Open Retailing - Essential for a Successful Self-Service Strategy
Release Date: 10/23/2020
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Summary: In this podcast we will discuss how open retailing is vitally important to retailers today. The COVID-19 pandemic has created a lot of changes for retailers and we discuss the importance for retailers to change, adapt and evolve their consumer journey's as quickly as possible.
Host/Guest LinkedIn Profiles:
Jerry Langfitt: 00:00
Hello again, this is Jerry Langfitt, your host for this episode of COMMERCE NOW. In today's episode, we are joined by Matt Redwood, global head of self-service for the retail division, who is a known expert at helping our retail customers find a retail strategy that best fits their organization's needs.
Today, we will discuss how openness is vitally important to retailers today. There were a ton of changes in retail, what are some of the trends retailers need to adapt to, Matt?
Matt Redwood: 00:41 Retailers have really got a difficult period at the moment. Parking COVID for one minute, there's two pressures that are really driving them to evolve their value proposition as quickly as possible. The first is the ever-expanding or rising consumer expectations. Consumers are always looking for that heightened level of experience, particularly in-store, more so when you look at the shift to online.
So online is obviously extremely convenient, it's very quick. Consumers are still driven into stores because they value the face-to-face contact with that particular retail brand and the experience that they get in stores. So retailers are constantly under pressure to increase their in-store experience to meet the needs, or hopefully exceed the needs of their consumers shopping within their stores, and to try and capture that sale within that particular store to make sure that that consumer doesn't go elsewhere.
Similarly as well, heightening that experience within the store also drives that consumer to come back to that store. So in a period where brand loyalty you could say is at an all time low, it's even more important that they deliver the right experience, as well as a good experience for that particular consumer that's walked through their doors into their store.
The second factor that they're really having to focus on is the changing speed at which technology moves at. Technology's always been an extremely fast evolutive business, but it's really, really difficult for retailers to integrate new innovations or new technologies or new solutions in a sustainable way that supports their overall platform and ecosystem.
Obviously now COVID has come along, it's thrown another dimension into the mix, which is uncertainty and speed of change. Retailers had to adapt extremely quickly over the last 12 months to not only changing consumer trends as confidence or shopping habits changed, but also different regulations or legal restrictions in terms of how consumers shop within their stores. So, there's three massively fast moving influences here that retailers have to combat and navigate successfully.
Jerry Langfitt: 03:01 What's been their struggle right now adapting to that? Is it their own systems? Is it the solution provider systems? Where seems to be the biggest disconnect?
Matt Redwood: 03:11 Sure. So I think historically there's been certainly a lack of openness within retail IT, and that's something that's changing extremely quickly. It's being forced to change by retailers' requirement to constantly update or evolve their customer journeys or customer touch points within their store as quickly as possible to stay ahead of these trends. So retailers are really looking for open platforms now that gives them the ability to change, adapt, evolve, and ultimately improve their consumer journeys as quickly as possible. A closed system really doesn't deliver against that.
Jerry Langfitt: 03:51 It seemed like, at least in years gone past, solution providers for retail technology would say, "Here's my software, here's my hardware, and we'll change real slowly." So, the solution provider's been just as much to blame as the retailers for not being very open.
Matt Redwood: 04:06 Yeah, I completely agree. I mean, if you take the self-service business as an example, historically retailers have procured the hardware, the software and the services from one supplier. Which is absolutely fine and will continue to a certain extent in the future, but you're very much then locked into one particular platform, you're obviously dependent on the roadmap of that supplier.
So shifting to a more open infrastructure means that, A, you're not locked into a specific solution, you're not locked into a specific vendor and their defined roadmap and you're not locked into a specific process. So, it gives you the flexibility to be able to bring third parties or new technology or new solutions into your environment much easier and much quicker, but also it's giving retailers the choice and the power over their own IT roadmap. So no longer are they dependent on one particular supplier's hardware or software roadmap, they can actually cherry pick best of breed from the market and bring that into their ecosystem.
Jerry Langfitt: 05:08 Well, it's interesting, because when I'm talking to retailers, their level of sophistication with IT has grown exponentially. Whereas before all I needed was a cash drawer and a till, now I have many different types of paths that the consumer can take. IT has had to grow with that, to the point where even they're doing a lot of the software work themselves and they really want to control it. Consumers want to be empowered, as retailers I feel seem like they want to be empowered as well and be able to choose their own path.
Matt Redwood: 05:39 Yeah, I mean, ultimately, it's about giving the end consumer the choice to shop in the way that they want to shop. Really to do that, you have to take a good hard look at who shops in your stores, why they shop in those stores or at your particular brand and what good looks like to them. Then it's about building the right IT infrastructure to meet those expectations.
So gone are the days where you may have one, maybe max two or three touch points in a store, retailers now really need a kit bag of different solutions that they can pick different combinations of to really tailor the technology to each one of their stores. So it's not a one size fits all anymore, it's really about tailoring the technology, not just to your estate, but to each and every store to make sure that you're actually matching the technology to the expectation of those particular consumers within their store.
The best example to use is really when you look at a grocery retailer that may have three or four different store formats, right from the very smallest convenience store, all the way up to the supermarkets and the hypermarkets, the customers that shop in those stores may be the same person, but they may be shopping in a different time of the week, and certainly would be a very, very different consumer journey and expectations. Someone shopping at a convenience store, it may be an inner city worker that's coming to grab a lunch, so three items at lunch, or a couple of items that their wife has asked them to pick up on the way home. Transversely in a hypermarket, you're much more likely to have a family shopping to buy their weekly shop with 50, 100 items.
Now it may be that same consumer that's shopping across all store formats, but the expectation related to the customer journey or the shopping journey that they're on, that particular mission is incredibly different. So it's about understanding what are the different customer journeys that you have in your stores, finding the right technology, and then providing them with the touch points to deliver against those customer journeys in the most efficient and value rich way.
Looking further forward, retailers are really looking at how can we increase that consumer experience within the store? How can we make it as easy and rich as an experience for that particular consumer? I think what we will see moving forward, and back to the topic of this conversation why openness is so important, it's because some more emerging technologies such as facial recognition, item recognition, product tracker, people tracker.
All of these emerging technologies retailers are going to start to use them more and more to make sure that they can deliver a heightened level of experience in their stores to make sure that that consumer not only shops in that store once they're there, number two, they maximize the spend once they're in the store, and number three, they come back to that store to shop again. So being able to cherry pick best of breed in terms of different technologies or different solutions on the market, bringing them into the ecostructure for each store in your estate is going to be the important driver for openness in the future.
Jerry Langfitt: 08:44 Retailers, as the consumers need different journeys themselves, so you need a solution provider that can actually, okay, there's going to be a retailer that wants all the work done for them and you're going to have a retailer that wants to do most of the work for themselves. How does openness serve both of those types of retailers?
Matt Redwood: 09:04 Sure. I think this is the biggest change that we as suppliers have to appreciate and support moving forward, that every retailer is different. Although they may have stores that are similar, each value a different approach in terms of consumer journey, what's important to that consumer, the level of service they want to give, and also the level of staff interaction and technology interaction.
I think we as a supplier to the retail industry need to be very mindful of the fact that every retailer may want a slightly different approach, a slightly different value proposition or technology approach, and we have to be able to support that. The sustainable way of doing that is with an open approach. That gives us the ability to work with one particular retailer who may want off-the-shelf solutions, but they're going to combine different solutions in a different way to create the value proposition for their store.
We might have retailer B, who's really looking at taking a lot of the development in-house, so acting a bit like a systems integrator, where they bring best of breed from three or four different suppliers and merge them together to create the right value proposition. So, we as a supplier to retail or technology supplier have to be open in terms of how we work with retailers, how we support their future vision and their strategy, and ultimately how we enable them to take the best of our solutions and maybe merge them with other technologies.
Jerry Langfitt: 10:36 I recently read a study from McKinsey and they surveyed consumers this past March, then again this past June. In just 90 days, they recorded a notable increase in self-service preference by consumers. Does open retailing play a role here to adapt to this quickly changing sentiment?
Matt Redwood: 10:55 Yeah, absolutely. It's really interesting data that you talk about there, because I guess there was a risk when everything was heavily locked down and governments were changing the regulation almost on a daily basis. Retailers had to really react extremely quickly, not only to how they kept their staff and their consumers safe, but also what technology they used in the store. The interesting trend that was driven out of this was actually consumers' comfort level using self-service devices in stores actually increased quite dramatically.
It's a strange one, because the perceived risk is actually among human interaction and not interaction with technology. So, a lot of retailers really leveraged the self-service devices they had in their store, because it gave them more flexibility in terms of how they dealt with the changes. Quite a lot of retailers had a big shift in their operations that they had to deliver, quite often managing queues because they had restricted quantity of consumers inside the store and managing consumers out of the store in the car park. But also inside the store, just making sure they had products on the shelves, because consumers in certain times of the year were panic buying or stock buying.
So self-service not only enabled them to deliver the right customer journey, giving consumers that comfort level that they weren't interacting with other humans too much and they were safe, but also it freed up a lot of the staff that would normally be on checkout to actually go and work on some of those other tasks elsewhere in the store.
So, I think the underlying message is really that self-service gives retailers the flexibility to run the right operational model within their store, and to balance that, I guess, customer journey with staff utilization and efficiency. I think that's the overarching benefit that most retailers took advantage of through the last 12 months of COVID.
Jerry Langfitt: 12:54 Well, to go back to the original point though, what's happening with COVID is more of an acceleration of what we saw happening anyway with what you said about online shopping and needing to make the physical store much more relevant. So these aren't new things, but these are things retailers always intended to work on, and this is just accelerating everything. Correct?
Matt Redwood: 13:18 Yeah, absolutely. I mean, ultimately a lot of the trends that we're now seeing were moving in that direction anyway, all that's happened is we've accelerated that trend. I think the other trend that will be accelerated is actually consumers will start to demand more from their retailers and their in-store experience, because not only is it about choice in terms of shopping the way that I want for a most enriched experience based on my needs as a consumer, but also there's this safety and comfort element that consumers want this enriched customer experience, but they also want to do it in a way that they perceive as being safe.
So, retailers have really got to look at how they can bring even more touch points or even more customer journeys within their store to give those consumers that level of confidence that they need. So, retail is going to become much, much more diverse over the next couple of years where we see a much more blended view, not only between offline and physical in-store, but also in terms of the different touch points that retailers have in-store.
I think there'll be a lot more diversity retailer to retailer, but also among the retailer's estates, it really gives them the opportunity to have different mixes of technology in each one of their stores, depending on what the customer journeys are. So if anything, it will give consumers much more flexibility in terms of how they'll shop in stores in the future, and it will give retailers much more opportunity to engage with that retailer in the right way and ultimately influence that they shop more at their stores.
Jerry Langfitt: 14:55 Well, and that to me seems much more critical, because if I'm talking about my bank accounts, it takes me a lot of effort to change banks. However with retail, I can go from the grocery store across the street to the grocery store one block over, and I can get affected by the parking lot and how busy it looks. So it seems like the retailers, it's even more critical that they look to those new journeys to please the customers. No?
Matt Redwood: 15:22 Yeah, absolutely. I mean, ultimately competition amongst retailers is the highest it's ever been. Brand loyalty is probably as low as it's ever been, because a consumer knows that if they get a bad experience in one store, they go down the street and there's two or three similar stores that they can shop at. So, they're being very fickle in terms of shopping at the stores that they know that they get the level of experience that they expect.
I think one of the interesting phenomena when you speak to consumers is once they have a good experience in-store, that becomes their defacto base level and anything below that is then deemed as a bad experience. So, retailers have really got a tough job to make sure that they are continually enhancing the in-store experience, and obviously technology plays a huge part of that.
If we look at the self-service space as an example, friction points associated with self-service devices are 100% the focus among suppliers like ourselves, but also in retailers in terms of how we remove or reduce those friction points as much as possible. So looking at emerging technologies, such as item recognition or customer recognition to actually remove some of those friction points that consumers experience using a particular touch point.
Back to our openness topic, having the right open ecosystem that allows them to say bring a third party innovation and integrate it within their self-service environment is going to enable them to deliver a heightened level of consumer experience for the end user, and ultimately differentiate their in-store experience against one of their competitors.
Jerry Langfitt: 17:03 Now about that, when a retailer isn't open or when a solution provider isn't, what are we talking about the damage or the time it takes for someone to adapt? I mean, when you say incorporate a new journey, what's the negative of not being as open? It just takes much longer to react to the consumer, correct?
Matt Redwood: 17:24 Yeah, I mean, ultimately from a retailer's perspective, if your supply isn't open and there is a new piece of innovation or technology that you want to integrate into your store environment, you're very reliant on that supplier being able to build that particular solution or technology into their roadmap to then deliver to you. Ultimately, that's the wrong way round. It should be us as suppliers that are pushing the envelope with retailers in terms of what technology they should be putting in their store to deliver a heightened level of experience.
What the openness gives them is, it gives the supplier the ability to actually go to market and find the parties that may be beneficial, could enhance the solution. But on the flip side, it gives retailers the flexibility to do the same. So, if they have a partnership with a technology supplier that they use elsewhere in their store, and it may be something related to their warehousing or their back office, and they see that there is a potential benefit of integrating that technology in the front office, an open environment allows them to take control of that decision and ultimately get the solution out there quicker. So, it provides much more agility to retailers and it provides much more flexibility to the supplier in terms of what's their value proposition and what their solutions look like.
Jerry Langfitt: 18:47 Hmm. It sounds like openness is definitely critical for every retailer's success. I think this is a good place to wrap up our conversation today. Thank you again, Matt, for sharing your insights with us, and thank you to our listeners for tuning in to another episode of COMMERCE NOW.
For more information on openness in retail, go to www.dieboldnixdorf.com/selfservicesolutions or click on the link in the podcast show notes. Until next time, please keep checking back on iTunes or however you listen to podcasts for new topics on COMMERCE NOW.