Deloitte eyes tomorrow’s stores

August 10, 2012

Turn sales staff into brand ambassadors who use technology to compete for empowered shoppers.

This story is from the upcoming issue of Facts, Figures & the Future publishing on Monday, August 13, 2012. To receive a free subscription, click here.

Retailers are struggling mightily to find relevant roles and positions for their stores—largely because shoppers are able to access product prices, details and user reviews on smartphones and tablets, and are spending more online. Over the past decade, reports the U.S. Census Bureau, online sales have surged an average of 20% annually vs. 3% for physical stores.

Store operators know they need to evolve because consumers apply leverage with every click.

But how can they stay high on the go-to list?

Deloitte surveyed retail executives about the shape of next-generation formats and the viability of brick-and-mortar stores. In its newly issued report, The Next Evolution: Store 3.0, An executive perspective on retailer readiness for tomorrow’s store, the consultancy noted:

  • 79% of retail executives surveyed “agreed/strongly agreed” that the store will continue as the primary place to shop in the next five years.
  • A majority said the store would continue to be the primary channel for compelling brand experiences and meaningful interactions with sales associates.

F3 and The Lempert Report have written repeatedly about smaller store formats ahead to penetrate urban markets and add convenience. We’ve also described the successes of retailers such as Costco and Trader Joe’s that compensate store employees well and enable them to serve as valuable differentiators.

While “retailers are unsure about the roles and responsibilities of their sales associates in this new environment,” Deloitte concludes, “knowledgeable sales associates can make all the difference, providing a competitive edge and driving customer loyalty…in a Store 3.0 setting.” Indeed, it recommends that retailers invest in training sales associates to become effective brand ambassadors—because “five or more years from now, the sales associate is expected to become a technologically savvy brand ambassador with specialized product knowledge.” 

However, much of this report dwells on the use of technology to create memorable shopping experiences. Survey findings disappointingly note that:

  • Retailers are currently not investing in technology (performance, training, workforce and task management) to help sales associates improve service quality—even though 72% say service quality distinguishes their customer experiences from those of competitors.
  • Nor are they investing in technology infrastructure such as Wifi, which would enable real-time loyalty program signups, SKU availability checks, and product information and reviews. Even among retail leaders, says Deloitte, more than half lack Wifi and more than a third lack plans to implement it.

What will be the role of the physical store in five years? It will be more experiential and less transactional, said the surveyed retailers:  85% felt that “providing customers with a compelling brand experience will become a primary role of the store, eclipsing traditional shopping (79%).”

Although IT will be an enabler of retail success, only 18% of executives surveyed think they are “ahead of the curve.” By contrast, 28% feel they are “in line with competitors,” and 31% say they are “playing catch-up to competition.”  The Deloitte report urges retailers to focus on these specific emerging technologies: customer-facing in-store applications such as a virtual look book on a tablet; contactless payments; mobile payments; biometric payments; mobile POS; and augmented reality applications.

This story is from the upcoming issue of Facts, Figures & the Future publishing on Monday, August 13, 2012. To receive a free subscription, click here.