Navigant Research Blog

Online to Brick-and-Mortar and Back Again

Casey Talon — July 5, 2017

As I strolled down Pearl Street, the center of local commerce, it was hard not to notice the shifting face of a small city undergoing an economic boom. Storefront overhauls and new construction flank the street from the east to west end. One newcomer caught my eye this week and made me think again about the debate of the potential death of brick-and-mortar retail. Warby Parker, the online eyeglass retailer, is setting up to open its doors on Pearl Street, bringing its cult following from cell phones to the door. This store is part of the company’s seemingly aggressive 2017 expansion to 70 storefronts nationwide.

So, what is happening? Amazon, the online retail giant, bought Whole Foods for $13.7 billion. Walmart is set to buy Bonobos Menswear for a reported $310 million. Do the big companies see online or in-person shopping as the future? I’d argue that the future is choice and technology-enabled convenience.

Smart Technologies to Redefine the Shopping Experience

Seamless access to products from our cell phones to the store counter plus technology-enabled in-store experience: this is the future of retail. The mobile/online access to goods has been the threat to the storefront for a few years at this point. What the recent moves by the retail giants tell us is that choice is critical. Taking a deeper look into the future of in-store shopping, the winners will offer a tech-enabled experience for convenience and fun.

Intelligent building technologies were long touted as solutions for cost savings via energy efficiency. While this foundational benefit remains important, the framing of solutions around the Internet of Things (IoT) changes the value proposition. Once a facility—in this context, a storefront—has been equipped with a backbone of sensors, gateways, and controllers to feed analytics and services, the IoT applications can offer wide business insight. Store managers can suddenly track shopper movements to optimize product placement and speed up checkout times, yet ultimately make the experience more enjoyable for their customers to keep them in the store as long as possible.

Evolving IoT Retail

This IoT approach to facility optimization has many energy and operational benefits, but the change in the experience for the customer is key for retailers. A few recent examples of IoT for retail showcase a new tech-enabled experience and provide a spotlight on what the future of shopping may look like for the stores that survive.

There has been a lot of speculation on the integration of Amazon Go and Whole Foods. As one article explained, “Amazon Go is clearly a new benchmark for IoT retail. With its system, a store can at once know the real-time status of every item, attribute these items to individuals, and then instantly bill them for it. The behavioral analytics potential of linking all stages of the supply and purchasing funnel is immense, allowing Amazon to pursue a more agile and responsive brick and mortar retail strategy. Customers might even be able to get real-time suggestions based on their shopping lists, or even get coupons for items they’re mulling over—all because of identity.”

What we know is major investments are shaking up retail. Any major retailer that fails to embrace technology faces real threats to its long-term viability.

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