Competing With Amazon: Redesigning Retail Stores of the Future

In my last blog post, Four Ways Amazon is Beating Retailers, I wrote about how Amazon has changed the retail game with broader product assortments, higher customer centricity, lower prices and a superior technology stack. But retailers have something that Amazon doesn’t – physical stores, which act as an unlikely competitive advantage. Despite Amazon’s convenience, consumers have proven with brands like Apple, that they still enjoy a fully immersive shopping experience – when done right. Even in advanced e-commerce markets like the U.S., over 92 percent of sales in 2016 will occur at physical stores! Stores offer immediate gratification – something an online retailer like Amazon can only attempt to do with one-hour delivery options like Prime Now. It’s no wonder that even Amazon is experimenting with, and evaluating physical stores as a logical growth option.

Today’s consumers take a truly omnichannel approach to their path to purchase. For example, say you’re in the market for a new smartphone– don’t you typically do some product research on your phone and check out prices? Then, you may head into the store to actually play with the phones, but make the final purchase online to see if you can find a better price, and eventually choose to pick up in-store. To succeed with today’s consumers – and compete with Amazon – retailers need to integrate multiple data sources on consumers, products, and channels. A data-centric strategy is at the heart of a “Smart Store.”

Four Ways Data Integration Can Create a Smart Store

  1. Touch and Feel Experience Centers
  2. Retail stores tend to be large and often confusing. Reconfiguring stores so consumers can experience products be they entertainment centers or tasting a new recipe for dinner is key. Market leaders also link this immersive, physical experience with online to increase and complement product selections.

    Apple Retail, for example, allows customers to touch and play with new products in-store though they may buy online. Costco offers a narrow selection in-store for categories like furniture or electronics – but provides linkages to a broader online selection with home delivery options. British fashion retailer Jigsaw Group boosted online sales by offering consumers access to in-store iPads that showcased broader apparel selections.

    Bundling products or offering alternatives require having real time availability details on every product. However, internal inventory systems often lack this data – leaving store employees in the dark as to what to suggest. Consumers too, are limited as the online offering is not synchronized with the physical store offering. The online division may be in Silicon Valley, while the stores division is located in the Midwest. Plus, each division works on multiple systems that don’t interface well with each other.

  3. Click and Collect Centers
  4. A significant percentage of consumers want the convenience of buying online — while collecting their purchases in-store. For high experience products such as TVs or groceries – this allows for one last physical check of the product – prior to taking ownership. Retailers have an opportunity to meet this need by reconfiguring their physical stores into collection points. This could be another differentiator over Amazon’s Prime service that offers faster deliveries – but no pick up and check options. By allowing for faster curbside pick-up retailers can reduce friction and ease a consumer’s journey on the path to purchase. This may require store redesign with smaller stores that look and feel more like warehouses and delivery centers as opposed to shopping destinations.

    So why haven’t more retailers tried to implement something like this? The short answer is because of data: E-commerce and in-store systems were designed in technical silos and don’t interface well with each other. To serve an omnichannel customer and create an efficient click and collect system, retailers also need real-time updates to inventory. How many of you have used the ‘find a store’ feature on a retailer’s website, excitedly headed to the store to buy the item right now, only to be sorely disappointed when the item is nowhere to be found?

  5. Information Hubs and Solution Centers
  6. In-store knowledgeable and trained associates can offer advice and upsell consumers on solutions in a more personal way than Amazon can. Consumers find value in education like how to build solutions with multiple components – whether it’s the latest entertainment center from Sony, installing cabinets for the kitchen or a weekday dinner for the family. But with cost cuts and resultant high turnover rates, retailers have lost seasoned floor associates, with all that valuable personal expertise – and retailers must figure out how to provide this information in real-time to younger, less experienced employees. The challenge here is that product data is extremely complex and involves thousands of suppliers, catalogs, digital images, and relationships. So selling an entertainment system, for example, requires integrating data to price the right combination of a TV + a Sound Box + the Right Cables + the Service Plan and Installation and Delivery Options. Unless these product relationships are available real-time to an Associate on an iPad – it’s going to be hard to close the deal.

    This calls for real-time semantic capabilities to enrich product data with logical linkages so that store associates understand what goes into solution bundles and can better advise customers. For example, say you’re selling an entertainment system: Associates need to know all the components a customer may need once they’re home to successfully install. Providing associates with information-rich product data that is semantically linked either on iPads or at in-store kiosks would help them close the deal and upsell customers.

  7. Reward and Personalization Centers
  8. High-end shoppers want to be recognized and rewarded for their loyalty! Nordstrom’s, for example, excels at offering personalized service and rewards that include personal shoppers, free alterations, as well as invitations to special events and sales. But delivering on these calls for real-time consumer profile updates across every touch-point — be it online or offline. Associates need to not just recognize customers (via Ibeam technology, Apps, loyalty cards) at the point of sale – but personalize service based on past requests!

    The issue here is that at most retailers, consumer profile data sits across multiple organizational and technology silos. So, information like how long Customer A has been part of a loyalty program may be stored in a different data silo than their purchase history (both in-store and online) and their age, hometown, preferences and what stores they visited in yet another data silo. When none of this information is linked together – it can result in a ‘faceless’ customer experience that can erode consumer loyalty. To store and try to analyze all of this data, some retailers have made significant investments in data storage systems like Hadoop, but systems like these cannot provide real-time operational capabilities, leaving them grappling with how to best to link and query all this data to personalize the shopping experience for the customer.

MarkLogic’s Solution for a Smart Retail Store

For retailers, meeting the needs of omnichannel consumers requires integrating consumer, product, supply, and transactional data real time to create a truly “Smart Store.” Locational or geo-spatial data to enable analysis at the store or regional level is also critical.

MarkLogic’s solution for Retail is an Operational and Transactional NoSQL database that integrates and links consumer, product, supply, geo-spatial and transactional data sources and allows them to be queried and updated in real time. Its flexible data model allows for data ingestion without complex data modeling and ETL upfront. This allows retailers to bridge the data gaps between their online and in-store channels which often operate in silos organizationally.

Further, with a comprehensive Retail hub, associates can “recognize” Customers as they enter the store, have access to those individuals’ updated profiles on preferences and purchases, and then can provide personalized rewards and real-time promotional offers. Finally, through semantic capabilities via MarkLogic to enrich product data with logical linkages, Associates can better advise customers on related products and understand what goes into solution bundles.

That helps them close the deal with consumers and makes this a “Smart Store” that can compete with Amazon.