Automation is fast becoming an integral part of the consumer’s shopping experience, whether they like it or not. In fact, automation already has its roots firmly in the retail sector—especially when it comes to back-end processes such as supply chain and inventory management. Walmart already uses automated systems to solve ‘last mile’ delivery issues and the German eCommerce brand, Otto Group, has reduced its out-of-stock rates by 80% using cloud-based machine learning.
On the front lines, where consumers interact with brands online or in store, traditional business models are no longer drawing the attention of savvy shoppers. To thrive in the new age of retail, brands have evolved using technology to simplify the sales process and intuitively market products and services to meet their customer’s expectations.
Despite the expansion of Amazon Go’s ‘check-out-less’ supermarket in the U.S., we’re far cry from a frictionless retail landscape that’s void of human contact. In fact, only 2% of consumers who own an Alexa-enabled device actually made a purchase with it in 2018.
Despite consumer demand for greater convenience, people still want an element of control when it comes to purchasing goods and services. But this doesn’t mean automation can’t enhance their shopping experience and benefit their everyday lives.
Take the connected home, for example. Smart home devices like Google Home and Amazon Echo, which control lighting, fridges, and even washing machines, are just a few ways in which consumers receive the benefit of convenience through automation—driven by the promise of reduced energy consumption and overall household savings.
Smart speaker adoption grew to 24% in the first quarter of 2018 in the U.S.—up from 22% in the prior quarter. In the UK, smart speaker usage doubled in 2018, resulting in a 14% penetration of the market, and is expected to rise to 19% in 2019, according to eMarketer.
While these may seem like small increases, it’s a clear indication that consumers are generally warming up to the idea of a more connected way of living at home.
The ability to deliver richer personalized, contextualized experiences to provide increased value for consumers and push the boundaries of smart home solutions is the next big challenge for smart-speaker manufacturers.
Changes in attitude
Outside the home, AI and VR are creating widespread opportunities for retailers to develop tools that streamline the purchasing process and provide personalized shopping experiences. There’s a growing appetite for this type of technology as consumer expectations become more sophisticated both on- and offline.
A recent survey by Oracle indicates that 65% of U.S. consumers like the idea of using virtual reality to navigate the in-store experience, as well as having a handpicked wardrobe to try in store. Furthermore, 58% of consumers said they liked the idea of having a grocery store suggest a shopping list for their approval based on their purchase history, as well as social and geographical data.
While the age range of this demographic isn’t clear, it’s likely that the appetite for smart tech to lead the shopping experience is influenced by younger generations, who are more accustomed to technology and the way it impacts different areas of their lives.
Despite these encouraging figures, brands should still err on the side of caution, no matter how enthusiastic consumers may appear for an automated shopping experience. Although consumers in the Oracle survey were interested in grocery stores recommending shopping lists based on behavioural data, 54% of consumers indicated that automatically charging and shipping their recommendations was too invasive.
When it comes to the exchange of customer data, trust remains the linchpin of these automated processes to ensure retailers don’t overstep the mark and alienate their customers.
China’s automation boom
One market that’s getting automation right is China. By building systems around digital applications and tools that consumers have grown accustomed to, such as social media and QR codes, businesses of all sizes are thriving by adopting what’s known as ‘automated convenience’ to engage with customers.
Wufangzhai, a 97-year-old Chinese restaurant chain, halved its labor costs in one branch and increased sales by 40% after introducing an automated system that incorporates mobile payments through the Alipay app using QR codes.
Unsurprisingly, startups have influenced the trend to go staff-less in China. However, major players such as JD.com and suning.com have also entered the race to make automated customer services the new norm.
Alibaba has already opened up a shopping center next to its headquarters with self-serving tills that accept Alipay. There’s also a hotel without a reception desk in Chengdu where guests can make reservations by sending their identification online and then check in using cameras.
Although there’s a lot of catching up to do in the West, we’ve already seen brands such as Sephora and Burberry embrace modern technology to transform their physical stores and provide customers with an enhanced shopping experience.
There’s strong evidence to suggest an increase in positive sentiment when it comes to the use of automation to improve the quality of products and services and make them more accessible to consumers.
Luxury fashion eCommerce retailer, Farfetch, has certainly staked a claim on what an automated store might look like in the West with its concept store: the Store of the Future. Here, the brand showcases the latest in retail technology and aims to revolutionize the way customers discover new lines, purchase products, and interact with staff.
With the rise in popularity with athleisure, Nike recently opened its Nike House Innovation Lab 000, which takes customer service to a new level. Not only can shoppers customize their own running shoes, but with the use of a proprietary app, Nike can tie in online and offline activity, allowing customers to self-serve in-store or request one-on-one shopping consultations.
It’s clear that some brands are starting to understand the evolving desire for automation. By investing in the latest technology, retailers are able to tap into these changing attitudes at a pace that consumers are comfortable with, all while setting the benchmark for the rest of the industry.
But if brands really want to provide customers with a shopping experience that’s personalized, contextualized, and convenient, access to customer data is vital.
With the enforcement of GDPR and the recent Cambridge Analytica scandal, today’s switched-on customer is more cautious than ever when handing over their data. Online customers find it frustrating if they can’t check out without a registered account, and frequently opt-out of marketing communications when purchasing goods online and in store.
Despite these attitudes, research suggests that consumers in the UK and U.S. are more likely to hand over deeper and more specific information in order to save money or improve the services they receive. If retailers want to win over customers with automation, a combination of trust, transparency, and added value for the consumer will be the vital ingredients to success.