From Kiosks to Pop-up Stores, the Landscape of Physical Retail Has Changed for Good
All around the world, today’s consumers are living increasingly fast paced lives. In just the last decade, advancements in mobile technology and smartphone ownership have fundamentally transformed the way consumers shop and increased their expectations for swift and seamless experiences.
With more options than ever before, consumers have been plucked from the back seat and placed directly behind the wheel—making it mission critical for retailers to get creative and find new ways to bypass the competition and meet their consumers where they are.
Although consumer demand for convenient purchase options has climbed dramatically in recent years, in part due to the accelerated adoption of digital during the COVID-19 pandemic, consumers have not abandoned physical retail—in fact, quite the contrary.
According to findings published in Raydiant’s State of Consumer Behavior 2021 report, nearly half (44.4%) of consumers still prefer physical and in-store shopping to online alternatives.
Some of today’s most successful brick-and-mortar retailers such as Target and Best Buy serve as prime examples of in-store’s ongoing relevancy: “Best Buy raised its outlook and now expects fiscal 2022 revenue to be between $51 billion and $52 billion with same-store sales growth of 9% to 11%. Best Buy was projecting same-store sales growth of 3% to 6% for fiscal 2022.”
But for brands that aren’t monoliths or for retailers that have yet to test out a new market, opening and operating a new physical storefront can be risky. And then there are locations where a standard size store isn’t logistically possible—think airports, college campuses, sports arenas and even in dense cities where available commercial real estate is both sparse and highly expensive.
Fortunately, there are a myriad of innovative solutions that will allow brands and retailers to dodge the spatial and financial hurdles associated with brick-and-mortar while still placing them directly in the paths of their customers.
Meeting the customer where they are—and where they’re headed
Enter micro-stores, kiosks and pop-up locations. These bite-sized mobile stores appeal to consumers on-the-go and help eliminate inconvenience from their shopping journey.
By strategically placing a kiosk or micro store in a high-traffic location, retailers provide a valuable service to consumers who want to seamlessly grab what they need and get to where they’re going.
This was the motive behind why, earlier this year, school food supplier Sodexo launched an autonomous micro-grocery store at the University of Denver, as well as a new line of high-tech, Yo-Kai Ramen vending machines at New Mexico State University.
On the flipside, small format and autonomous stores could also be leveraged to bring products into rural areas and underserved communities with little to no access to fresh food—a problem that continues to plague millions of American families.
A recent study by the U.S. Department of Agriculture revealed that rural communities across the nation have seen a 20 percent decrease in grocery and specialty food stores over the last 25 years.
According to the USDA’s findings, there were 23 nonmetro counties without food retailers of any type, 41 nonmetro counties with just one food retailer, and 115 with only one grocery store.
Across the Atlantic Ocean, rural villages in Sweden have also faced similar challenges. Between 1985 and 2010, the number of supermarkets in rural Sweden dropped from 8,500 to 3,500, leaving thousands of citizens, like those living in the country’s far-north Skåne region, with fewer and less-convenient food options than those living in metro areas.
Fortunately, one innovative grocer is bringing food accessibility back to Sweden’s rural countryside one autonomous store at a time.
Launched in 2018, Lifvs is a supermarket startup that has deployed 19 autonomous, shipping container-sized grocery stores throughout Sweden’s most remote regions. With reduced staff and overhead costs, the Stockholm-based company supplies fresh food, dairy and produce to small communities where full sized grocery stores have historically struggled to remain profitable.
Back in the United States, regional supermarkets, such as ShopRite in the Northeast, and even independent grocers, such as Fayetteville’s Nourish + Bloom, are testing out autonomous store models. And although these stores have, so far, been primarily deployed in metropolitan areas, the success of Lifvs serves as an example of how autonomous technology can transform American rural communities as well.
But for consumers living in cities, the call for convenience isn’t always limited to the necessities. While small format stores are a great solution for expanding local food and beverage options, they can also make discovering new tech, apparel or even skincare products—particularly those sold by digitally-native brands—a more convenient and engaging experience as well.
Earlier this year, former Nike executive and now T-Mobile Industry Segment Advisor Ryan Taylor told RETHINK Retail, “One of the biggest opportunities I see in retail today is delivering a frictionless-type experience. And what I mean by frictionless is self-checkout, or a scan-and-go option, where a consumer does not have to actually interact with, if that’s their preference, an associate or employee in a store to fulfill their shopping experience or needs.”
And it doesn’t stop there, as T-Mobile works with luxury retailers that require greater connectivity for both pop ups and updated physical stores. For customers, this means more opportunities in the form of product discovery, convenience, and frictionless interactions with sales teams.
Taking a test drive
Although smaller in size and assortment, alternative store formats can make a big impact in helping retailers meet the demands of consumers while providing a testing ground to gather critical business metrics.
These days, kiosks, micro and popup store formats are typically enabled by Internet of Things (IoT) technology such as cameras, sensors, computer-vision and even heat mapping—all tools that create an environment rich with real-time data. By extrapolating and analyzing this data, retailers glean invaluable insight into how consumers experience their store as well as how products are performing within a specific market.
According to Haixia Yu, a Board Director at Summer Search: “A pop-up store is an excellent low-cost way for brands to showcase the latest products, attract new customers, and interact with customers in a fun and engaging way.”
With new and emerging markets consistently on-the-rise, making smart, data-informed business decisions about where to test next is quintessential for retailers aiming to expand their physical footprint.
Powering a connected future
Behind every digitally-enabled store is a reliable internet connection—ideally a 5G wireless connection with low latency and enough bandwidth to support the POS, cameras, and other onsite IoT technology that power the store and provide remote monitoring and management of a location’s assets and inventory.
Besides offering optimal connectivity, 5G networks enable high-speed fixed wireless access which allows retailers to launch a new pop up shop at lightning speed.
“Small format stores, from micro-stores to pop-ups, serve a hyper-localized customer and gives the retailer a chance to be part of a community. Smaller format stores allow for a more curated assortment, leveraging customer insights and data to drive a product mix while having the opportunity to learn what delights the shopper. A smaller format store also allows for two way and direct communication with the customer, giving the retailer a chance to close the feedback loop on product assortment, aesthetic, size, fit or style,” said Liza Amlani, the Principal and Founder of the Retail Strategy Group.
While the implementation of these 5G network solutions within the pop-up retail space is continuing to be planned and developed, a recent example of a potential large-scale application is Kohl’s partnership with Sephora. Kohl’s announced earlier this year that they were opening 400 new Sephora outlets at Kohl’s shops to join another 200 already in operation with a roadmap to 850 by 2023.
Notes Doug Howe, Kohls’ chief merchandising officer, the expansion serves as an opportunity to “…[make] prestige beauty more accessible to people everywhere.” More micro-stores than pop-ups, Sephora integrates into Kohl’s larger department store model via 2,500 square foot stores with “the look and feel of a freestanding Sephora.”
As Amlani observed, it is because smaller stores ‘allow for a more curated assortment’ that 5G integrated consumer insights, tracking, and even geospatially informed data collection and analysis provide such critical opportunities for the all-sought-after omnichannel data personalization that can identify the specific needs and preferences of local consumers to an unprecedented level of detail, something that is simply not optional to an effective and locally integrated beauty supply outlet.
5G allows for this to be setup quickly, flexibly, and with a high-level of consumer ease and accessibility, and might help (e.g.) Sephora’s ‘Beauty Advisors’ to make more specific and effective recommendations to customers in a way that happens entirely within a 5G ecosystem Sephora can manage themselves whether they choose to integrate into a broader store Wi-Fi system or not.
Notes Christian de Looper for digitaltrends, “While Wi-Fi and 5G will be pitted against each other, all signs point to us likely needing both technologies to fully take advantage of the internet of tomorrow.”
Whether it’s to bring fresh food to communities, test a new market, or launch an interactive retail experience, today’s kiosks, micro and pop up stores are proving that innovative retail comes in all sizes. To learn more about how T-Mobile’s 5G network can power your next idea, visit https://www.t-mobile.com/business/5g/5g-hq/industry/retail.