Reimagining the Consumer Experience:
The Frictionless Future
The future is now, which I learned first-hand, prior to COVID, when my team worked to open the first frictionless store in Southern California, Quick Eats. This new world thrust upon us by an unprecedented global pandemic has changed the game in a way that no retailer could have planned for. The pandemic is the biggest retail disruptor since Amazon. The consumer is now setting the expectations that you must fulfill, which includes low touch/no touch, while delivering a more personalized experience. This includes an omni channel last mile. This is compounded by a labor crisis that challenges even keeping the doors open 24/7.
Survival demands that retailers change by design and not by default. There isn’t time for experimentation or knee jerk reactions. We must have an innovative and transformative strategy. We are now ‘officially’ labeled an essential service, while still mired in the old-world challenges, such as outdoor EMV, which has consumed our time, attention, resources and budget. Our existing store technology has aged during this time, so, what now?
Adding insult to injury, is a labor crisis. We haven’t been able to fully explain the cause, but explaining it pales in comparison to solving it.
With COVID restrictions relaxed, hospitality expected to hire 1 million people in April. According to the Bureau of Labor Statistics, the reality is 266,000 jobs were filled and the sector is down 2.8 million jobs compared to pre COVID times. In April, there were 8 million job openings and 9.3 million unemployed people. One school of thought is the benefits being offered allows people to be more selective in the job they eventually accept.
Many retailers have tried to stem the tide with danger pay and ramping up recruitment efforts in order to find and more importantly retain talent. A customer of ours, with 600 stores has committed $28 million in danger pay since the onset of COVID and recently committed an additional $50 million in perpetuity, through increased wages. This begs the question of whether this is a stop gap measure or could that investment be better spent in reducing our reliance on the traditional labor force? Could a long-term strategy of automation lead to a smarter store, built for the long haul? More importantly does this provides a much-needed opportunity to redefine the roles of our associates, while transforming us into a technology first workplace that Millennials want to work for. We can now leverage our in-store associates as brand ambassadors whose purpose is to enhance the consumer’s experience, differentiating you from the competition. Don’t be lulled into the belief that offering a higher wage to scan cokes and smokes will keep the staff you have. We are quickly learning it may not be enough to entice the 9 million unemployed to fill out an application for employment.
Declining automation/robotics prices coupled with increased labor costs should not be ignored. Some studies suggest technology prices have declined 65% since 2015.
We’re in the middle of a perfect storm that is forcing us to transform everything we thought we knew and not just define a new strategy, but accelerate the execution of that strategy.
In the past year we have seen some startling trends:
- E-commerce Up 129%
- Spending on Meal Delivery Up 70%
- More than half of Americans are using contactless payment
- More than 1/3 of Executives in a recent survey said they are in- vesting in automation as a direct result of COVID
As the landscape continues to morph, so should we. The terms “frictionless” and “low touch/no touch” carry different meanings for everyone. For this reason, it’s important to define your end state before evaluating what will enable it. A technology first strategy is the key, rather than selecting technology that defines your strategy.
At its most basic, we can define frictionless retail as a platform that helps retailers design and develop a less labor intensive checkout in a variety of formats. Retailers are looking for scalable and cost-effective solutions that run the gamut from self-checkout, walk up camera vision enabled shopping on the forecourt to a fully autonomous store.
One size does not fit all, so look for part two of this article to explore some of the available solutions in operation today.
For more information,
contact Fiona Harris