Innovation, between watching and doing

MICHELE CAPRINI
26/10/2020
In brief
Even before the spread of COVID-19, which already after its first passage left in its wake a remodelled retail, there was a superficial perception that the traditional store is having to up its game, replaced by e-commerce. But it is not so. Physical retail is alive and well and provides the lifeblood which sustains the success of online sales, rather than suffering them. Digital innovation, created by the giants of U.S. retail, is there to prove it. Those who did not understand its strategic centrality in time ended up, instead, in the heaping pile of the ‘retail apocalypse’ victims.

The never-ending innovation practiced by three giants of American retail is, by now, an unavoidable reference model for explaining the growth and de-growth of the entire worldwide sector.

TARGET’S CONTINUOUS CYCLE INNOVATION

In 2017Target (1,900 stores in the U.S.) invested 7 billion dollars in various initiatives aimed at uplifting its stores and reshape the customer shopping experience.By 2018, the effects were already evident: foot traffic hit its highest peaks of the decade. Since then till today, the continuous innovation of spaces has never stopped, integrating classic distribution with cutting-edge technologies.

The COVID-19 emergency has further boosted Target’s tendency to technological innovation. The Minneapolis-based retailer has responded to social distancing needs in many ways, primarily with contactless self-checkout via the proprietary app’s mobile payment option.

Watch out for the queue!

Then, with the Pre-Trip Shopping reservation, an online booking system for ensuring enough space to shop safely and comfortably, Target monitors and, if necessary, limits the number of people allowed in the store at the same time.During the holiday season, it will be possible to visit Target.com to verify if there is a queue outside your favourite store and book your place in the line. Target will then send you a message informing that it is your turn to enter the store.

In addition to this, Target is doubling the number of spots dedicated to Drive Up, the same-day collection service where goods are brought directly to the customer’s car.Also the need to scan barcodes has disappeared. Customers simply show their app to the Target’s team member through the car window, with a visible personal identification number confirming the order. This year, given the inevitable drop in visits to supermarkets, Target’s curbside pickups increased by 734%.

WALMART, THE STORE-AIRPORT

The new store design of Walmart, the largest retailer in the world, will involve 200 stores by the end of 2020, and a further 800 in 2021. The redesign of Walmart supermarkets began a year before the health emergency.

The stated goal is the definitive continuity of the shopping experience between physical and online store, using a single language on the app and in the aisles.

Janey Whiteside, Walmart’s chief customer officer: “We’ve always known customers want to get in and out of a Walmart as quickly as they can. Not in a bad way. You don’t want to waste time”.This propensity grew during the pandemic for the obvious need for safety, speed and clarity, which consequently became the main prerequisites for the new supermarket layout.

At the supermarket just as at the airport

When we started, we spent a lot of time looking at places where large groups of people need to be quickly directed somewhere. Airports inspired us because you don’t spend a lot of time there and thus you don’t know the way, and people must be taken to the right place in a timely manner”.

The app will direct customers to the exact locations of the items that the customer is looking for, in aisles marked with clearer and larger numbers and letters corresponding to the app’s icons. Walmart defines these tools as “navigation efficiency”.For some readers, these big words may not be of much help, but by using the same icons used on the smartphone, people’s orientation will be strongly facilitated.

Also the signage has changed, now transformed into a blue square that imitates the app’s icon, also used for the parking and pick up areas. Shopping in a supermarket, stopping in your car, browsing the Walmart app or using your PC browser, always with an immediately recognizable signage,

KROGER, DIGITAL INNOVATION WITH UNIVERSITIES

For Kroger, another giant of the stars and stripes distribution (3,000 stores nationwide), the importance of innovation is such to make strategic the collaboration with universities.Also in this case, this project started before the pandemic, with the creation of a digital innovation laboratory at Northern Kentucky University.Kroger, on the other hand, is involved in other digital initiatives involving higher education in Cincinnati; in 2019, for example, it opened its own space at the 1819 Innovation Hub of the University of Cincinnati.

Retail is techno-centric

It’s all about talent and how we attract talent for Kroger’s mission, which is increasingly techno-centric”, is the definition of the project given by Chris Hjelm, executive vice president of Kroger. The digital and technological capacity of the retailer is even claimed as ‘part of the corporate DNA’, in reference to the excellence of 84.51°, the ownership structure of data analysis.

Kroger also stands out for its IoT market research. The group is active at the Innovation Hub where it has developed a prototype of an intelligent refrigerator to make it easier for customers to reorder Kroger products that are getting low.

QUESTIONS AND ANSWERS

It is natural to ask how it is possible to compare the events of Target, Walmart and Kroger with the general state of American retail, always in headlines in recent years for the setbacks suffered by entire sectors (shopping malls and department stores, for example), by major distribution chains and by retail institutions such as Sears or J.C. Penney.The dismal lists of companies filing for chapter 11 bankruptcy are in open contradiction with the performance of the brands that make up the backbone of U.S. distribution.

It is even more natural to ask what sense have the millions of speeches made on the conflict between physical distribution and e-commerce, and on the irreversible damage that the second would cause to the first.The sales volumes achieved by these retailing channels are growing strongly on both sides. Stores become the natural outlet for apps and, in turn, promote digital business development.

The answer is simple: those who decide the market understand technology as the driving force of distribution. Since the days of the first cash register and the advent of the barcode, this has made the difference between development and recession, or worse. It is a simple but important concept to commit to memory and write in stone.

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