AWS for Industries
Seven Smart Store Strategies to Streamline Retail Operations
As the retail industry tackles dramatic shifts in shopper behavior, broad changes in product assortments, and huge growth in digital orders, innovative merchants are responding to these market shifts with laser-focused, technology-driven customer experience initiatives. We wholeheartedly applaud these efforts.
But it’s not enough.
Retailers must also focus on back-office store operations to increase automation, gain efficiencies, and reduce costs because these factors are critical to successful customer-facing functions and financial health. If retailers ignore employees and internal processes, customer experience technology investments won’t have the intended positive impacts.
Don’t get me wrong. I’m not advocating that retailers choose operational efficiency over customer experience. I’m recommending that you align operations and customer initiatives to create a differentiated, tech-enabled in-store strategy.
We call this the smart store.
In a recent blog post, my colleague Joanne Joliet outlined the five ways retailers can transform customer experience with smart store technologies. In this post, I’ll go behind the scenes with seven smart store strategic imperatives to help you increase efficiencies and improve financials so you have an advantage in today’s competitive retail market.
Imperative 1: Combine Physical and Digital
For omni-channel retailers, the physical store often remains as the most effective and cost-efficient method for online order fulfillment. Some retailers fulfill up to 90% of digital orders from their stores. This approach means retailers must become micro-fulfillment centers—not an ideal situation when store layouts aren’t optimized for product picking and fulfillment. The result is higher labor and cost per order, which could negatively impact the brand.
This problem is apparent especially in the grocery segment as customers shifted to online orders during the pandemic. Grocers need to equip store associates with mobile AI/ML-based predictive fulfillment tools to quickly and efficiently prepare orders for pickup or delivery. As part of a digital commerce strategy, Co-op, the UK’s largest consumer cooperative with more than 4.6 million active members, is using in-store digital fulfillment technologies from AWS partner Naveo Commerce to speed product picking and reduce labor costs.
Imperative 2: Equip Retail Associates to Engage Effectively with Customers
As customers demand more engaging interactions with store associates, retailers must equip customer-facing employees with mobile tools to enhance interactions, like conveying information or transacting sales. Store associates need to personalize the discussion, understand all inventory status in real time at the store and throughout the chain, and seamlessly complete a transaction when and where the customer wants.
At the beginning of the pandemic in March 2020, Neiman Marcus was forced to close its physical stores. The retailer quickly pivoted by developing—in just two weeks—NM Connect, a 100% AWS serverless application that uses AWS Lambda, Amazon Simple Storage Service (Amazon S3), AWS Amplify, Amazon API Gateway, Amazon DynamoDB, and other AWS services. The Connect application enabled store sales associates to work from home and sell directly to their customers. It also helped Neiman Marcus generate $3 million in incremental daily sales beyond existing ecommerce volumes, resulting in a whopping 2,500% ROI.
Imperative 3: Understand Retail Shopper Movements, Behaviors, and Interactions
Yes, retailers gain key insights from POS analytics, but an awareness of other in-store customer behaviors can improve store operations. With computer vision technologies like AWS Panorama that apply AI/ML to video cameras positioned throughout store, retailers can access shopper traffic, customer movements, shelf and product interactions, checkout queues, associate interactions, and loss prevention activities and patterns. The AWS Panorama appliance only delivers detected behaviors or patterns to your cloud-based analytics data framework.
Canadian convenience retailer Parkland is working with AWS partner TensorIoT to use this video-based shopper insight solution to improve store layouts, optimize product assortments, and reduce long checkout lines—all to boost operational efficiency and customer satisfaction.
Imperative 4: Use Intelligence to Improve Retail Stock Availability
Retailers must always strive to improve product availability and eliminate out-of-stocks. With real-time shelf sensors, video intelligence, and mobile robotics, retailers can quickly identify stock-outs and replenish items. AWS partner Trax Retail’s AI image-recognition technology platform can detect product availability on shelves to improve inventory management.
Imperative 5: Use Automation and Robotics to Manage Repetitive Tasks
There are now several advanced robotics solutions available for retailers to automate high-volume, tedious activities like floor cleaning and inventory replenishment. US grocer Giant Eagle is using AWS partner Brain Corp’s in-aisle robotic platform to analyze inventory and store conditions to streamline restocking and store upkeep.
Imperative 6: Deploy IoT Devices to Proactively Monitor Retail Equipment
With IoT-enabled smart devices, retailers can collect sensor and telemetry data to streamline operations. When you know the real-time operational status of freezers, coolers, deli cases and scales, coffee makers, and HVAC systems, it’s easier to comply with regulatory food safety standards like HACCP. You can also proactively predict when machinery will need maintenance so you can plan for repairs instead of scrambling to manage a service outage.
AWS provides a powerful infrastructure to support complex IoT connectivity and data management solutions, such as AWS IoT Device Management, AWS IoT Greengrass, Amazon Kinesis Data Streams, Amazon Kinesis Data Firehose, and Amazon EventBridge.
The US convenience retailer QuikTrip is working with AWS partner Ayla Networks to deploy a comprehensive IoT management framework. They are using AWS services to provide real-time visibility for many different in-store devices. This insight is helping the company reduce equipment downtime and improve store operations.
Imperative 7: Don’t Forget Store Associates
Employee training is a key element of any technology deployment. As you plan smart store initiatives, be sure to include training in your project plan. Even if you perfectly implement every imperative I’ve outlined in this post, you’ll achieve higher ROI if you train your employees to use and understand the different technologies. At AWS, we thoughtfully consider usability, workflows, and data through the lens of store associates to ensure a positive employee experience. You can’t forget about your employees. You must train and course-correct when necessary to ensure your staff is using the solutions to their maximum benefit.
If you’re ready to embark on a smart store journey, AWS and our extensive partner network are here to help. Contact your account team today to get started.