by Nick East/co-founder and CEO, Zynstra
Today’s grocery and convenience stores are the new digital battlefronts. C-stores have modernized from “gas and a snack” stops to delivering a complete, high-quality, express retail and food experience, while grocers are rapidly prototyping new “click and collect” services with enhanced online and offline integration. Couple that with the raft of emerging new frictionless checkout technologies being trialed and you can safely say that today’s grocery and c-store experience is definitely changing. What’s more, with Amazon’s acquisition of Whole Foods and Amazon Go checkout-less stores popping up in key metro markets, the world of grocery and convenience is being disrupted by technology in ways few would have predicted.
And talking of predictions, looking back just a few years, many industry watchers predicted that physical retailing would soon meet its demise. What happened next is now old history—Amazon and other retail giants saw the opportunity to take the very physical nature of grocery and c-stores and take it to the next level with digital transformation tactics, making them the new digital battlefronts. The future is online and offline—physical and digital—and the key battleground is the store.
The heightened attention for the grocery and c-store space has led retailers across the board to search for ways to undergo digital transformation to meet today’s customer expectations. It doesn’t have to be an expensive case of “rip and replacing” your existing store IT. The simple truth is that there is an opportunity now to optimize existing in-store technology without incurring substantial costs of hardware replacement, and this can enable digital transformation of the store. What’s surprising is that, to date, the IT industry has not responded effectively with the necessary tools that fulfill the unique needs of this sector.
IT professionals in this space complain of having to make do with solutions designed for a different age. If this has been difficult to live with in the past, it’s going to prove impossible in the future. The reality is that modern grocery stores and c-stores need to run larger workloads at the edge—in the store, in real time, away from the datacenter—in order for the processing time to be immediate and cater to the latest applications and services consumers expect. Edge is the face of new retail, and the industry is now investing in sophisticated technologies across mobile and multi-media in-store systems as they add click-and-collect in-store capabilities, two-hour delivery options, mobile and contactless payments, and more specifically to c-stores, fast food kitchens and juice bars to become high-quality and digitally transformed stores. To prepare for these digital amenities, their IT solutions in the store need to be powerful enough to support the changes, but also operate in “no-back-office, no-local-support,” highly distributed environments.
In order to win in this new digital battlefront, grocery and c-stores will need to stay focused on implementing in-store technology that improves the shopping experience, while reducing costs. Let’s take a look at how tailored IT solutions can address these challenges and eliminate any pain points when undergoing digital transformation:
Improving the shopping experience in a digitally led world
So important is improving the customer experience that grocery and c-stores are constantly re-modeling and adding innovative components to ensure that the shopping experience remains fresh and engaging. IT can play a pivotal role in rising to this challenge.
C-stores are defined by the customer experience they deliver: quick, easy and reflecting our busy lifestyle. So, laser-like attention on a successful and differentiated customer experience is obvious. In-store IT solutions must reflect and enable this core business value. They must support an omni-channel experience so that customers can choose how they buy, whether it be ordering online and picking up on the way home, ordering while at the pump and picking up when the gas is paid for, or many other mobile-driven scenarios.
The impact of technology changes in the grocery market is rapidly taking shape, with Walmart offering mobile checkout technology to eliminate the headache that comes with long checkout lines during peak periods. And this year Kroger opened a new front in the battle for the most convenient grocery shopping with the launch of handheld scanners, dubbed “Scan – Bag – Go.” A familiar pattern is also emerging within c-stores as the demand for mobile tablet-based devices and mobile kiosks to accelerate checkout increases.
To achieve this, IT solutions must be integrated with the cloud, but also retain in-store speed of response and reliability, regardless of WAN infrastructure, so that retailers can have peace of mind that the customer transaction will be efficiently completed in real-time.
A key digital transformation objective is to attract customers into the store, or to bring the store to them wherever they are. This may involve tablet-based browsing and purchasing of goods at convenient touchpoints within the store or pump, or a tablet-equipped associate at the grocery store to make the sale and complete the transaction. This requires a local IT infrastructure with the power to support multiple device types and applications with guaranteed quality of service.
Expanding offerings and footprint
New requirements for customer experience models and applications are rising all the time. Innovation is a constant requirement. IT must have the power and flexibility to enable these models quickly and cost effectively. This requires backroom IT that can keep pace with front-of-store innovation—an IT solution which is inherently flexible to accommodate pricing, promotion and product line changes, but in a cost-effective manner. They need to be easily upgraded to support new applications that may be required to support new lines of business.
Innovation does not come about by chance. It demands constant experimenting and testing in order to ensure that it works perfectly once rolled out across stores. But this can be a real challenge for grocery and c-stores, especially those that have hundreds of locations to think about. If implementation across each store needs to be slightly different, it can be extremely difficult to know whether everything will behave correctly.
What’s required is an in-store IT infrastructure that acts as a platform for innovation, allowing grocery and c-stores to perform centralized experiments in a replicated, risk-free environment before the technologies are used publicly by customers. This allows retailers to adopt new technologies quicker than before, and to keep up with the pace of change.
The success of the CPG sector, and the requirement to put stores where customers need them, has led to an expansion of the number of outlets and a desire to be able to respond to demand and open (and potentially close) outlets quickly and cost effectively as market conditions dictate. As such, grocery and c-store IT needs to be easily deployed and commissioned with minimum technical resource, and without disruption to the business. An optimized way of achieving this is to design and maintain a standardized IT golden image across all sites that can quickly and effectively be rolled out with minimum business impact.
Reducing the cost to serve
Although customer experience is king, this does not mean that the issue of cost containment and reduction is not of paramount importance. In an IT world, this means reducing in-store infrastructure costs and reducing implementation, support and management overheads.
IT professionals are seeking solutions that can reduce the IT bill of materials by replacing multiple legacy servers in-store with virtualized solutions. Existing legacy infrastructure in grocery and c-stores can’t cope with the demands of new services and applications and can incrementally increase costs by accumulating the IT bill of materials, with inevitable escalating support and management costs.
A modern IT solution must deliver virtualization designed for the store, which can accommodate both back-office and front-of-store applications—including the ever-critical point of sale. A key consideration for grocery and c-store IT is reduction of management and support costs. For example, many grocery and c-stores are widely distributed and do not benefit from local IT support skills. So not only is centralized monitoring, management and support essential, it must be delivered and maintained in such a way as to minimize costly site visits, reduce down time, and facilitate ease of maintaining currency so that all implementations are always kept securely up to date. This is challenging to achieve cost effectively across multiple distributed edge devices, particularly where consistent standard images must be maintained across sites to reduce costs. The processes and technologies used for automated patching and to keep current are core to the value any IT solution can deliver.
Costs can be contained, ensuring in-store simplicity of support, so that more and more expensive support skills are not required. PC support skills cost less than server support skills, which in turn cost less than datacenter support skills. Grocery and c-store IT must address de-skilling the support challenge, so that these costs can be reduced.
Grocery and c-stores have had to cope with sub-optimal IT adapted from other market sectors for some time, and they have done a great job of making it work. But as they move forward into more varied and sophisticated customer offerings, they will need to optimize their existing IT solutions to meet their digital transformation needs and ensure they don’t break the bank. As such, their in-store IT will need to deliver compact, advanced IT on site which can enable a differentiated customer experience with powerful but simplified central management capability to reduce costs.