In-store retail is finally going digital
From Sainsbury’s debating the future of till-free shops to Alibaba reaffirming its commitment to smartphone-assisted retail, the future of in-store shopping is digital.
In September, Sainsbury’s put some tills back into its once till-free Holborn store. The supermarket’s experiment with an app-led shopping experience (scanning a QR code to pay on exit) seems to have been at least a partial success, but there are always commentators eager to point out where tech fails consumers.
Sainsbury’s, for what it’s worth, simply stated: “Some customers preferred to pay with cash and card, which sometimes meant they were queuing to use the helpdesk, particularly at peak times of day. This is why we’ve added a manned till and two self-checkouts back into the store.”
Try to pay with notes or coins in an Amazon Go store and it could take you a while, too. There is speculation the tech giant is currently looking for sites in the UK.
In China, however, where the penetration of mobile payment stands at 86%, according to PwC’s Global Consumer Insight Survey 2019, things are moving a little more quickly. There is much excitement about Alibaba’s Freshippo. Yes, you can still go to a helpdesk if you want to pay cash, but the retailer’s commitment to experiential smartphone-assisted retail is impressive.
There are reportedly more than 150 stores across 21 Chinese cities. The app allows shoppers to access information about products, add them to their shop, checkout with Alipay and arrange delivery to their home within 30 minutes (if they live nearby), as well as use a number of services in store such as restaurants and Starbucks cafés.
The key to Alibaba’s planned disruption of retail, though, seems to be delivery and data. On the delivery side, each store also acts as an ecommerce warehouse, with overhead conveyor belts and a team of pickers allowing for rapid fulfilment.
FMCG marketers will need to work closer with the online media arms of big retailers, whether that’s Walmart’s ad exchange or Amazon Advertising
The recent partnership with Alibaba’s Ele.me local services division (people on mopeds) further expands this capability. And with machine learning, Freshippo can effectively track product margins, target promotions using a wealth of user data and improve the restocking process (as well as optimising which SKUs are carried in each store).
Jacques Penhirin, China retail and consumer head at consultancy Oliver Wyman, told the FT he estimates such data acumen could help a retailer achieve “a strong 9% margin”.
Big ecommerce beasts like Alibaba and Amazon believe they can take a slice of the grocery market and bring the proportion of online sales more in line with the wider retail market. Amazon already offers a two-hour delivery service to Whole Foods customers in 30 US cities via the Amazon website. Alternatively, online shoppers can filter only for products in nearby locations if they want to collect their order in store.
The convenience battleground
In the UK, Amazon’s grocery offering is provided via Prime and a partnership with Morrisons. The Times reports that Amazon is planning stores in the UK and the Wall Street Journal suggests that new stores, distinct from the Amazon Go chain, are to roll out in the US potentially by the end of the year.
Amazon is also reportedly looking to license its Go technology to both Cineworld and airport grocery retailer OTG. This may be another way of capturing data to bring consumers into the world of Amazon groceries (though it’s still unclear which app consumers will use at these third-party stores).
While these ecommerce companies look for physical infrastructure to round out a multichannel offering capable of taking greater share of wallet, the incumbents are returning the compliment and imitating parts of the online model.
Walmart and Target have invested in delivery and in-store pickup, with the former announcing in September that its ‘Delivery Unlimited’ subscription (which charges an annual fee of $98/£89 instead of $9.99/£9.06 for each delivery) will soon be available in more than half of the US.
In the UK, Tesco is set to jump on the bandwagon as consumers become comfortable with subscriptions. Tesco Clubcard Plus will launch towards the end of the year, costing £7.99 a month and giving customers 10% off two big shops every month alongside ‘always-on’ discounts for Tesco’s line of clothing and homeware.
So, though the more eye-catching headlines may be that Tesco is working with Trigo Vision on a camera-and-software based system similar to Amazon Go, as well as trialling app-based shopping at its HQ, the real battleground is for a level of convenience that fits busy lifestyles and perhaps eventually makes the big trolley shop an anachronism.
In a future where delivery is an increasingly attractive option for a consumer’s regular ‘big shop’, FMCG marketers will need to work closer with the online media arms of big retailers, whether that’s Walmart’s ad exchange or Amazon Advertising.
Whether consumers are ready for till-free supermarkets may be by-the-by. Multichannel loyalty may be just getting started.