December 7, 2022How Retail Leverages Self-service for Increased Sales
How Retail Leverages Self-service for Increased Sales
Each year, retailers strategize to find a balance between competitiveness and profitability. Consumers, empowered by increased choices, are looking for the best products, experiences, and prices. Retailers aim to deliver; however, with an average net margin of only 2.65%, increasing store traffic, finding efficiencies, and cutting costs are essential to operating in the black. Retailers are using interactive digital experiences as a solution to maintain market share in this dynamic space.
The transition to digital engagement in retail incrementally gained ground over the past few years but accelerated in 2020. The COVID-19 pandemic forced brick-and-mortar shoppers to find different ways to make purchases. E-commerce skyrocketed, growing 43% in the U.S. in 2020, ushering in a new era of digital-first consumers. When stores reopened, shoppers expected the same access to information and instant gratification that e-commerce provides, driving brick-and-mortar retailers to adapt in-store experiences to meet those demands.
However, the shift in consumer behaviors coincided with supply chain disruptions and shortages that led to rising costs. These changes created an urgency to find solutions that help businesses improve efficiency, reduce retail operating costs, and enable excellent customer experience (CX).
These retail technologies allow merchants to meet new challenges head-on to delight customers, increase sales, and control costs, resulting in a healthier bottom line.
Point of sale (POS) technology has evolved into systems that do much more than manage transactions. They've become indispensable tools that businesses use to manage interactive experiences in retail with a wide range of features and value-added capabilities, such as:
Competition for customers is intense, increasing the cost of customer acquisition. As a result, retailers are ramping up efforts to build loyalty with rewards and customer engagement solutions. Effective loyalty programs in retail lead to better customer retention key performance indicators (KPIs), greater customer lifetime value, and stronger relationships. With a focus on loyalty rather than new customer acquisition, retailers can better use their marketing budgets and see an improved return on investment (ROI).
Modern POS systems equip retailers with robust inventory management systems, including detailed matrices that allow stores to track stock down to style, size, and color levels. Consumers adopted omnichannel shopping during the pandemic and now expect the same access to inventory data whether they shop online or in-store. Retail POS inventory systems provide accurate product availability data to shoppers so they can make purchasing decisions based on availability and avoids disappointment from stockouts. Additionally, precise inventory data helps retailers to make informed decisions about stocking, merchandising, and purchasing, which helps to control inventory costs.
Busy consumers don't want to stand in line – and 25% won't enter a store or will leave without purchasing if the line is too long. A 2022 Bluedot survey found that 61% prefer self-service rather than waiting for assistance from store employees. However, in addition to capturing sales by providing the type of checkout experiences shoppers want, there are more benefits of self-checkout for retailers, including:
Self-service enables retailers to allocate fewer employees to the checkout. Most retailers have found that attended self-checkout is the best model, allowing shoppers to ask for help when needed and keeping a watchful eye on activities to prevent shrinkage. However, one employee can monitor 4-6 self-checkouts, significantly reducing labor costs.
Enabling customers to scan items, pay, and bag purchases on their own also help retailers navigate the ongoing global labor shortage, estimated to total 85 million workers by 2030. Adapting operations in response to workforce changes will ensure that retailers can continue to deliver excellent customer experiences and capture sales rather than struggling with traditional processes and staff shortages.
It's often challenging to collect customer data from person-to-person transactions. Touch screen engagement in retail via self-service allows retailers to obtain more data, collect customer feedback, and gain deeper insights into customer behaviors. Retailers are offering benefits for this data; Get your receipt emailed to you where it will be easy to find for returns or exchanges versus running the risk of losing the receipt. With this exchange, both parties win – the retailer gets your email which may be used for marketing, and the customer gets to hang on to their receipt where it will be easy to find.
Buy online, pickup in-store (BOPIS) gives consumers the convenience of finding the items they want, placing orders, and then picking them up in the store or curbside. It eliminates traveling from store to store to find what they want and saves time and delivery costs. BOPIS accounted for 10% of all E-commerce in 2020, with a total of $70 billion in sales.
Keeping customers happy is always a plus for increasing revenues, but BOPIS benefits retailers in additional ways.
BOPIS eliminates costly shipping and last-mile delivery costs for retailers. Additionally, when a retailer uses a check-in kiosk for customers or smart retail lockers when they arrive at the store, they can minimize the labor required to get orders into their customers' hands securely and accurately.
BOPIS brings consumers into physical stores to pick up their purchases. But it also increases in-store revenues. A 2022 PYMNTS study found that 47% of consumers make additional purchases when they arrive at the store to pick up their merchandise.
Over 24% of shoppers will choose to shop local over Amazon if BOPIS options are efficient in their local retail stores. Over 40% of retailers saw an average BOPIS order increase by one to two items, while 24% saw an average BOPIS order increase by five items or more.
Omnichannel consumers are used to having access to a business's entire product selection. So, they may feel limited when shopping in-store. Endless aisle solutions give brick-and-mortar shoppers information on all products a retailer has for sale on all channels – and helps retailers capture sales they would otherwise lose due to stockouts in the store. Endless aisle solutions deliver 10% of all sales. Endless aisle solutions also provide retailers with several other benefits.
Omnichannel shoppers who don't find the products they want in a store have learned they can pull out their smartphones and find items from other retailers; 17% report buying from a competitor right there in the store, 37% report placing the order with a competitor when they get home, and 35% report visiting a competitor's store. In-store endless aisle solutions allow retailers to compete and save those sales.
The National Retail Federation (NRF) reports that U.S. online retail sales in 2021 totaled $1.050 trillion, but consumers returned about $218 billion of those purchases. With an endless aisle solution, a retailer can create showrooms that enable consumers to see and try products, helping to reduce the number of returns. Jessica Kats, eCommerce and retail expert at Soxy, says there has been a significant reduction in returns and exchanges since the store introduced the Endless Aisle option. In addition, she indicates that about 27% of in-store shoppers use this option, and 41% use this during the holidays.
Endless aisle solutions allow a retailer to sell a wider variety of products without holding inventory for every product at every location. As a result, retailers have better control over inventory costs and can minimize warehousing and storage costs company-wide.
While touchscreen signage is a way of communicating information to customers on promotions, new products, and special events, retailers are exploring creative ways to use interactive signage to engage customers and increase sales, such as:
Businesses can create effective touch screen signage engagement in retail by using interactive signage in combination with other technologies. For example, a store can deploy intelligent fitting room systems. RFID tags on garments can trigger displays that allow shoppers to consider size, style, or color options. Augmented reality in retail can also automate upselling and cross-selling, showing customers on an interactive touchscreen which accessories will complement their purchase. Interactive touch screens can also enhance experiences on the retail floor, providing information and offering coupons or discounts at the point of decision to incentivize purchases.
Touch screen signage creates retail advertising displays of in-store sales and promotions. However, these solutions can also display ads from other companies. Digital out-of-home (DOOH) advertising can build a new revenue stream for retailers. They can negotiate lucrative ad rates to run dynamic content featuring their vendors' or partners' ads, boosting the bottom line. Furthermore, DOOH spending is projected to increase by 19.2% in 2023, giving retailers more opportunities to capitalize on this trend – if they have the right technology to display the ads.
Touch screen signage gives retailers a sustainable way to communicate with customers. It eliminates paper use and waste and recyclables that the retailer generates. Additionally, energy-efficient displays require minimal power to operate, helping retailers meet goals. Retailers will undoubtedly benefit from the cost savings from paper reduction and energy-efficient touch screeen signage. However, it can also be a part of a growth strategy. Accenture identified a trend a few years ago, showing that consumers are more likely to do business with eco-friendly brands. Additionally, the National Retail Federation found in 2020 that consumers are willing to pay 35% more at stores that prioritize sustainability.
Retailers that promote their loyalty program on in-store signage see a significant increase in membership due to the ease of registration and accessibility in-store. Frederick Reichheld of Bain & Company states, "increasing customer retention rates by 5% increases profits by 25% to 95%" – not something retailers can afford to ignore.
Implementing Interactive Touch Screens in Retail
New consumer behaviors, industry trends, and economic pressures create challenges that retailers must overcome to remain viable. Interactive engagement in retail can help businesses cater to omnichannel consumers, meet their expectations, and increase sales. Technologies that support retail touch screen engagement also automate processes, allowing companies to address labor shortages and rising labor costs. Retailers who have built successful businesses on their ability to provide face-to-face, personalized service may need to augment that strategy with technologies that support greater efficiency and connected omnichannel processes.
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By Rick Smith