Month after month we see industry news articles about how the big players are filling their stores with cutting-edge tech to improve the experience for customers.
This article, for example, explains how Walmart has recently been updating its store in Levittown, New York with enough cameras, sensors and processors to pump out 1.6 terabytes of data every second, and enough cabling to scale Mt. Everest five times.
Similar to what can be found at Amazon’s Go stores, this incredible amount of tech monitors stock levels in real-time and notifies employees when an item needs replacing, at the same time freeing them up to engage more with customers.
Dubbed the ‘Intelligent Retail Lab’ – or “IRL” for short – this is Walmart’s future-focused retail testbed. Mike Hanrahan, CEO of IRL, explains that learnings from this store will be rolled out across the Walmart chain once proven.
Great news for Walmart’s customers, right?
Certainly, it’s great when there are knowledgeable team members available to help you when you need it, either by showing you where something is, or sharing their expertise. And depending on the application, if it’s tech-powered, even better.
Take Sephora’s Color iQ foundation match for example. To find the foundation that perfectly matches their skin tone, customers must visit a Sephora store and chat with a team member who uses a special Pantone-powered handheld photographic device. It’s over six years old now, but it’s still genius. It gives customers a reason for heading in-store, and it gives team members a tool to support their knowledge and passion for cosmetics.
But in the case of Walmart’s IRL store, are the millions being spent on new tech – at least from a customer’s perspective – just fixing a problem that doesn’t really exist?
Let us explain what we mean.
Walmart, like so many retailers, already has excellent fulfilment in place. So too do almost all retailers these days. Generally speaking, if it’s not on the shelf, it’s not out the back – it’s completely out of stock. And no amount of fancy real-time tech will fix that.
When it comes to Amazon Go’s checkout-free stores, sure they’re ‘frictionless’, but just how much of a benefit to customers is this really? In other words, just how frustrating is it to wait at the checkout at your local supermarket for a minute of two? Is it frustrating enough to make you choose to shop at another store if it’s further away? Probably not – especially as the problem doesn’t happen all the time.
Thinking about all this reminded us of Rory Sutherland’s excellent Ted Talk from back in 2009. Rory talks about perceived value, and gives the fantastic example of engineers being tasked with a way to make a train journey from London to Paris better. The engineers, Rory explains, came up with a very clever (and very expensive) engineering solution that would shave the travel time. As an ad man, Rory suggests a better solution would be to pay male and female supermodels to walk up and down the train aisles serving fancy French wine for free. Passengers would, Rory suggests, ask for the train to slow down. A tongue-in-cheek idea, sure, but a good point nonetheless.
Now returning to Walmart’s IRL store. When we hit the webpage of the article about the store, the first thing we noticed was the striking motion-tracking art installation that Walmart has installed (pictured above). For us, that’s a brilliant example of a great use of in store tech to surprise and delight customers. It’s genuinely cool – and we bet it cost a lot less than all the other cameras and sensors that have been installed to monitor stock levels or help customers save time at the checkout.
As humans, we care about efficiency – but only up to a point. According to a 2016 study by the Time Use Institute, US shoppers spend about 43 minutes on a typical grocery shopping trip. What percentage of that time is spent at the checkout? Not all that much.
We’re not suggesting Amazon’s Go stores aren’t great – they are – but we’re wondering whether the few minutes saved at the checkout are really a big practical advantage to the customer. Because convenient as just walking out is, there’s actually a fair amount of effort required to enter the store in the first place. You need an Amazon account, a recent iPhone or Android phone, plus the Amazon Go app.
Perhaps it’s the fact that the stores are in convenient locations, they look fantastic, that the food is fresh and that the prices are right that has led to their success more than the ‘just walk out’ factor.
Imagine the exact same store, but instead of being able to just walk out, you have to use a self-checkout – but the self-checkout tells you a different joke every time you use it. Would that put just as big a smile on your dial as being able to simply walk out does? We think it probably would.
While we understand the commercial reasons behind equipping big retail stores with futuristic tech, we wonder whether customers could be impressed with much, much cheaper experiential elements.
Now that’s one way for brick and mortar retailers to fight back against sales being lost to online.