2001: A Space Odyssey?” and its murderous computer HAL? How about “The Terminator” series which told us machines would take over the world? Even lighter films like “War Games” taught us not to mess with tech or it would follow us around like a “Chuckie” doll. It seems many people who grew up watching those movies have gone into retail sales and still have an inherent fear of retail technology. As FDR famously said: “We have nothing to fear except fear itself.”
A study released in January 2019 by market research company SSRS indicates that 42% of small business owners admit they don’t use retail technology to its full capacity. Thirteen percent of the study group said “we do not use any technology” in their business on a weekly basis. And 10% said they limit the use of it because “they are just busy getting the job done each day.” Trusting retail technology, however, can make doing those jobs easier, more efficient and more accurate.
Technical Evolution, Not Revolution
An examination of what types of retail technology businesses are buying, and how much they’re buying, reflects a large trust issue. Total Retail’s “2018-2019 Retail Technology Report” released in January 2019, shows that even though the retail industry is continuing its digital evolution, in many respects it’s moving about the same speed as natural evolution which isn’t exactly fast. Most respondents – 37% – said they did not plan on investing anything on emerging technologies in the following 12 months.
Not investing in emerging technologies – mobile apps, artificial intelligence (AI), machine learning (ML), marketing automation, dynamic digital signage, and augmented reality (AR) – doesn’t mean they aren’t buying or updating their retail technology, though. Well-established tech solutions – point of sale systems (POS), e-commerce platforms and analytics – are the leading retail technology investments and, not surprisingly, are the three technologies at the top of the list in terms of current use. E-commerce platforms are in use by 57% of the survey respondents, 49% rely on a POS, and 45% use some kind of analytics. Inventory management software, very often part of a retail platform, was fourth on the list with 40%.
All four of these digital solutions are back-office labor, time and cost-saving tools that have a measurable return on investment (ROI). Not surprisingly, store owners more easily trust established, tried-and-true technology. Let’s face it: Back-office retail technology just makes doing business easier.
Learning to trust technology is often a result of simply using it regularly.
Ross Martin, who owns Caledonia Village Ace Hardware in Caledonia, Michigan, uses Paladin Data Corporation’s retail technology to keep the right mix and optimum quantities of products in stock. One of the system’s features, Suggested Ordering, uses sale transaction data and analytic algorithms to eliminate hours of price shopping and automatically generate inventory orders to maintain the ideal amount of stock on hand. Using it has helped the store achieve an in-stock percentage of approximately 98%, which Ross says helped him earn Ace Pinnacle status as a top-performing store two years in a row.
“Our store uses Suggested Ordering 100%. Ace considers 95% really good and we’re always above that,” he says.
Dave Billman simplified his life in his store, Clinton Hardware in Clinton, Massachusetts, just by using retail technology he researched and purchased. He says mapping his store with location codes and trusting his Suggested Ordering reports has allowed him to eliminate inventory that doesn’t sell and replace them with items that do. It also lets him to track his departments and easily reorganize when he adds new products.
“I have full confidence in it keeping my store stocked but not overstocked. I love it,” Billman says of his in-store retail technology.
“You have to allow technology’s use of sophisticated forecasting models to automatically tailor your inventory to meet your customers’ expectations,” says Dan Nesmith, founder and president of Paladin Data Corporation.
Running contrary to the current investment trend, the “Retail Technology Report” also shows that half of business owners say they would invest in online and in-store customer-facing tech quicker than back-office applications. Much of the emerging technology is customer-facing. And its development has been driven by brick-and-mortar retail’s desire to enhance the in-store shopping experience and compete with the virtual toys e-commerce offers.
The National Retail Federation (NRF) recently surveyed consumers to gauge their expectations of and satisfaction with retail technology. Katie Jordan, NRF manager of Research and Industry Insights, writes in her blog that retail technology both in-store and online has improved the shopping experience.
“Today’s shoppers expect innovation from retailers, particularly millennials. Consumers find it important that brands offer technology throughout the shopping journey, particularly when it comes to taking the guesswork out of the pre-purchase experience. Millennials across the board are the most likely to say it’s important that retailers offer innovation or technology that helps them shop,” Jordan says.
Much of the front-end retail technology involves creating cohesive, cross-channel marketing and product offerings often called “omnichannel.” The channels involve the in-store and online marketing, shopping, and sales experiences that work together in both digital and brick-and-mortar stores. While e-commerce has been given credit for the retail evolution that has forced many large retailers out of the business, the fact is that as much as 80% of sales still happens in brick-and-mortar stores.
Top Shelf Tech
Respondents to the SSRS survey say their websites initiated their use of technology and they continue to be the most used. Retail technology being utilized includes:
Websites – 59%
Cloud-based solutions – 40%
Mobile apps and interconnected devices – 28%
Analytics, tools and reporting – 20%
CRM, marketing and sales – 19%
Artificial intelligence – 6%
Facial recognition – 2%
The Total Retail report shows that inventory management and ordering continue to be the favorite technology of retailers. Marketing automation, powered by artificial intelligence and machine learning, are the emerging technologies of choice because of their wide-spread applications. Amazon and Google sales and searches are the most obvious example of how AI and ML can customize or personalize product offerings.
Do a product search and then venture out onto almost any website. Notice how many products are inserted into your online content that are the same products you searched for, or are similar? Customized offers!
Independent businesses increasingly have access to programs that can place their inventory into localized product (Google) searches.
Whatever your opinion of retail in-store technology, it is improving the customer shopping experience. The NRF poll shows that three out of five consumers feel retail technology has improved their shopping experiences, and eight out of 10 say they have better interactions with retailers because of technology. Millennials, the largest demographic of shoppers, are happiest with the improvements.
Respondents who agree that shopping technologies and innovations improved their experience:
Online shopping – all consumers 80%, millennials 87%
In-store shopping – all consumers 66%, millennials 80%
Mobile shopping – all consumers 63%, millennials 87%
Much of the emerging retail technology attributed to the industry evolution and credited with improving customer shopping experience has already become mainstream. Self-checkout is now the norm in many large and medium-sized stores. Voice shopping is on the rise, too, thanks to Alexa, Siri and Google. Market research company, eMarketer predicts that 38 million U.S. consumers will shop through voice services by 2021, an increase of 14.4 million over 2018.
Making Retail Technology Pay Off
A study published in Retail Dive says roughly 90% of consumers indicate that in-store shopping offers the highest satisfaction among purchasing options. Those numbers are spread across the generations, too. Shopkick, a company that creates shopping apps for mobile devices, conducted a recent survey that shows that 55% of Generation Z shoppers – those born between 1996 and 2010 (the generation following millennials) – indicated they would do the majority of their holiday shopping in stores. That number is surprisingly a tick higher than Baby Boomers (54%) who have been the foot soldiers of in-store shopping for generations.
All those shoppers expect in-store technology that is helpful and stimulating. That means retailers who are interested in keeping their businesses at the forefront of commerce need to overcome their fears and invest in retail technology.