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Much has already been written about how shoppers will be intersecting with retail in the health and wellness sector in the world of “2027” (i.e., more than 10 years from now). It is our expectation that concepts like “seamless,” “omnichannel,” “interactive,” “digital,” “connected” and “automated” will be incredibly important — so much so that the words themselves may have faded from the discussion.
Bryan Gildenberg, Kantar Retail
No one talks about an “automated” P-O-S/checkout system today — though 30 to 40 years ago scanning was a new technology seen to offer a competitive difference. Omnipresence of an idea reduces the need to call it anything — all of these things by 2027 will just be … shopping. Or will it? Increasingly, as smart appliances talk to smartphones, Dash buttons and your home technology, shopping may increasingly turn into autoreplenishment — a nonactive process where stuff magically appears.
Though this will unquestionably be more prevalent, Kantar Retail estimates that the world of 2027 will see 70% to 75% of all retail sales still taking place in a retail store. Also, unquestionably, this means that the role of that store will change, and that the definition of a great shopper interaction within that store environment will also change.
At the 2016 NACDS Total Store Expo, Kantar Retail’s contribution to the NACDS “Vision 2027” exhibit focuses on the future of shopper interactions — trying to portray what a Perfect Shopper Interaction will look like.
Part 1 of that journey will look at the Health Store of the Future. Using Kantar Retail’s Virtual Reality platform, visitors will be able to undertake an immersive, VR-rendered shopping environment of tomorrow. This store environment features interactive displays that render menus and curated assortments, interactive health readouts that sync seamlessly with wearable technology and virtually curated assortments of a shopper’s favorite items.
Implicit within the virtual presentation is the compelling idea that not only could this be what the store will look like, but that a VR/augmented reality platform could, in fact, be the store itself.
Imagine that 10-plus years from now the issues around VR (motion sickness and some difficulty maneuvering yourself through that ecosystem) are resolved and intuitive controls exist, and that the immersiveness of VR is driven from a portable device and readily accessible. What’s to stop shoppers from logging into their “Drugstorexyz.com” app, plugging their device into some sort of eyewear, and immersing themselves in a virtual shopping, education and diagnostic environment?
The power of technology will also, certainly, play a role in the relationship between retailers and suppliers, and this is the primary focus of our exhibit area. Much more has been written about the consumer-facing side of the “perfect shopper interaction of tomorrow,” but much less about the analytics and partnership that will support and deliver that interaction. In our Vision 2027 contribution we look at the enabling analytics for this perfect shopper interaction in a variety of ways, with a particular focus on the 70%-plus of sales that will be physical store based.
Our first look is at understanding what gets sold in the store. A simple way to look at this is that in a world where e-commerce replenishment cycles have shortened to an average fulfillment time of several hours rather than several days, a core conclusion is that fewer items will warrant the capital outlay that placement in thousands of physical locations requires.
Next-generation analytics will be the critical problem-solving tool for this — in particular the linkage between broad consumer understanding and transaction data-based analytics that help forecast the economics of tomorrow’s shelf. Expo attendees will get to see a sample of how we think this problem will be solved through a virtual reality rendering of tomorrow’s shelf analytics.
Tomorrow’s stores will need to maximize every last inch of space dedicated to merchandise to drive every last penny of incremental cash flow. Achieving this vision will require stores to genuinely reflect the trading area they operate in — any item on the shelf that poorly reflects the neighborhood is money brick-and-mortar operators cannot afford to waste. Small stores, in particular, will need this hyper-localized assortment to be a critical piece of their value proposition.
The ability to rapidly visualize a variety of assortments, and test them virtually, will be essential. The Kantar Retail cloud-based virtual reality platform represents today’s manifestation of how this testing can be done at low cost and with powerful results.
Virtual reality has enormous potential for changing the nature of how retailers get their work done — in particular, it’s easy to envision a world in which virtual or augmented reality becomes an essential part of a retailer’s in-store execution plan.
Store associates wearing simple specialized eyewear will have a virtually rendered planogram they are setting against that should ensure 100% accurate shelf set execution — the virtual reality can do a quick visual check against the set and decide whether it is in compliance or needs more work. Analytics attached to this process should allow stores to reset against sales data much more quickly and precisely.
The road to this execution nirvana is going to be a slightly bumpy one, of course, and in the short to medium term one of the critical factors for both suppliers and retailers will be the state of in-store conditions.
Many retailers today are facing resource-based challenges at an execution level: With same-store sales flat or declining and wages rising, the labor available in-store is often not enough to execute everything that needs doing. This challenge gets exacerbated when buyers, facing the same declining sales trends, start to run more promotions to drive sales — the stores get more work to do with less labor to do it.
Avoiding this “unproductivity loop” requires great strategy, but also a quantum shift in how we measure in-store execution.
The final piece of Kantar Retail’s contribution to Vision 2027 highlights our Planorama technology — the industry leader in image recognition-based shelf condition management. By using whatever device an associate has (rather than proprietary hardware), Planorama can tell you in minutes whether a shelf or store is properly executed and, with the right data attached to it, Kantar Retail’s analytics can tell you what the economic impact is of that imperfect execution.
The brick-and-mortar retail ecosystem will still be vital to most retailers and supplier business models — and this level of precision (achievable today) is symbolic of how we think truly collaborative execution will work going forward.
The store of 2027 will be an interesting hybrid of “analog” merchandising, shelving and product and a whole collection of assets from the digital ecosystem of tomorrow. The relationship between suppliers and retailers and the underpinning analytics that drive that store will mirror that duality.
Kantar Retail looks forward to seeing many of you at Total Store Expo for a live preview of how we see that evolution unfolding.
Bryan Gildenberg is chief knowledge officer at Kantar Retail.
