A new study from Accenture shows that physical retail stores will be composed of three areas: The Aisle, the Dark Store, and the Promenade Area.
Retailers have long known that the future of their industry lies in a type of consumer experience that is more e-commerce-centric, more digital, personalized, sustainable, and more integrated between offline and online shopping. But the pandemic brought that future forward by many years. In that context, a new study from Accenture says that retail must now go for full offline channel integration. Realign the purpose, functions, and operating model of the retail store itself. And do this for each individual store at a truly local level.
Mauricio Blanco, Executive Director of Accenture Chile, explains that ” this online-merge-offline (OMO) model requires retailers to dare to reimagine how they operate across all channels. It means going beyond the traditional and developing a portfolio of stores that is more diverse and better adapted to local needs. An OMO model allows for lower costs and increased investment in new experiences.”
The report states that to move toward an OMO model, retailers should focus on five main elements. First, drive an integrated customer experience. Blanco detailed that “a fully integrated OMO model streamlines, simplifies and accelerates the deployment of customer experiences across online and offline channels. This includes, for example, consistent and personalized promotions, digital payments, returns processes, optimized delivery options, and a clear focus on target audiences.”
Secondly, the supply chain needs to be optimized. Mauricio Blanco highlighted that “in OMO model that leverages modern cloud technologies, enhanced data analytics, artificial intelligence and machine learning can enable greater automation and drive operational efficiency. In that way, retailers can foster resilience and accountability, as well as cost reduction and service quality at the local level. It can also dramatically improve channel productivity and profitability.”
The third key element is talent. Retail must drive an adaptable workforce and receive ongoing training in digital skills. This is not only essential to the OMO model but will also equip workers with the skills they need in an increasingly digitized and automated economy.
Fourth, there is data. By harnessing the power of distributed edge computing, the OMO model can enable automated, real-time decision-making in retail stores. This could mean, for example, transforming the customer experience by providing personalized product recommendations via interactive displays or smartphones as consumers walk through a store. It can also enable personalized guidance, more innovative ways to manage and reduce wait times, and more.
Mauricio Blanco explained that “retailers must use data, AI and machine learning to generate information and make decisions. To be truly customer-centric, retailers need to leverage internal and external data. Central to this is a focus on specific business outcomes and use cases, as well as changing the culture, processes, and ways of working across the organization. By leveraging a data solution and AI, retailers can access proven use cases in marketing, supply chain, and merchandising, enable prescriptive recommendations, simulations and what-if scenarios, and accelerate transformation.”
The fifth element is corporate responsibility. All stakeholders, including consumers, now expect companies to contribute to greater sustainability. And by developing an OMO model, retailers can integrate ESG (environmental, social, and governance) aspects of the business across all functions, from product sourcing to the in-store experience.
What the store of the future will look like
The store of the future will consist of three complementary areas: The Aisle, The Dark Store, and The Promenade.
In the Aisle, people will use their smartphones to buy their essential products. For example, in the supermarket, it can be everything from laundry detergent to groceries. These are the products that customers already know they want, for which locating and choosing from the shelves is simply a time-consuming task that detracts from the overall experience. Focused on speed and efficiency, the Aisle maintains the basic principles of current shelf organization and navigation but replaces each product with a unique QR code. The customer simply scans the code, and the Dark Store serves the product within 15 minutes, as fast and straightforward as shopping online. This flow offers customers a streamlined way to shop. It also allows the store to free up space for both its Dark Store and its Promenade Area while enabling significant efficiencies and synergies (such as avoiding the need to stack shelves, reducing shelf waste, optimizing inventory, etc.).
The Dark Store is the micro-distribution center that uses extensive automation to fulfill customer orders placed in the Aisle with maximum speed and efficiency. It allows for a broader range of options, such as in-store or home delivery of purchases. And because it is tied to the local store, it is often closer to where users live, making last-mile delivery faster and more economical.
Finally, the Promenade Area is a flexible “play” area for product discovery and shopping for which sight, touch, smell, and physical presence are essential. It allows retailers to introduce a more significant number of brands in-store, either through brand-specific kiosks or in-store outlets. The key is the adaptability of this space, which allows for a changing menu of in-store events and products, such as fresh food displays, premium products, health centers, tailored experiences, among many others. It is a space that could even serve as a hub for the local community, which can be customized and adapted according to local needs and seasonal priorities.
Tomorrow’s store concept promises to radically simplify the omnichannel customer journey while offering retailers increased profitability. By enabling more value-added services and better in-store experiences, the model promises to drive foot traffic, extend visit durations, and increase order sizes. At the same time, an improved pricing strategy can increase revenue margins. At the same time, ampler delivery options (including combining online and in-store shopping and home delivery and pickup) can increase e-commerce conversions and brand affiliation.
Mauricio Blanco concluded that “tomorrow’s store concept promises significant synergies and efficiencies. Optimizing inventory and sharing fulfillment infrastructure more effectively between online and offline channels protects profitability. Store layout will be better optimized for operational needs. And with the Dark Store component taking on much of the heavy lifting in operations, hyper-efficient automation will reduce handling costs and product waste on the shelves. It will also bring distribution closer to customers’ homes, reducing last-mile delivery costs.”