Tehnology is the lifeblood of the retail business

Tehnology is the lifeblood of the retail business
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Nearly a century ago, on 6 September 1916, the first ''Piggly Wiggly'' outlet opened its doors to impatient customers in Memphis, US (where else?!), as the first true self-service grocery store, the forerunner of the supermarket. A revolving door, shelves full of carefully arranged products clearly marked with price tags and multiple checkout counters were the unprecedented innovations presented that day to curious customers. In less than five years this shopping model became absolutely dominant in the US, and then the global expansion started. The innovations which ensued, like shopping baskets and carts, advanced checkouts and other retail elements we consider as the standard today, have shaped the shopping methods of billions of consumers worldwide. It was unquestionably the biggest step taken in the history of trade ever since the first exchange of goods for money and the beginning of a more systematic application of innovation and technology in the retail business.

Nowadays the role of technology in the retail industry is undeniably fundamental, as regards financial investments and the overall impact on the development and sustainability of this sector. Every retail segment is governed by technology: from the automated procurement and distribution processes in both the online and the bricks-and-mortar shops to sophisticated technological solutions for different stages of the sales process starting with product presentation and ending with the payment. Where are we now - almost a hundred years from the day when the first customers gazed in awe at the neatly arranged products on the shelves of the first supermarket?

Consumption requires logistics

Technology indeed shapes both the habits of today's consumers and the sellers' business processes, and now, more than ever, it directly influences our purchasing decisions. The first example is e-commerce or online shopping, the channel that brought about the most significant changes in the way we buy, ever since the aforementioned first supermarket in Memphis. Online shopping is slowly taking over the primary role on the global level for several reasons. From the buyer's perspective, shopping from the comfort of their own home facilitates making decisions about the best or the most affordable product, since all the necessary information is accessible on the Internet, while the payment process is now simpler than ever, irrespective of the method used: card payment, direct banking or the increasingly popular virtual wallet, the so-called e-wallet. On the other hand, to a seller it all boils down to efficient logistics. There are no physical locations and related costs, warehouse space can often be minimised, which allows a significantly faster and simpler response to customers' requirements, compared to bricks-and-mortar shops.

E-commerce is constantly growing and gaining prominence on the Croatian retail market as well. Croatian biggest retail chain has been running its own web shop successfully for a couple of years. Admittedly, it does not offer only the standard service that involves purchase and delivery, but also innovations such as a combination of online purchase and payment and the pickup of goods on a physical location. This is reportedly an accelerating trend even on the global level.

In addition to that, the purchase of furniture, IT equipment and home appliances, even the school books, in both the specialised retail stores and several other successful internet sites specialising exclusively in retail sales of consumer goods online has grown in popularity.

Although it seemed that e-commerce would eventually put an end to the traditional commerce, or at least cause a considerable decline in its revenues, the trends detected over the last few years indicate the complementarity of these two segments, based on the technology that enables it.

Arguably, the pivotal role in this unprecendented application of technology is occupied by the ubiquitous mobile platform, the element that connects these two worlds in terms of product search, payments, product ratings, social network services, as well as the inevitable after-sales service that today's consumers expect.

The mobile platform

From the technological point of view, great importance is given these days to the use of mobile platform in the retail industry. The application of technology in a retail business, in the context of interaction with end-users, is the most prominent in the use of the mobile channel. It is almost impossible to list all the recent innovations in this field, however some of them proved worth keeping among the biggest global traders as the technology that is “here to stay and become a part of consumers' daily lives“. The most interesting technology applications are detectable in two segments: customer loyalty and payments, and, of course, the combination of both. Talking of loyalty programmes, it is important to emphasize that the focus of the retail trade is on a more precise needs analysis and preparing personalised offers for an ever-increasing customer base. The key resource for this is data, more easily and quickly accessible through mobile technology than through any other channel so far.

Among the interesting innovations in this field there are various Location Based Services (LBS) which use the physical location of the customer (the so-called Geo-fencing), in order to come up with and deliver a personalized offer to his mobile device. A version of the Bluetooth standard called BLE (Bluetooth Low Energy) is used to locate a customer precisely within a store. Such a form of Bluetooth communication does not require any special activation and pairing of mobile devices, which generally facilitates the interaction between the user's mobile device and standalone BLE transmitters, the so-called “beacons“ strategically arranged all over the store. In this way when a customer passes by the shelf with a preferred product, a notification about special offers or the one containing additional information appears on the screen of his mobile device. One of the world's biggest retail chains, Carrefour, has recently started a series of successful pilot projects on various locations worldwide, including the countries in this part of Europe, which were met with very positive responses among the customers.

Responsible application

Although such technology application certainly provides the seller with a powerful product promotion and sales optimisation tool, and the buyer clearly benefits from a simplified purchasing process and a better display of choices when searching for the optimal product, a downside to this level of personalised approach can be identified. There is a thin line between a tailor-made offer and an invasion of privacy. The information about when we buy, where we buy or even why we buy (e.g. a suggestion to combine two or more products with a similar purpose) is the kind of information we are not obliged to share with others. The old saying that ''with great power comes great responsibility'' applies here too.

In the matter of payments, every conversation about the application of technology in the retail trade these days is likely to culminate on the topic of mobile devices. The segment striving to unlock the full potential of this sales channel is precisely the payment. Its objective is to elevate the shopping experience to new heights by means of new payment methods and the aforementioned loyalty services.  The most widely accepted technology application in this field is the one of contactless payments over mobile phones which enable the use of NFC interfaces, QR codes or SMS payments. In this regard, Croatia is not lagging behind other countries. For the last three years our biggest retail chain and one of the leading Croatian banks have been using a barcode-based mobile payment system, which has been implemented successfully to serve more than 200,000 customers. In addition to that, one of our leading banks has recently launched its contactless payments system based on the NFC technology and it is planning to expand the offer of its products in this segment soon.

What the future holds is definitely a purchasing process which is even simpler for the end-user. The experiences gathered in other branches of the industry, for example in the Uber global taxi service, indicate that customers are ready to adopt new user-friendly practices and are seeking minimum interaction with the seller.

Finally, the ultimate benefit of technology in the retail trade for both the seller as the provider and the buyer as the consumer is efficiency - to achieve the set targets with no resources wasted.

Goran Bosankić, Pre Sales Manager, BU Payment, Asseco SEE