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The Future of Retail – Is It Touchless?

15th November 2020

Covid has made all of us more aware of what we touch in public spaces. And, as health concerns over Covid have now been with us for many months, new behaviours have become ingrained habits that are probably here to stay.

It’s no use trying to swim against this tide. Every retailer must take a fresh look at how their customers prefer to shop and make it easy for them to do so. Or they will risk losing their customers to competitors who give them what they want.

For most businesses that means an increasingly digital and multi-channel operation.

Pure play digital retailers have had the advantage in our new Covid world. They offer the ultimate touch-free solution and have established fulfilment routes, although some have struggled to cope with huge volume increases. High sales during the pandemic period have helped Amazon double their net profit this year to $5.2 billion and the recent Quarter 2 sales have been higher than the Christmas quarter of 2019.

Most digital-only retailers consider their biggest challenge to be the “final mile”, as it represents the most expensive and complex part of their process. If you turn this view on its head and look from the customer perspective, the biggest issue with online shopping is the first mile of the returns process. Whether you’ve got to go to a parcel office or designated drop off point, it’s just not as easy as ordering your items. Smart retailers are increasingly offering a returns pickup service. Physical retailers have the advantage of stores that create the opportunity for a convenient returns process for their customers and the possibility of an extra sale from the additional footfall for the retailer.

However, retailers that started with physical stores tend to be on the back foot when it comes to touchless and digital customer journeys. Some physical retailers have buried their heads in the sand and hoped the fad for touchless would pass over. These businesses are now struggling to remain viable as online research and purchase is an increasingly attractive customer proposition. Most store-based businesses offer a touchless route, however, yet only the sharpest have a truly integrated operation that allows customers to seamlessly move between multiple channels; whether instore, online, or via a call center.

So where should retailers focus to align themselves with entrenched touchless trends?

1. Payment instore is moving away from the system of customers queuing to pay a colleague at a till. The use of contactless cards, rather than chip and pin or cash, has become customers’ preferred option. It saves operational time instore as the payment itself is quicker and it reduces time spent handling hard cash.

But the real transformation in payment has been because of technology that helps skip the line altogether. Self-checkout tills have been around for years and are now being superseded by customer apps that enable self-scan and payment from your own device or a handset. Retailers are now juggling with a mix of payment methods that require new instore furniture, a revised front-end layout and different colleague cover models. The customer experience you deliver during payment creates a lasting impression that will influence where the customer chooses to shop in the future.

2. Digital fulfilment via stores, whether kerbside collection or picking up a Click and Collect parcel instore, is a moment of truth that really matters to busy customers expecting an efficient experience. It took me 45 minutes to retrieve my grocery order by kerbside collection at one store, and I couldn’t just drive away as I had already paid for my shopping. The store’s errors were not having enough colleagues to match the number of booked pickups and the collection point being a long way from their storage bay, so it took ages to wheel the order over. They sound easy to avoid, yet these seemingly simple to solve problems happen more often than you’d hope. Follow the simple rules of match your resource to the order numbers, keep the storage and collection points close to minimize travel time, and make sure your colleagues are trained on your process and you’ll drive both online and instore sales

3. Map all your customer journeys and make sure there aren’t any missing. For returns, for example, does the customer have multiple options or are you restricting them to just returning to one physical location? Many retailers have realized they need new customer journeys and Covid has spurred them on to make changes in weeks that were previously under consideration for months and even years. Don’t get left behind because there will always be a competitor willing to look after your customers better than you do.

4. Review every stage of every journey and check it is smooth for your customers and as efficient as possible for your operation. It is likely that you will have work to do to integrate your physical and digital routes, which is a driver for digital investment. KPMG’s research over the pandemic period for its Enterprise Reboot report found that 59% of executives say the pandemic has created the impetus to accelerate their digital transformation.

5. If you invest in technology to help your touchless journey, whether that is new kiosk payment or RFID stock systems to reduce counts instore and help you publish accurate stock numbers to customers shopping online, make sure you consider how your operating model needs to flex to accommodate the technology. For example, adding self-checkout tills reduces the cover needed on traditional tills, yet you must decide the model you will use to support customers at self-checkout tills when they need help. Dodgy scales, systems that can’t cope with coupons and difficult to use customer interfaces all drive increased requirement for colleague interventions and annoy customers. Consider too, how you target and incentivize your store teams to make sure they drive the right behaviours. If helping a customer with an online order doesn’t help towards a team’s sales target or returns are netted off the daily sales total, the store team is unlikely to go out of their way to make things easy for the customer.

Touchless retail is already here. How you adapt to it and evolve your operation as customer habits and preferences continue to change will determine how successful you are.