Contactless Store – Main Retail Format of the Future

The pandemic is changing consumer patterns with a focus on online services. Rethinking work principles of physical stores is the only way to maintain traffic and sales. Contactless store as a new format of retail could become the main trend in the industry for the next few years.

It’s not just about the “contactlessness” of purchases for the sake of protecting the health of customers and employees during the pandemic. Fundamental changes in consumer behavior are taking place, which are associated with the development of technologies, as well as with the introduction of brand new products and services that change the landscape of the retail industry.

Nowadays, it is already possible to formulate a list of steps that the retail business should take to overcome uncertainty, become more stable, and get ready for further changes.

Everyone changes, but in different ways

In response to the current crisis, retailers quickly got busy with ensuring employee and customer safety, developing new business models, and launching new services. Below, there are the basic reasons why the industry needs to thoroughly understand which changing consumer habits they should adjust to.

Over the past few months, many consumers have experienced significant changes in lifestyle and financial state. Accenture conducted an investigation and identified four main groups of customers:

1. 33% of respondents reported a decrease in disposable income compared to the pre-crisis period. These people are four times more likely to be on temporary leave or unemployed and expect financial support from the government.
2. 9% reported a reduction in the time that they used to spend on leisure. 59% of them reduced the frequency of shopping trips.
3. For 32% of respondents, disposable income and free time remained the same as before the outbreak. They are least likely to follow the government’s recommendations on the pandemic and won’t adjust personal and consumption habits in this regard.
4. 26% reported an increase in disposable income and free time since the beginning of the pandemic. These people are more likely to learn new skills and use digital channels for shopping.

Speaking about the big picture, 71% of consumers are shopping today in a much more frugal mode than before the crisis.

The client is always anxious

In the consumer markets of countries where the epidemiological situation is stabilizing, health concerns are slowly diminishing. However, economic problems remain unresolved, undermining the consumer confidence index.

Nevertheless, people still feel uncomfortable about going to public places. At the same time, this concern can be reduced if retailers take visible measures to follow sanitary requirements.

The top 5 initiatives to help consumers feel more comfortable in public places look as follows:

1. The first position belongs to the established standards for cleaning premises: 27% of respondents immediately put this condition first; 46% included it in the top 5 basic factors for reducing consumer concerns.
2. The second position goes to the visible implementation of disinfection procedures (18% and 54% respectively).
3. The third one – to the availability of PPE for customers and use of free disinfecting agents (14% and 58%).
4. Next is the mandatory wearing of PPE by retail employees (12% and 60%).
5. Finally, the same rule for all visitors entering the premises (7% and 56%).

Other customers’ requirements for offline businesses, particularly retail, include a limit on the number of customers in a store at any one time, expanding contactless payment and delivery options, minimization of touching during the purchase process, meeting social distancing requirements, etc.

I’ll be back…?

Caring for the health of customers and giving them the opportunity to choose a buying channel help retailers accelerate the restoration of traffic and sales via offline channels. But the main question now is different: will offline channel demand recover to the level it was before the pandemic?

Willingness to go to shopping malls has already been expressed by 29% of respondents from countries where the number of infected is increasing and 30% of respondents from countries with a stable epidemiological situation.

43% and 35% correspondently are no longer afraid to go to pharmacies and small grocery stores; 30% and 27%  - to retailers selling non-essential goods.

Another “wake-up call” for the industry is changes in the online shopping frequency metric for consumers who rarely used online channels. According to Accenture, on average, consumer online spending has grown by 160% and is likely to remain at the current level, which will naturally cause a decrease in the share of offline purchases.

Also, since the beginning of the crisis, the demand for retail outlets to provide remote and contactless service has grown significantly. The share of customers who use contactless payments has increased by 51%. The number of users making orders via apps has increased by 47%, and the number of users making purchases via social networks – by 39%. Dispensing of goods through pick-up points or directly to the car was discovered by 33% and 40% more consumers, respectively.

Consumers who plan to remain in the habit of using services and shopping remotely account for 70% of the total number of respondents.

Contactless selling

The sum of modern realities, trends, and forecasts leaves no choice for the industry: the contactless store format is both gaining popularity as a concept and getting its first practical implementations around the world.

For example, the largest European discounter chain Aldi recently finished the implementation of a tool for monitoring and managing the number of visitors in its stores. Major US retailer Target has launched a delivery-to-vehicle functionality via a mobile app and has also allowed shoppers to place their online orders directly via Instagram.

Of course, the transition of “physical retail” to the contactless paradigm involves the implementation of many process, organizational, and technological changes.

First of all, retailers are required to check employees’ daily contacts to monitor their health status. Stores can also reduce offline in-store interactions by installing self-service terminals in sales areas for contactless online ordering.

For fashion retail, the most relevant trends are self-service fitting rooms with automatic control of the flow of customers and disinfection lamps for things that have been tried on but have not been purchased.

Contactless offline stores should also be equipped with tools for monitoring the allowable number of customers and controlling the wearing of PPE.

An important part of the updated points of sale is navigation tools to the desired shelf for large trade formats, as well as displays with the possibility of self-payment and receipt of goods on-site.

Remote consultations on goods/services are becoming an important tool for retailers with a large advisory element in sales. The share of people who are going to continue using remote consultations after the pandemic exceeds 73%.

Conclusions and new goals

First of all, protecting the health of customers and employees will remain a strategic differentiator for retail in the foreseeable future. The development of the usual physical formats of sales without taking this factor into account is simply impossible. Moreover, the increased focus on conscious (lean) consumption, which has escalated further during the pandemic, will require retailers to also make it a key feature of their value proposition.

Additionally, retailers should consider the possibilities of increasing consumer activity both online and offline. This is necessary to retain and augment a customer base through improving the quality of service.

To do this, the industry needs to significantly increase its investment in digital tools and omnichannel projects that will help create new connections with consumers and respond to their needs which are changing along with the epidemiological situation. Moreover, in order to develop, launch, and support new tools, you don’t have to hire and maintain a large team of your own specialists – you can delegate this to professionals by outsourcing.