Isabelle Bajeux-Besnainou, Dean of McGill University’s Desautels Faculty of Management
A year ago online retailer Amazon opened its first Amazon Go store, introducing its Just Walk Out Technology which allows customers to grab what they need and leave without checking out. Since the debut of the Seattle outlet, Amazon has opened up eight more locations. Chinese e-commerce giant Alibaba has opened 65 “offline” stores in the past year, revolutionizing the shopping experience with the help of robots, apps and an overhead conveyor belt.
The world of retail is changing at a dizzying pace, and the transformation extends far beyond online shopping. A report issued by the World Economic Forum in 2017 on the future of consumption noted that retail is becoming more “inspirational, exciting, simple and convenient” in order to meet the needs of the empowered consumer. McGill University is embracing this change, having recently launched the new Bensadoun School of Retail Management to lead research and prepare the next of leaders to navigate today’s new retail landscape. As co-chair of the World Economic Forum’s Global Future Council on Consumption, I was in Davos in January to meet with global leaders and explore how game-changing technologies can enhance retail models.
Disruptive technologies are intimidating and many organizations are slow to adapt. While Amazon and Alibaba are overhauling the grocery shopping experience, major chains are struggling to implement basic technologies. Only 5 per cent of grocery purchases around the world are completed online. Granted, e-commerce in supermarkets presents some unusual challenges, as products are bulky and often perishable.
Online shopping, however, is not the only way to provide shoppers with a convenient experience they want. New research into artificial intelligence and Big Data offer novel ways to minimize the frustrations experienced while shopping in-store. How many times have you wandered up and down the aisles of a store, peering at the overhead signs while searching for an elusive item on your list? Major chains have introduced self-checkouts to avoid long lines and save labour costs – although the systems aren’t perfect. (Ever had to wait for a clerk because you double-scanned your milk?)
In an age when consumers use their phones for everyday tasks, such as hailing taxis or paying bills, it would be great if our devices could tell us where we could find the rolled oats. Picture a tool that could help us locate items in the grocery store; one that scans an object, compares prices with other retailers and searches the web for relevant coupons or promotions; one that gives potential buyers insight on nutritional value or allergy information. Imagine how you would interact with such a tool and how it would improve your shopping experience.
If traditional retailers don’t embrace new technology, startups will fill the gap. Meal-kit companies already deliver ingredients and recipes for healthy meals directly to your door, bypassing the in-store search for items, lineups and even the mental effort required to conceive your weekly meal plan. Delivery apps have expanded your choice for takeout to include healthier options. Ride-hailing apps have extended their offering to deliver local premade meals to people’s homes.
It is unlikely that we will stop buying things because the experience is unenjoyable, especially when it comes to necessary purchases such as food. However, it is likely that where and how we acquire our goods will evolve. Failure to adapt the experience will only increase the consumers’ rush to alternatives, leaving traditional retailers at risk.
There are many examples of retailers that are not afraid of change and the challenges of adapting to new technology and are actively piloting new ideas. The Aldo Group Inc. is a Canadian example of a company that has been leading this effort. The shoe retailer has an experience design lead, whose job is to build one of the most advanced and unified commerce experiences in fashion.
Some examples include a state-of-the-art inventory management system that enables customers to shop any store at any time, a mobile application for customers that can be used for both browsing merchandise and requesting a shoe size in store, and a mobile application for sales associates, providing access to inventory and making client services seamless.
Walmart is another example of a company that is actively piloting new ideas. Despite being known as a retailer of goods and food, they are quickly becoming known for the technology they are integrating into their company. Walmart has secured strategic partnerships, collaborating with two tech leaders: Microsoft for cloud computing and Google for voice-activated shopping. It has also made a number of acquisitions and investments in its e-commerce platform, along with investments in in-store automation that will eventually enhance operations efficiency within its nearly 5,000 stores.
My advice: Improving the shopping experience does not need to start with a complete revolution of the business model. Look into your customers’ desires to determine how new technology can help address these. Startups may always be the first to push the envelope, but established retailers need to be fast followers.