Most brick-and-mortar retail is blowing it.
Amazon’s grocery and pharmacy businesses grew at unexpected rates, earning surprised callouts from investors last year. Meanwhile, membership-based chains like Sam’s Club and Costco are thriving, too.
But those are the walled garden exceptions of the retail world. What about retail stores where people just walk in and shop?
Well, they’ve spent the past few years revamping their in-store experience – and many are now coming around to the realization that these efforts have, in fact, amounted to shooting themselves in both feet.
Take the aggressive fight against theft that led retailers to lock up half the products in their stores. How’s that working out? “When you lock things up,” Walgreens Boots CEO Tim Wentworth said on the company’s earnings call last week, “you don’t sell as many of them. We’ve kind of proven that pretty conclusively.”
For a scientist to prove a hypothesis wrong is progress, and worthwhile work. But for one of the country’s largest retail chains to conclude after years of testing that in-store shelf prisons are bad for store sales betrays a serious collective delusion – especially considering all the major chains (Walmart, Kroger, CVS and Target) have followed suit.
The biggest problem, though, is that retailers are still trying to dig themselves out of the hole they’re in. There have been widespread layoffs across retail stores and corporate offices. Chains are also using technology to reduce the average number of workers required per shift. These and other data-driven software additions, including retail media, have helped mask losses in store traffic.
Both Walgreens and CVS, for example, have grown total revenue and their prescription businesses, but retail store sales volume has decreased year over year for the past couple of years.
And if retailers are digging a hole, tech companies are more than happy to sell them the shovels.
Shovel expo
Every January, the NRF starts the year with what it calls “Retail’s Big Show” in New York City. And this year, the exhibition hall was filled with new tech and data-driven solutions with the aim, apparently, of making shopping worse.
While retailers have realized that barricading merchandise is bad for business, they don’t seem willing to let shoppers return to shopping the normal way by, you know, walking around and taking things off shelves.
Case in point, meet InVue locked shelf dispensers, which have a button customers can press to get one of an item. If you want another, you have to wait five seconds. God forbid somebody in a hurry wants to buy two razors.
A bevy of vendors, meanwhile, have taken to the shopping cart itself as the seat of innovation. Gatekeeper Systems has a product called Purchek, which auto-locks the wheels of shopping carts that haven’t passed through the point of sale. Theoretically, someone running out of a store with a cart can’t get very far.
What could go wrong?
It’s not hard to foresee frustrated employees having to green-light any cart leaving the store and ticked off shoppers who do pay and then have their cart wheels lock up. There’s also an audio and video alarm designed to cause a thief to abandon the cart and run.
TRACARTS takes a different approach by (you guessed it) placing screens and sensors on normal shopping carts to make them trackable and interactive. These sensors help corral lost carts more effectively, sure, but the souped-up carts can also promote the retailer’s app through a QR code and incentivize shoppers to submit their data, join a loyalty program and collect retail media offers.
But a company called Indyme gets right to the point with a new self-service locked shelf that allows customers to grab the item they want without an associate coming over – as long as they input some personal info.
Whether overt or subtle in their approach, it’s clear that while many of these products are ostensibly solutions for “asset protection” – the current preferred industry nomenclature for anti-theft measures (shrink is so 2020) – they’re actually all about data collection and retail media.
For instance, multiple location data vendors at the NRF’s Big Show were pitching in-store mobile-tracking products. Although these solutions don’t collect user info, they do monitor shoppers as they move throughout a store and thus feed algorithms with information about common pathways taken by looters.
Not to mention, of course, that these location data services can also prompt video ads to play on nearby screens and increase the number of attributable in-store retail media conversions.
The other in-store problem
Aside from the challenge of preventing merchandise from walking out the door, retailers are also struggling to hire and retain workers.
At least one vendor at the show pitched retailers with employee body cams, akin to what police officers wear, which detect problems with products on shelves and suspicious behavior by customers and make employees more efficient.
For those stores that want to improve the customer experience without doing the usual thing – as in, actually hiring people – there are solutions like the new bitHuman interactive “agents,” which are AI-generated avatars on screens who give AI-generated responses to a shopper’s questions. These screens were placed throughout the NRF conference hall as a handy way to direct people to certain stages or exhibitions.
An exec I met in the exhibition hall told me these video AI agents also help prevent theft, because people who shoplift at self-checkout are less likely to do so when it seems like a live person is staring at and interacting with them.
Of course, as with all AI-generated content right now, it’s super buggy and obvious. Nobody could ever be confused that these avatars are anything but AI-generated bots spouting auto-generated dialogue. But bitHuman also bills itself as a contributor to loyalty program sign-ups and retail media conversions, because it helps track what customers buy and offers incentives for people to share their phone numbers.
So, what was my takeaway from NRF? Retailers seem excited about all these products.
Personally, though, I’m thinking about taking up shoplifting.
