E-commerce has grown steadily in Australia since the start of the pandemic, where online sales accounted for 16.3% of all sales in 2020, and pre-pandemic estimates were only around 12%. Understandably, retailers therefore spent most of the last 18 months focused on improving online, omni-channel services, ensuring business continuity during lockdowns, and optimising the customer experience in the months after.
Witnessing this innovation wave has been exhilarating, and it has anchored the conviction even more deeply in the retail industry that a technical edge is a competitive edge, and that to maintain it, sustained innovation is necessary. But with the return of lockdown conditions and accompanying uncertainty, retailers may be hesitant to invest in the digital transformation of brick-and-mortar stores that are closed or running at reduced capacity. As counterintuitive as it may sound, I believe the lockdowns are an opportunity to focus on in-store optimisations.
Stand out when Australia reopens
2020 is full of insights. Although it was a dramatic year for in-store retail, it experienced a sustained recovery throughout the year. A recent survey shows that for all categories except electronics, Australians still prefer to shop in-store. Beyond the act of buying what we need, shopping has always been a social activity for many of us. And I have no doubt that after a few months deprived of healthy social interactions, Australians will rush to stores and malls with their families and friends to reconnect and enjoy a renewed sense of normality.
Continuing to inject innovation in physical points of presence is an opportunity to make an impression on customers when they set foot in shops again, and to differentiate from competitors that may have idled in the meantime. With most shops closed at the moment, now is the perfect time to implement these changes without disrupting customers and day-to-day operations.
Innovate small and smart
There are two points to keep in mind when innovating in retail. First, there’s no need to break the bank, and second, we must look at the right innovations at the right time.
Many retailers operate on low margins, and simply can’t afford mammoth investments into complex technologies and systems the tech industry advocates for in the short term. Sometimes, it just doesn’t make economic sense to adopt these solutions, especially if the implementation cost outweighs the potential loss that may arise without them. Sure, removing the checkout phase from the customer journey, with systems scanning all items in a bag and directly charging customers’ bank accounts sounds great, and is technically doable, but still very expensive to deploy in one phase.
Innovation should be incremental, with the right systems implemented to ensure that the efficiencies and cost-savings really offset the investment with the shortest possible time. With this in mind, there are still low-hanging fruits that retailers can harvest without emptying their wallets, and that will also provide the infrastructure for innovation in the future.
Innovations to consider now
While retailers may fret about the cost and benefit ratio, there are in fact, different technologies available for their consideration. Often, many of these solutions simply require adding another layer of technology onto their existing systems. For example, by applying a layer of artificial intelligence to existing surveillance networks retailers can monitor the movements of people and products to prevent fraud and shoplifting, having an immediate impact on the bottom line.
Moreover, as customers have grown used to seamless online experiences, their expectations for equally positive shopping trips will follow them right back into physical stores. Retailers should therefore take this opportunity to ensure, point of sale and inventory systems are equipped to manage inevitable data surges, and supply chains are automated to manage inventory and ensure shelves are always sufficiently stocked.
By deploying an edge computing solution now and relocating data processing functions closer to the edge (e.g. a warehouse), retailers can drastically reduce delays in these processes. And while products like servers may traditionally conjure up images of large and bulky equipment, innovative advancements have created compact edge servers like the ThinkSystem SE350 that can be easily deployed across locations, even retail stores.
Innovation begets leadership. But it must be smart and happen at the right places and the right time, especially in retail. As we patiently wait for our lives to return to normal, it would be a nice surprise, as consumers, if we could return to an overall improved in-store experience, while continuing to reduce costs on supply chain operations. I believe whether retailers unlock these investments now will hugely impact their future prosperity.
Nathan Knight is managing director for Australia & New Zealand at Lenovo Infrastructure Solutions Group.