With UK retail sales in permanent decline for the first quarter of 2017, Britain's high streets are facing an uphill battle.
Stores see more consumers turning to the internet for their shopping trips, with UK shoppers now spending more online per household than consumers in any other country. They also see new players entering the game with Amazon announcing its foray into the convenience sector, revealing plans for a next-generation grocery shop. The traditional bricks and mortar store now faces assaults on all fronts.
Recent figures from the UK Cards Association show that £154bn was spent on the internet in 2016 - up by a quarter in just two years - there can be no doubt that online shopping is taking the retail sector by storm. Yet on the other hand, Amazon seeks to entice those consumers shopping on the high streets into a checkout free, ultra-convenient shopping experience powered through a free-to-use mobile app and Amazon Prime membership. The concept could prove just as disruptive. With an estimated 80 million Amazon Prime members globally, shoppers will undoubtedly flock to these stores for a speedier and more convenient shopping trip, if not just for the sheer novelty.
However, to say all is lost for Britain's bricks and mortar stores would be a far cry from the truth. New technologies are proving equally as disruptive as the online trend, and what's more, are giving physical stores the tools with which to compete against new players. According to the 2017 World Economic Forum Report 'Shaping the Future of Retail for Consumer Industries', eight new technologies are expected to change the face of the retail landscape. Of these eight, the Internet of Things (IoT), Artificial Intelligence (AI) and robotics are expected to reach "full readiness" within 2-5 years.
Retailers are now increasingly looking to integrate these technologies into their operations. Computer Vision, a form of AI, has already been adopted by big brands and retailers are now following suit. The technology works by capturing images of in-store shelves and uses advanced fine-grained recognition engines deep learning algorithms to analyse them. This can provide a wealth of highly useful data on the performance of products, as well as offer recommendations for on-the-shelf actions, such as where a particular product should be placed, how it should be priced or what promotional methods should be implemented. The technology is being used by sales and merchandising staff to provide highly accurate shelf insights, and as an alternative to manual store audits that can be costly, time consuming and prone to human error.
IoT technologies are also beginning to provide important real-time data for in-store execution. An example of their use can be seen in store fridges where IoT cameras, discretely placed behind fridge handles to face the contents, take an image every time a customer opens or closes the door. The images are then automatically uploaded and analysed to provide real-time data on product spacing and availability, and can alert staff when certain products are out of stock. These technologies can also alert staff when a particular brand is being stocked too often and doesn't comply with the agreed shelf layout.
Similarly, robotics will play a crucial role in capturing data across stores. They can be used either once a day for a full sweep of a store between 3-6am, or in between peak times to ensure maximum availability and compliance during the busiest hours of the store. Cameras, fixed on top of mobile robotics platforms taking a full sweep of a store at intervals, can provide data about shelf space, product placing and pricing. Store staff face a constant battle to keep product pricing up to date. Earlier this year Tesco received serious criticism when it was found that across 33 of its stores, promotions were advertised on the shelf but the discounts were not applied at tills. The use of robotics in retail has the potential to free up sales staff and provide them with the much needed time to make corrections to pricing or spacing and improve product placement, which in turn will improve the customer experience.
Given how quick consumers are to embrace technological advances, it is likely that Amazon Go stores will become an immediate player on the retail scene, whilst at the same time, the ease of use and accessibility that has coaxed thousands of British consumers into shopping online is unlikely to abate. However, the future is far from bleak. Shelf space and the physical placement of products is a huge factor in drawing consumers into bricks and mortar stores and plays a key part in influencing their purchasing decisions. New innovations are beginning to make headway across the physical retail space which are enabling retailers to capitalise on these influences, giving them the tools to compete with rising competition and ultimately, turn the tide in their favour to make stores more profitable.