AWS for Industries

Making the Smart Store a Reality: How Retailers Can Elevate Experiences, Operate Efficiently, and Achieve IT Agility

Believe it or not, despite the massive shift to online purchasing, brick-and-mortar stores are the hub for delivering unified commerce. To be successful and remain viable, retailers must equip stores to elevate the customer experience, operate efficiently, and adapt with agility to changing market dynamics.

Use the Past to Guide Your Future

With the emergence of ecommerce about twenty years ago, retailers shifted budget to invest in online infrastructure. At that time, a retailer’s website and physical stores were designed to operate as separate channels that were compared to, and even competed against, each other. Website sales delighted retailers with double- and sometimes triple-digit sales growth, prompting retailers to double down on digital investments. This left many retail stores in a severely anemic state.

As time passed, innovative retailers began to use physical stores to support online sales with initiatives designed to create a single, blended sales channel:

  • Buy online, pick up in store (BOPIS)
  • Buy online, ship from store (BOSFS)
  • Buy online, return to store (BORTS)

However, this effort to connect digital and physical channels was primarily focused on better inventory availability without much consideration for other critical elements of the customer journey. For example, store and online purchases were tracked separately instead of as one cohesive purchase history.

Although COVID led to exponential growth in ecommerce sales, especially in certain segments like grocery, stores still contribute roughly 80% of total sales for retailers. This is because stores are an experiential destination for shoppers to discover, research, see, touch, and buy products. Stores now serve as a major node of fulfillment with some retailers fulfilling up to 90% of online orders from stores. This is a sharp increase from the pre-pandemic days when roughly 50% of online orders were fulfilled by stores. For returns, brick-and-mortar stores bear the brunt of returns with about 60% of customers returning online purchases to stores.

Given this symbiotic relationship between online and physical stores, a continued long-term underinvestment in store technology could be detrimental for retailers. Companies need to shift their strategy away from the competing forces of online vs. offline, digital vs. physical, and ecommerce vs. brick-and-mortar. A siloed strategy is no longer sustainable. Instead, retailers need to accelerate the shift towards incorporating physical stores into their customer engagement ecosystem.

Implement a Smart Store Framework

To enable unified commerce, retailers need to add intelligence to stores, make them broadly connected and digitally focused. Retailers need to create smart stores.

By adopting core technologies like mobile, computer vision, robotics, augmented and virtual reality (AR/VR), voice, and IoT, combined with artificial intelligence and machine learning (AI/ML), retailers can elevate customer experiences, operate more efficiently, and achieve IT agility in shifting markets. A smart store approach connects physical stores to the digital world.

Elevate the Customer Experience

A great experience varies based on the brand and target customer, so there isn’t a single script. But whether someone is buying groceries, electronics, or clothes, shopping should be simple and enjoyable. Retailers have prioritized investments in delivering an integrated experience online but have lacked the tools to track, measure, and engage consumers in stores. With new advancements in cloud capabilities and the power of real-time data, retailers now have the opportunity to rapidly experiment and scale solutions that elevate the customer experience through:

  • Personalized interactions
  • In-store shopping assistance
  • Augmented and virtual product exploration
  • Health and safety compliance
  • Frictionless transactions

Retailers have been experimenting with these technologies in trials, POC, and their labs but have not been deploying them in a robust, collective manner to support the customer journey. It’s now critical that these investments not only work together but are also deployed with agility in mind, allowing retailers to add or remove capabilities seamlessly.

Here are customer case studies that show how AWS has successfully deployed solutions to elevate the customer experience:

  • Lotte Mart, a leading food, clothing, and electronics retailer in South Korea
  • Footasylum, a UK-based fashion footwear retailer

Operate More Efficiently

As stores become the hub of unified commerce, retailers must operate efficiently and proactively. Receiving, stocking, pricing, selling, fulfilling, and maintaining the store are just a few areas where retailers can eliminate manual processes with smart store technologies. The most successful retailers are those that are aligning investments along a clearly defined employee journey, knowing that a good employee experience results in an excellent customer experience. With cloud-based offerings, retailers can more easily implement and scale capabilities in areas such as:

  • Assisted selling
  • Store monitoring and analysis
  • Inventory visibility and merchandise validation
  • Automation
  • Optimized store fulfillment and order picking
  • Equipment monitoring

Ian White, Senior VP of Strategic Marketing and Innovation at Parkland—a leading convenience store retailer in Canada and the Caribbean—shared his thoughts about using AWS technologies to optimize operations. “We want to use computer vision to better understand consumer needs in our stores, optimize operations, and increase the convenience for our visitors. We plan to use AWS Panorama to deploy different computer vision applications at our stores and experiment over time to strengthen our customer experience and value proposition.”

Achieve IT Agility

Elevating the customer experience, operating efficiently, and achieving IT agility require a solid technology foundation that facilitates speed and scale. This means you must enable:

  • Low latency and edge compute capacity
  • Rapid, modernized store application deployments
  • Application efficiency and management

This case study explains how ALDO, a major footwear vendor in North America and the UK, can develop new applications in less than three months to quickly adjust to shifting marketing dynamics. For more information on how the cloud is transforming store technology architecture, here are three strategies for building a smarter store foundation.

The Path to Smart Stores

Where you start on your smart store transformation depends on your point of departure. We suggest that retailers start from the customer and work backward by answering questions like, “Who is my customer?” and “What are their biggest pain points as they shop in my store?” The challenges could be difficulty locating items because of a poor store layout, shelf stockouts because of inventory issues, or a long checkout queue with no alternative option for contactless payment.

As retailers add intelligence to stores, they’ll reap the benefits of happier customers and increased sales. Find out how AWS and our extensive industry partner network can support your retail transformation. Contact your account team today to get started.

And look for the other blog posts in our series about smart stores, where we share technologies, use cases, and customer success stories for each of the smart store goals: elevate the customer experience, operate efficiently, and achieve IT agility.

Joanne Joliet

Joanne Joliet

Joanne Joliet leads the worldwide strategy and thought leadership for the apparel and fashion retailing & CPG segments at AWS. In partnership with the AWS Retail and CPG leadership teams, Joanne works to deliver cloud migration and modernization strategies, partner solutions, and go-to-market capabilities directed at apparel and fashion companies. Joanne has more than 20 years of retail technology and industry experience, including past leadership positions at Gartner, Inc., Belk Department Stores, Family Dollar Stores, and Accenture.

Alejandro Mondragon

Alejandro Mondragon

Alejandro Mondragon joined AWS in 2020 as the Head for Business Development Retail for Germany, Austria, and Switzerland. With the goal of helping retailers in his region grow their businesses, he leads the development and go-to-market strategy for the retail vertical in the region, including channel development and sales enablement. With deep domain expertise in retail industry data, marketing strategies, and customer experiences, prior to joining AWS, Alejandro held leadership positions at GfK, WPP, Roland Berger, A.T. Kearney, and French retailer Carrefour. He has a BSc in Mechanical & Industrial Engineering and an MBA from Georgetown University.

Scott Langdoc

Scott Langdoc

Scott Langdoc leads worldwide strategy and thought leadership for the grocery chain, drug, and convenience/fuel retailing segments at AWS. In this role, he helps fast-moving retailers use technology to navigate changing customer expectations and market dynamics. Before Scott joined AWS, he spent more than 30 years in technology, market research, consulting, and leadership positions in the retail industry.