What Are Contactless Stores?

Retail Business Review | Saturday, October 08, 2022

Contactless stores indicate a suite of technologies and customer experiences that retail chains have implemented to reduce friction or delays experienced by customers at various touchpoints and minimize human contact in the buying experience.

FREMONT, CA: The retail industry has experienced significant changes in the last decade as prominent retail brands invested greatly in digital transformation underpinned by cloud computing progress and the widespread acceptance of e-commerce.

The pandemic in 2020 and the succeeding reopening of the economy have further hastened changes driven by varying customer expectations and informal demands of Millenials and Gen Z customers.

Stay ahead of the industry with exclusive feature stories on the top companies, expert insights and the latest news delivered straight to your inbox. Subscribe today.

What are contactless stores?

Contactless stores indicate a suite of technologies and customer experiences that retail chains have implemented to reduce friction or delays experienced by customers at various touchpoints and minimize human contact in the buying experience.

Technologies and processes that allow a contactless buying experience incorporate e-commerce buy online and pick up in-store (BOPIS), self-service checkout kiosks, NFC-based payment cards, mobile wallets, and cashier-less checkout experiences like Amazon’s Just Walk Out.

What are the critical drivers for contactless stores?

While e-commerce, BOPIS/Curbside, and contactless shopping experiences are not new, COVID-19 hastened the roll-out of contactless technologies and delivery models as customers and retailers redirected to overcome social distancing norms and safety concerns.

 •  As per Visa, tap-to-pay transactions in everyday segments in the US, including grocery and pharmacy, have grown more than 100% over the last year (2019). Thirty-one million Americans tapped a Visa contactless card or digital wallet in March 2020, up from 25 million in November, with overall contactless usage in the US growing 150% since March 2019.

 •  As per Square, “Mobile wallets have accelerated in popularity due to the low- or no-touch interactions customers can make to complete transactions. And for businesses, the tap-to-pay technology can decrease wait times at checkout.”

 •  eMarketer approximated that BOPIS sales revenue in the United States grew 107% in 2020 and will continue to grow upwards of 15% till 2024.

Technology implications of implementing contactless stores for retailers

 •  Based on the extent and scope of contactless store implementation, retailers may have to review bandwidth availability, LAN/WAN/wifi capabilities, network security, and security camera coverage at the store.

 •  Cashierless stores need a bevvy of technologies to work together. Computer vision, artificial intelligence-enabled cameras, infrared lead sensors, microphones, RFID strips, and mobile apps work together to proffer the convenience of walking in and leaving the store without checking out.

 •  POS systems may need an upgrade to offer additional payment options and integrate POS with sensors. In some implementations (for example, Amazon’s Just Walk Out), the concept of POS, as we know it today, may not even reside as a virtual shopping cart is updated in real-time as the customer adds items into the basket.

 •  Self-checkout, digital wallets, and BOPIS need a recalibrated approach to lose prevention to address theft and online fraud. As per Visa, “Unlike conventional online orders, a BOPIS transaction may contain less information to leverage in assessing the risk of the order (for example, a BOPIS order may not contain a shipping address). Unlike customary in-store transactions, a BOPIS transaction doesn’t benefit from the secure capture of the payment, like chip-on-chip or tap-to-pay methods.”

 •  Customer privacy concerns can turn into an issue when every customer is singularly identified and tracked across the store. While mobile loyalty apps and guest wifi systems are already trailing customer behaviour in-store, innovative contactless stores depend on enhanced customer movement tracking, which may raise questions regarding customer privacy.

More in News

These days, e-commerce fulfillment centers are crucial components of the supply chain that assist businesses in meeting the demands of modern consumers. Returns, packaging, shipping, and inventory control are all handled by the centers. Businesses of all sizes can benefit from using fulfillment centers in a number of ways, including increased customer satisfaction and efficient growth. The primary benefit of eCommerce fulfillment centers is their capacity to expand operations as required. Small and medium-sized enterprises (SMBs) can grow without having to invest in personnel, real warehouse space, or logistical equipment thanks to fulfillment centers. The fulfillment center can handle the additional workload, enabling the business to focus on other core aspects such as marketing, customer service, and product development. The flexibility is precious during peak shopping periods such as holidays or special promotions, where demand spikes temporarily. Companies can convert fixed costs (such as rent and salaries) into variable costs, where they only pay for the services they use. The cost model is more flexible and allows businesses to better manage cash flow, especially during periods of fluctuating sales. Operating an in-house fulfillment operation requires investment in facilities, equipment, and labor. It is beneficial for startups or small businesses with limited capital. Shipping speed is critical in eCommerce, as customers increasingly expect fast, often same-day or next-day delivery. The proximity significantly reduces shipping times and costs, enabling businesses to offer faster delivery options at more competitive rates. Due to their high volumes, fulfillment centers can negotiate better shipping rates. The savings are often passed down to businesses, allowing them to reduce costs while maintaining a high level of service. For international shipping, fulfillment centers can manage customs documentation and compliance, making cross-border eCommerce easier for businesses. Outsourcing fulfillment to a dedicated center allows businesses to concentrate on their primary goals, such as marketing, customer engagement, product development, and sales strategies. Managing the complexities of order fulfillment on a business scale can be time-consuming and resource-intensive. Fulfillment centers take on this burden, handling everything from order processing to packaging, labeling, and shipping. The operational shift frees up valuable time and resources, enabling businesses to focus on improving their offerings and growing their customer base without worrying about the intricacies of warehousing and logistics. Fulfillment centers provide businesses with advanced inventory management systems that offer real-time tracking of stock levels, order status, and product movement. A smooth returns process is critical in reducing friction and maintaining customer trust, as many online shoppers value a hassle-free return policy. E-commerce fulfillment centers provide many benefits to businesses, from scalability and flexibility to improved shipping efficiency and cost reduction. ...Read more
Retail design services influence how consumers view and engage with a brand. Professional retail design services maximize store layouts, enhance visual merchandising, and produce immersive experiences to help businesses realize their full potential. A well-designed store improves the customer experience by creating a useful and enjoyable environment. The design, lighting, positioning of products, and overall ambiance of a business all affect how customers feel when they enter. A well-designed business takes into account the entire client journey, from the time they arrive until they leave. Easy-to-navigate layouts help prevent customer frustration and ensure that high-margin or seasonal products are placed in prominent locations, increasing sales. Retail design services improve customer satisfaction and encourage repeat visits. Retail design services can also incorporate sensory elements such as lighting, scent, and music that align with the brand’s identity. Retail spaces are a powerful platform for telling a brand’s story and reinforcing its identity. Every aspect, from color schemes to a store’s design layout, can communicate the brand’s values, mission, and personality. Professional retail designers understand the importance of creating a cohesive look and feel that aligns with the brand’s image. A luxury brand may use high-end materials, elegant lighting, and minimalist designs to evoke exclusivity and sophistication. In contrast, a trendy, fast-fashion retailer might focus on bold colors, dynamic lighting, and modern, edgy displays to appeal to younger consumers. By aligning the physical environment with the brand’s identity, retail design services ensure that customers connect with the brand on a deeper level. Storytelling through design also plays a role in how customers perceive products. Retail designers can use visual merchandising techniques to highlight essential products, promote new collections, and create immersive displays that tell a story. Efficient use of space is crucial for any retail operation, regardless of the store’s size. Poorly designed spaces can lead to overcrowding, underutilized areas, or confusing layouts, negatively impacting sales. Retail design services focus on maximizing the potential of every square foot, ensuring that products are displayed attractively and that customers can move freely within the store. Professional designers also understand how to optimize store layouts to drive traffic to key areas. A well-designed floor plan may direct customers toward high-margin products or encourage impulse buying by placing small items near the checkout area. The growing demand for experiential retail means customers want more than just products—unique, engaging experiences. Retail design services can help businesses integrate technology, such as interactive displays, virtual fitting rooms, or mobile checkout options, to create a more modern and convenient shopping experience. Designers can adapt stores to accommodate new trends like pop-up shops or “shop-in-shop” concepts, where brands collaborate to create unique, short-term retail experiences. Retail design services also emphasize flexibility. ...Read more
 Retailers should differentiate between beneficial and complex technological advancements to improve their operations.  AI Revolutionizes Shopping Experiences:  Artificial intelligence (AI) has impacted various sectors, and retail is no exception. The integration of AI is changing how retailers manage their operations, boosting efficiency and profitability. Optimizing Inventory Management:  AI’s ability to analyze consumer spending patterns is revolutionizing inventory management. Retailers can now track which items are popular at different times of the year and adjust their stock levels accordingly. By utilizing AI-driven demand forecasting models, businesses can predict when to restock products, thus avoiding overstock situations and ensuring timely availability. Machine learning algorithms can process sales data and current trends to predict inventory needs accurately. This approach helps retailers maintain optimal stock levels, reduce excess inventory, and improve overall inventory management. Generative AI Enhances Retail Operations:  Generative AI offers more than marketing copy generation. Companies like Enmedio provide interactive digital tools that assist retailers in optimizing store layouts and improving inventory workflows. It can also play a significant role in filtering store layouts and planogram designs. By analyzing data from customer interactions, demand forecasts, and available store space, generative AI can automatically create effective store layouts and shelving plans. Personalized Customer Experiences through Data Analytics:  Retailers tracking online and in-store customer behavior are increasingly benefiting from AI-driven data analysis. This technology allows for the construction of specifically tailored shopping experiences. All Seasonings Ingredients ensures consistent flavor and operational precision, supporting retailers’ inventory management and planogram accuracy. Tailoring Recommendations:  AI helps retailers personalize their communications and offers based on individual customer data. This personalization can include product recommendations, upselling opportunities, and customized promotions. AI recommendation systems utilize various techniques, such as collaborative filtering, which looks at similar customers’ behaviors, and content-based filtering, which focuses on product attributes. Combining these methods can enhance recommendation accuracy.Customers can receive personalized suggestions through various channels, including email, on-site recommendations, mobile app notifications, or targeted ads. This approach helps retailers better meet customer needs and preferences, fostering a more engaging shopping experience. Self-Checkout Technologies:  A Changing Focus Self-checkout systems have been widespread, particularly during the pandemic when many shoppers favored touchless options. However, the excitement surrounding advanced self-checkout technologies is beginning to fade. ...Read more
The retail industry is transforming significantly due to new trends like augmented reality, artificial intelligence, and the Internet of Things. These advancements enhance the shopping experience and personalize consumer interactions, redefining the retail business model and enabling businesses to establish stronger customer connections in a rapidly evolving market. Below are some of the retail business trends shaping the market: Hyper-Personalisation and Product Differentiation Hyper-personalisation has shifted from being a luxury to an essential aspect of retail. Customers now demand shopping experiences that reflect their preferences, behaviours, and lifestyles. To remain competitive, businesses must leverage customer data to create unique experiences beyond basic product recommendations. By utilising advanced tools to analyse customer data, retailers can deliver tailored offers that foster meaningful engagement. Differentiating products is also crucial, as it enables brands to cultivate loyal customer bases that appreciate unique offerings that resonate with their values. Sustainability and Ethical Sourcing The movement toward sustainability continues to gain traction, fundamentally changing consumer purchasing behaviour. Customers increasingly seek durable, high-quality products over disposable options, prompting businesses to prioritise eco-friendly practices. Implementing sustainable practices involves sourcing responsibly manufactured items and establishing a reputation as a leader in ethical consumption. By emphasising transparency and accountability throughout operations, companies can attract consumers who value sustainability and are willing to invest in ethical products. Omnichannel Integration Omnichannel retail has become imperative for business survival. Consumers expect seamless shopping experiences across multiple platforms, including mobile apps and physical stores. Companies like Enmedio provide digital signage and interactive solutions that enhance customer interactions across these channels. Businesses that successfully integrate these channels report increased customer lifetime value and revenue growth. Establishing a robust omnichannel presence involves managing inventory, sales, and customer interactions across various touchpoints. The effectiveness of an omnichannel strategy is a crucial driver of growth, making it essential for retailers to adapt to changing consumer behaviours. Wellness-Focused Merchandise With the global health and wellness industry projected to grow substantially, retailers have a significant opportunity to cater to customers' increasing focus on mental, physical, and emotional well-being. Retailers must address new demand categories related to wellness, optimising stock levels and forecasting trends in high-demand areas. Creating designated wellness sections within stores can enhance customer engagement and increase transaction values by grouping products according to wellness goals. Splendor Volcanic Artesian Water offers premium sparkling water that supports retailers’ channels and enhances customer interactions with sustainable hydration solutions. Experiential Retail Creating immersive shopping experiences is crucial for physical retail locations. Customers now prioritise engaging in-store experiences, such as product demonstrations and interactive displays, beyond mere transactions. Investing in technologies that enhance these experiences can significantly improve customer engagement and conversion rates. Retailers must create engaging shopping journeys that resonate with customers, driving repeat visits and higher transaction values through evolving inventory and seasonal offerings. Visual Search Visual search technology is becoming an essential tool for product discovery in retail. This innovative feature allows customers to locate products by uploading images instead of typing descriptions, transforming online and in-store shopping experiences. Visual search capabilities can enhance product discovery, increasing sales and conversion rates. Retailers can boost customer engagement by investing in platforms that facilitate image-based product searches, making it easier for shoppers to find products they are interested in. As consumers increasingly seek personalised experiences and ethically sourced products, retailers must adapt their strategies to meet these evolving demands. Embracing digital innovation and integrating various sales channels will be essential for companies aiming to enhance customer engagement and loyalty. Additionally, by creating immersive shopping experiences and leveraging advanced technologies like visual search, retailers can transform the shopping journey into a more interactive and satisfying experience. Those who effectively harness these trends will thrive in the competitive marketplace and build lasting connections with their customers, ultimately driving sustainable growth and success in the retail sector. ...Read more