How Brick-and-Mortar Stores Can Use ReTech to Build Sales
The share of offline sales in retail has been decreasing due to the growth of the online segment. Analysts at Tranio international real estate platform outline options for innovative retail technologies (ReTech) for retail stores to help reverse this trend.
Offline, or brick-and-mortar, retail continues to go through a period of dangerous drops in market share, with no end in sight. While the large majority of retail sales are still done in-store, the tea leaves are showing a weakness in this type of shopping in comparison to e-commerce. Between 2019 and 2022, it is expected that the share of offline sales in the US and Western Europe will decrease by 2.9% to 82.4% according to the Boston Consulting Group forecasts.
In comparison, the total volume of sales in e-commerce will exceed a trillion dollars in 2020, amounting to 16% of retail sales, a steady increase over the past decade. What’s more telling is that according to statistical research newer generations prefer to shop online in higher and higher percentages as opposed to in-store. As seen in the United Kingdom, this trend is leading to a steady decline in the number of retail stores in recent years.
How Innovative ReTech Can Come to the Rescue
To offset the increasing market share of e-commerce sales, Tranio experts recommend that retail property owners and property managers increasingly turn to retail technology, innovative technologies to optimise sales in their brick-and-mortar stores. By employing ReTech, or retail technology, shops can survive the competitive struggle with their online counterparts by providing consumers with experiential retail, the idea that shopping is an interesting experience other than just a way to buy something that is needed. ReTech is more frequently being used by shopping malls—which are seeing a massive hit to their sales from online retailers like Amazon—providing leisure retail to their customers to ensure they don’t just buy products, but have an entire shopping experience.
Most online buyers will tell you that the most important benefits of shopping online are convenience, selection, and technology’s ability to promote items the shopper never would have seen. To attract buyers to their brick-and-mortar stores and build sales, owners are increasingly turning to innovative digital retail technologies to match these online conveniences and also provide a fully interactive shopping experience. Certain ReTech solutions—including Wi-Fi for customers, in-store shipping and pickup, location-based and real-time marketing, in-store app enhancement, electronic catalogues, smart mirrors in fitting rooms, self-checkout, and Artificial Intelligence (AI)—can customise the experience to each customer’s needs and shopping tendencies. For example, brick-and-mortar shops can provide buyers with an interesting shopping experience by offering clothes fitting with the use of augmented reality technology and supply stylist consultants with AI-based equipment.
Imagine a fully customised shopping experience where you step into a store and your phone immediately logs into the Wi-Fi and opens its shopping app, showing sales, discounts, and new items tailored directly to your tendencies and preferences. As you move from department to department, the AI on your app tracks which items you’ve placed in your cart and shows you complementary items, offers similar items that may be cheaper, or offers you discounts on purchases you’ve removed from your cart. When you enter the fitting room, a specialised smart mirror welcomes you to the store, shows the price of the items you’re wearing, notes other products that would enhance your outfit, and offer an online purchasing option right there to complete a sale. The store has not only built valuable data into a specific shopper’s tendencies but can exceed the experience and convenience of online shopping.
Shift Your Business from High- to Low-Risk
As reported by Cushman & Wakefield, certain types of real estate can be classified as low-, medium-, or high-risk, based on certain risk reduction factors faced by retail property owners:
ReTech helps to shift the classic retail business model to protect from threats by online retailers, while enhancing and developing an entirely new experience at the same time. For brick-and-mortar owners and property managers, this new type of retail development aligns with the business-to-business (B2B) space-as-a-service (SPaaS) concept of developing retail space into a high-technology service. By combining ReTech with certain AI-based property technology (PropTech) solutions—such as real-time parking locations, in-app maps of store locations, sensors to track your movements in the retail store and provide suggestions for finding certain types of products, mobility solutions for navigating malls, or transit schedules to return home quickly—retail stores can shift themselves from medium- and high-risk market segments into low-risk businesses. To help understand what trends can be used by savvy store owners, Tranio experts have outlined some of the top AI-based solutions help to increase sales:
- Consumer Experience Solutions. Used at the stage of goods' realisation as part of the product lifecycle management, these technologies allow the buyer to have a new purchase-related experience (e.g. clothes fitting with the use of augmented reality). This solution successfully attracts the attention of non-repeat buyers, such as tourists. For return shoppers, this will help create an additional motivation to visit the shop repeatedly. These ReTech instruments can be used through digital devices, either the consumer’s phone or a shopping cart mounted tablet. This type of technology is recommended for use for such retail property types as high-traffic shops on the main streets of mid-sized and small cities.
- Buyer Behaviour Solutions. To drive sales growth, store owners should focus on enhancing two business processes: pricing optimisation and product promotion. To achieve these improvements, buyer behaviour should be monitored and analysed to promote valuable promotions tailored to the shopper. Marketing activities should be reliant on understanding shopper analytics—for example, consumer clustering and goods correlation—to ensure customers find the products they are looking for and to help owners stock complementary good in the same location. By implementing ReTech and Proptech into their stores, shoppers can be tracked through digital devices to understand common movements in the store. Ideal uses for buyer behaviour technologies are supermarkets located outside of city limits in the suburbs, shops located on the main streets of mid-sized and small cities, department stores, and hypermarkets.
- Convenience-focused Solutions. Technologies that enhance the purchasing process help drive sales growth primarily by pushing inventory optimisation. By tracking inventory to make it available for consumers, digital devices such as electronic catalogues and mobile apps can be used to ensure that a consumer who is ready to buy will always have their item in-stock and readily accessible. By using PropTech solutions like digital and mobile devices and item-level RFID, store owners will never experience the loss of a sale due to products being out of stock. The recommended retail locations for these solutions are second-tier shopping malls, supermarkets located outside the city limits and in the suburbs, shops on main streets of mid-sized and small cities, department stores, and hypermarkets.
- Customer-focused Solutions. Sales growth can be driven thanks to pricing optimisation based on the examination of a customer's individual preferences. This concept, called “clienteling,” provides a personal level of attention on the customer through ReTech and PropTech. By using these technology solutions, owners can customise recommendations for shoppers, ensure promotions are targeted directly to them, and even greet a customer by her first name. Recommended to use in the second-tier shopping malls, shops in the main streets of small cities, hypermarkets.
With the risk of deeper sales losses for main street shops located in mid-sized and small cities, ReTech and PropTech can help offset these changing market pressures. With online retail growing every year in key demographics, offline brick-and-mortar retail shops must optimise their sales tactics to compete with more convenient online shopping. For classic offline retail spaces, the use of ReTech and PropTech solutions will help businesses reduce risk based on their retail property type. By implementing these technology solutions, brick-and-mortar shops can focus their business on an experiential shopping process tailored directly to each consumer, promoting return shoppers, increasing sales, and building customer relations to ensure the viability of their business.
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