What Are Smart Stores?

Smart stores, also known as connected stores, autonomous stores, or intelligent retail environments, are brick-and-mortar stores that incorporate various technologies to enhance the shopping experience, optimize operations, and improve customer engagement and lifetime value (CLV). These stores are sometimes described as phygital, as they combine traditional physical shopping with experiences from the digital retail world (eCommerce).

Smart stores often incorporate Internet of Things (IoT) technologies in the form of smart devices and sensors, and artificial intelligence (AI) technologies such as computer vision to power cashierless checkout. Smart retail also leverages in-store data analytics to create a seamless and personalized environment for both customers and workers. By leveraging innovations such as IoT connectivity, smart shelves, digital signage, and automated inventory management, smart stores offer features such as personalized product recommendations, frictionless checkout experiences, real-time inventory tracking, and targeted marketing messages. With data-driven insights and enhanced connectivity, smart stores revolutionize the way retailers engage with customers, streamline operations, and drive business growth.

1. Minimum friction: smart store technology is concerned, first and foremost, with reducing or completely eliminating friction from the shopping journey, including long or complicated checkout processes, stockouts, difficulty to locate products, etc.

2. Internet of Things-enabled infrastructure: Smart stores utilize devices and sensors to collect data from various sources, such as smart shelves, cameras, and shopping carts. These devices are interconnected, enabling real-time data transmission and analysis. For example, smart shelves equipped with Radio Frequency Identification (RFID) tags can automatically monitor inventory levels and send restocking alerts to store employees.

3. Seamless omnichannel integration: Smart stores can facilitate seamless integration between online and offline channels. Customers can browse products, check availability, and make purchases through various channels such as websites, mobile apps, and in-store touchscreens. This integration allows customers to start their shopping journey online and continue in-store or vice versa.

4. Intelligent checkout and payment systems: Smart stores streamline the checkout process by incorporating automated frictionless checkout and self-checkout systems, mobile payment options, and other advanced payment processes. Customers can pay using mobile wallets, credit card tap, touchscreens, or enable automated payment via a retailer’s app.

• Personalized customer experiences: Smart stores can leverage in-store and customer data and AI algorithms to offer personalized experiences based on customer preferences, purchase history, and behavior to deliver tailored recommendations, promotions, and offers.
• Enhanced in-store navigation: Smart stores can employ technologies like beacons and indoor positioning systems to provide customers with interactive maps and navigation assistance. These tools help customers locate products, find their way through the store, and receive personalized notifications or promotions based on their location.
• Real-time analytics and operational insights: Smart store technology leverages data analytics to gain real-time insights into customer behavior, sales trends, and operational performance. By analyzing data from various sources, retailers can optimize inventory management, improve store layouts, and make data-driven decisions to enhance overall operational efficiency.
• Remote monitoring and management: Smart stores enable remote monitoring and management of various store aspects. Retailers can remotely monitor security cameras, temperature control systems, and equipment performance. Additionally, store managers can access real-time data and insights on sales, inventory, and foot traffic remotely, allowing for more efficient decision-making and troubleshooting.
• Sustainability and energy efficiency: Smart stores often incorporate energy-saving technologies such as smart lighting systems, automated HVAC systems, and intelligent power management. These features help optimize energy consumption, reduce costs, and contribute to sustainable practices.
• Labor crisis management: Smart stores play a significant role in addressing the labor crisis by leveraging technology to optimize operational efficiency and alleviate the strain on available labor resources. With automation and advanced technologies, smart stores can streamline various tasks, reducing the need for extensive manual labor.

Retailers in recent years have begun to incorporate innovative technologies into their stores to deliver a more frictionless shopping experience for their customers. German grocery chain Rewe is an excellent example of application of smart store solutions. REWE operates cashierless supermarkets and convenience stores that utilize a combination of computer vision, sensor fusion, and deep learning technologies to track shopper/product interaction and automatically charge them for their purchases as they leave the store. Customers can in these stores shop as they normally would, and the smart store system tracks their movements and items picked up or returned, allowing for a seamless and frictionless shopping experience.

Other applications that retailers can potentially leverage include:

Interactive digital displays: Many retail stores are incorporating interactive digital displays that provide customers with engaging and informative experiences. These displays can showcase product information, offer recommendations, display customer reviews, and even enable virtual try-on experiences. Customers can interact with the displays using touchscreens, gestures, or augmented reality (AR) technology, allowing them to explore products in a more immersive and personalized way.

Mobile apps and in-store navigation: Retailers are developing mobile apps that provide customers with in-store navigation, allowing them to search for products, access real-time inventory information, and receive personalized recommendations. These apps can guide customers through the store using indoor positioning systems, beacons, or augmented reality (AR) overlays, making it easier for them to find desired items and enhancing their overall shopping experience.

Beacon technology: Beacon technology, which uses Bluetooth low energy (BLE) signals, is being utilized in smart stores to deliver personalized promotions, notifications, and offers to customers’ smartphones based on their proximity to specific areas or products within the store. Beacons can also help retailers gather data on customer foot traffic and behavior, enabling them to optimize store layouts, improve product placement, and enhance the overall customer experience.

These real-life applications of smart stores demonstrate how technology integration can transform traditional retail environments, making them more convenient, engaging, and efficient for customers and retailers alike.

Smart store technology can contribute to a more sustainable future by incorporating technologies and practices that minimize environmental impact. Here are a few examples of sustainable practices made possible in a smart store environment:

• Smart stores can prioritize energy efficiency by utilizing smart lighting systems that adjust brightness based on occupancy and employing intelligent power management to reduce wasteful electricity usage. Such measures not only reduce carbon emissions but also lower energy costs for retailers.
• Smart stores are geared towards more effective inventory management, minimizing food waste and product spoilage.
• With real-time data analytics, retailers can closely monitor inventory levels, track expiration dates, and implement just-in-time inventory strategies, reducing overstocking and the need for excessive product disposal.
• Dynamic Pricing and Promotions: Smart stores leverage AI algorithms to offer personalized promotions and discounts, encouraging customers to buy items that are nearing their expiration dates or those with limited shelf life, thus reducing the likelihood of waste.

By adopting these practices, smart stores align with sustainability goals, reduce their ecological footprint, and set an example for the retail industry as a whole.