Will 2020 Be The Year Of In-Store Innovation?

By Nick East, CEO, Zynstra

In 2019, the physical store started to regain momentum with several retailers opting to shutter some locations and open different store formats in the name of innovation. In fact, according to IHL, “more than five retail chains are opening stores for every retailer that is closing stores in 2019. This is up from 3.7 in 2018.” The report also shows that the number of chains adding stores in 2019 has increased 56 percent, while the number of closing stores has decreased by 66 percent in the last year.

As 2019 comes to a close, let’s take a look back on 2019 and what we predicted would be some of the key trends in 2019 in order to anticipate and prepare for what’s in store for the retail industry for 2020.

2019 In Review

At the end of last year, we predicted – and agreed with a variety of our industry colleagues – that a large rollout of Amazon Go stores across the U.S. would occur in 2019. Several industry observers predicted 3,000 stores by 2021 but, as of today, it does not look like this will materialize as Amazon reviews its strategy. However, we were correct in our assumption that more retailers would test Amazon Go style cashierless grocery with the likes of Tesco embarking on this new technology, together with reports on Sam’s Club and Giant Eagle among others. It also was interesting to see Sainsbury in the U.K. terminate their self-checkout trial as customers just weren’t ready.

We also expected a faster rate of adoption by retailers for alternative POS solutions due to the high levels of transaction speed and seamless experience demanded by customers. 2019 has seen this prediction gain pace, evident with headlines such as Walmart ‘Fast Lane’, Aldi’s first-ever self-checkout machines, Kroger launching Kroger Pay & Kroger Awards and the push for smart shopping carts that could revolutionize grocery shopping from vendors such as Veeve and Caper. This is just the tip of the iceberg and it will be no surprise when further developments shine in 2020.

Finally, let’s take a look at the rise of experiential shopping predicted by many to be a top trend in 2019. This movement was largely ignited by the likes of Nike and Adidas with their New York stores at the beginning of 2019 and the momentum has not slowed down. The experiential shopping concept will continue to bloom in all shapes and sizes with Nordstrom, Lululemon and many more but the variation in 2020 will be the number of partnerships that will be formed to accelerate footfall in-store.

This past year demonstrated that the physical store is not dead, just evolving. As we move into 2020, we believe the physical store will take center stage in retail, making 2020 the year of in-store innovation. As such, here are four predictions we see taking shape in the upcoming year…

Prediction One: 2020 Will Be The Year Of The Software-Defined Store

With rising labor costs impacting margins retailers are looking for maximum operational efficiency driven by in-store innovation with frictionless checkout and omni-channel convenience, however, they face huge obstacles due to aging infrastructure. These barriers prevent them from rolling out new applications and services across their store demographic and driving improved performance and operational efficiency. To beat this challenge, centralized management of stores through a software-defined store strategy will become a key tool retailers will implement in order to continue in-store innovation at a rapid pace and meet the demands of consumers.

The software-defined approach enables retailers to roll out new applications swiftly from a central control point and provides a singular view of store technology which speeds up diagnosis and resolution of issues while reducing the volume of costly site visits. By decoupling the hardware from the software retailers can move away from single-application devices to a leaner environment that will result in cost savings for every store. Consequently, the retailer has flexibility and adaptability built into its core and their store technology becomes a competitive asset for the business.

Prediction Two: More Checkout Options To Break Down Barriers To Purchase

With the proliferation of BOPIS, the availability of more checkout options such as mobile payment apps and scan & go checkout will become a requirement for retailers with physical stores. Store associates also will become more mobile with the right technology to accelerate the transaction process. Retailers who fail to offer more options for expedited and convenient checkout offers in-store will lose customer loyalty and sales due to abandoned baskets.

Prediction Three: More Innovative And Experiential Retail Partnerships Concepts For More Delightful Shopping Experiences

We’ve seen examples in 2019 of retailers announcing new partnerships with other retailers to drive new footfall, both online and in the store - including Disney’s plans to open 25 stores within Target locations as a store-within-a-store format, or Toys R Us and Target, allowing shoppers to complete their ToysRUs.com orders at Target.com. Those who embrace this experiential approach are recognizing the value of new retail concepts, in any channel, to fulfill customer needs and to deliver customer care with convenience and familiarity.

Prediction Four: New Omnichannel Fulfillment Efficiency For Increased Customer Convenience

Amazon Prime, with free one-day shipping, has taught us that shoppers are no longer willing to wait more than two days to receive their products. According to recent research, 92 percent of consumers said they would like “free one-day delivery by whatever means is most expedient – drone, driverless car, messenger, etc.”

As a result, retailers are also increasingly looking at the best technology for customers to click/collect/receive delivery/return, at speed in the store. We will see more partnerships such as Walgreens allowing shoppers to pick up online orders from Urban Outfitters, Free People, and Anthropologie at local Walgreen stores. Grocers also will be looking with interest at the early results from the micro-fulfillment strategy adopted by Meijer in contrast to the macro-fulfillment approach from Kroger’s partnership with Ocado.  

2020: The Year Of In-Store Innovation

Physical retail is by no means dead, it’s just evolving and becoming more efficient thanks to the help of technology and retailer’s innovative ideas. With some of the key technologies and ideas already put in place as a foundation, 2020 will be the year of in-store innovation.