This article discusses the digital transformation of physical stores, particularly in the Nordics, and how retailers can add value to the in-store experience without reducing friction. The article notes that while frictionless experiences like Amazon Go stores can be great, friction can also be beneficial for retailers as it can provide guidance and upsell opportunities. To address the gap between online and in-store shopping, retailers are exploring different solutions such as robots and interactive displays, but those that add value beyond what a store clerk could offer are most successful. Examples include IKEA's kitchen planner and augmented reality app, as well as the Club Matas app that offers in-store mode for product information and reviews. The article concludes that retailers need to find a way to offer value without reducing friction.
“A little less conversation, a little more action” - Elvis Presley
Bill Gates recently shared that he for a long time was surprised by the slow development of Artificial Intelligence, in the Norwegian podcast titled “In Good Company” (1). It seemed that AI for a long time was a tool great for defeating chess grandmasters, not making our everyday lives easier. Now the initial buzz seems almost underrated, with the advent of AI-powered technologies such as Chat GPT, the potential and impact is becoming increasingly evident.
One development where I have been surprised by the tempo is the digitalisation of physical stores, especially in the Nordics.
Some digital shopping experiences are great, like Wolt saving you the inconvenience of waiting in line for your Pad Thai. But what about the physical retail experience?
In 2020, Amazon launched its first Amazon Go store, offering a frictionless shopping experience that has revolutionised the industry. Customers can simply walk in, pick up the items they want, and walk out. The store uses computer vision, machine learning algorithms, and sensors to track customers and items, with the money spent deducted from the customer's credit card linked to their Amazon user account. Frictionless and fun.
In comparison, at my local Supermarket you can simply walk in, pick up your desired items and wait in line to scan them at self-service. Once there you can enjoy searching up all your fruits and vegetables and scanning your scannables. After a long and hard struggle, you wait for the one clerk operating the 10 self-service counters, to approve that you are in fact over 18 and that you just bought one orange. You pay, you get a receipt, and lastly you wait in line to scan your receipt, so that the gate from self-service hell opens. Voilà, you have successfully completed your digital retail experience!
When it comes to digitalising the retail space, the mentioned examples represent ways of creating a (more) frictionless experience. As anyone who has ever bought a new suit or computer knows, a little friction can be a good thing. The right amount of guidance can help customers make informed decisions, realise they need super 150 wool for their new suit or that the computer they saw in the advertisement won’t be sufficient.
So, if there is an added value of friction, how can you create a symbiosis between the lesser friction found online, with the upselling potential and improved satisfaction offline?
A global survey conducted by Google and Ipsos found that 56% of in-store shoppers used their smartphones to shop or research items while they were in a store in the past week (2). This trend is particularly evident among younger generations who have grown accustomed to the convenience of online shopping and bring those habits when visiting physical stores.
However, traditional brick-and-mortar stores still offer unique advantages that online shopping cannot (yet) replicate, such as the ability to touch and feel a product combined with human interaction and guidance. These factors create a more personalised shopping experience, while removing the need to worry about shipping and return labels.
To bridge this gap, retailers are exploring various technological solutions. From touch displays that provide customers with an online shopping experience in-store, to robots that can help you. Reducing friction? Yes. Adding value to customers? Maybe.
Those who do it best, find ways of adding value beyond what you get from a store clerk, without completely removing the friction.
One old but gold example is IKEA and their kitchen planner tool. This tool allows customers to plan their kitchen from the comfort of their own homes. The planner provides inspiration to customers to create their ideal kitchen, and once the customers design is complete, some friction is added. At IKEA customers gets expert assistance to further enhance their design, resulting in a better final solution, even if it means slightly exceeding the customer's budget.
In more recent times, IKEA has launched an innovative Place app that employs augmented reality technology to provide customers with a visual representation of how furniture would appear in their living spaces. This tool offers an added advantage over traditional in-store assistance and significantly reduces the likelihood of erroneous purchases. Despite this technological advancement, it is worth noting that IKEA's physical stores still generate 75% of the company's revenue (3). And at the store friction in form of the famous IKEA maze is added, the result being the customer leaving with more purchases than initially intended.
Inadvertently, one of our good clients has discovered an exceptional method of enhancing the customer experience in stores. As revealed in the previously cited Google survey, 85% of consumers consider product information and images crucial when selecting a brand or retailer. With the introduction of the Matas Plus app's "in-store mode," customers can now enjoy a Vivino-like service exclusively for the client's products. By using the app, shoppers can stroll through the store, scan items, and access all the necessary information, including other customers' feedback and ingredient descriptions. The stores are filled with testers, allowing customers to sample those products and experience their texture and quality first-hand. Customers can seek assistance from store staff or (if preferred) chat with them through the app. Upon purchase, customers' loyalty cards are scanned, and they are offered a discount if they have accumulated bonus points. Later they receive follow-up emails suggesting other products that complement their most recent purchase. It is a retail experience where technology is supplementing, not replacing the store personnel. 900.000 have already downloaded the Club Matas application, so the value added is not lost on people (4). And the newer generations friction phobia is neither lost on Matas, you are also welcome to shop directly in the app from your own living room.
To sum it all up, technology should not remove, but reduce the friction. To quote Elvis Presley “A little less conversation, a little more action.”
(1) https://www.nbim.no/en/publications/podcast/bonus-episode-bill-gates/
(3) https://www.statista.com/statistics/946210/ikea-sales-share-by-sales-channel-worldwide/
https://s23.q4cdn.com/244975451/files/doc_financials/2021/q4/02-Matas-%C3%A5rsrapport-2021.22-DK.pdf
(4) https://s23.q4cdn.com/244975451/files/doc_financials/2021/q4/02-Matas-%C3%A5rsrapport-2021.22-DK.pdf
