Innovation

Digital transformation in retail: Business challenges as shopping becomes increasingly automated

Mike Zorn of employee engagement firm WorkJam talked with TechRepublic about the changing roles of consumers and retail workers as more jobs in stores are handled by machines.

Mike Zorn, VP of workplace strategy for employee engagement firm WorkJam talked with TechRepublic's Dan Patterson about how retail companies will have to adapt to demands from consumers who are highly educated about products, and want a more personalized shopping experience.

Watch the video above or read the full transcript of their conversation.

Patterson: Today we are talking about digital transformation in retail, particularly as retailers adopt cashier-less systems and some of the challenges they face... I wonder if we could talk a little bit about how cashier-less systems are changing retail, and how quickly this transformation is occurring?

Zorn: Sure, I think part of the critical factor that retailers are going have to face is the expanse of interests that different customers are going have. Some are going love the idea of just coming in, and absolutely having everything self-service, to be able to get information. Some are also, though, they still like the socializing aspect of it.

Retailers are going have to figure out how they manage across that wide spectrum of customer, because it's that customer experience that really brings, basically, the revenue that retailers need at this point in time. And they need to be able to be very flexible and agile to meet those needs.

Patterson: So beyond what we see, the POS, the point-of-sale systems, what happens on the back end with cashier-less systems? And how are retailers installing, using, and managing different technologies?

Zorn: Well, there's a number of different types of technology. So there's the technology where somebody comes in. They select it on their mobile device. They go into a fitting room, and what they've ordered comes down, and actually just goes straight into their fitting room.

SEE: How Sephora is leveraging AR and AI to transform retail and help customers buy cosmetics (TechRepublic)

There's others, where it's stacked on the floor. They can order it right on the floor. They can walk right out. There's others that are kind of simpler, to the Apple-exposure of things, where somebody can come into their store, they can find the item. Somebody else will ring it up for them, just on a mobile device of some sort, and the person just walks out.

If you think about the old days, I mean, people basically had to come in. They put it in a bag. They have to sign a receipt. All of that's going away. It's all being done either on an individual's mobile device, or it's being done on a mobile device provided in the facility.

I was actually at a store recently where the entire transaction was handled by a robot of some sort. You basically ordered on this device, and it went away and came back, and there was the item you ordered. And you took it out of the little robot-type thing.

So there's lots of different things, I think, occurring right now, Dan, all of which is going to kind of settle, or eventually settle, based on where the customer's most attracted.

Patterson: Mike, where does data factor into the equation? How are retailers using data, both from customers and their mobile devices, as well as other data that they may collect themselves? How does data factor into changing the cashier-less system?

Zorn: Well, data is king, as they say. Many of the retailers, when you look at where they're going, and you look at where they're hiring right now, much of it's in the data aspect of things. The ability to understand your customer, to understand your customer's preferences, whether somebody is willing to come in and buy a pair of shoes without trying them on, ordering, just picking them up, whether it's a soft-goods-type approach to things, where it used to be touch and feel.

SEE: IT leader's guide to achieving digital transformation (Tech Pro Research)

The other part of the data, that I think becomes absolutely essential for retailers, is kind of pushing when somebody comes in the store, being able to understand what they thought, being able to understand what they have an interest in, and being able to make recommendations based on, if they come in your store, what other things may be a need. So if you're an electronics retailer, and somebody's buying a printer, and you want to offer to him four or five other things, so that it's kind of that spur of the moment-type decision.

So data is critical. Data becomes very important. I think most companies right now are kind of struggling with how to manage all the various data points that they may have.

Patterson: Yeah, I wonder if you could share a little more about some of the challenges retail companies face when they add technology.

Zorn: Well I think, again, my expertise is really in the human resource side of things. So I think some of the challenges that people are facing is ... You're almost going be looking for a different type of an employee to fit into a situation where you have a more self-service, if you want, or an approach where it's a cashier-less-type approach to situations, because you have to have the stocking, but the stocking of the shelves, the ability to get the merchandise to the person, and that's a different individual.

But you're also going have much more knowledgeable customers that are coming in, because they're going do all the research ahead of time. And they're only going find a great experience where they can talk to somebody that is more knowledgeable than them. So if they can't just buy it after reading on their mobile device what's there, if they come in your store, they're going want more than just what they get today in many cases.

They're going want somebody that can really educate them, so you're going have to have a much more educated employee population that isn't needed all the time, but is readily accessible. Whether it's a concierge-type approach or a personal shopping assistant, it's going have to be somebody that is top of the game, where right now what you have is, maybe, retailers that have a smaller part of that group in more of the cashier-type approach. Those cashier jobs, for the most part, will not be there. And it's going be a much more talented and expensive employee that you're going have in the facility.

SEE: Digital transformation: A CXO's guide (ZDNet special report) | Download the report as a PDF (TechRepublic)

Patterson: I wonder if you could leave us with a forecast, say the next, say, 18- to 36- months in retail? What other trends are coming, and what disruption should companies look out for?

Zorn: Well, I think the biggest disruption, again, coming from my perspective, is there aren't going to be people that are going to be looking for these jobs on a regular basis. So you're going have to start making that transition to a more self-service, technology-driven company, because there just aren't going be people to go into these jobs.

If you look at the predictions that are out there, it's millions and millions of jobs that are going go unfilled, because people aren't looking for them. And people that are going to college and people that are coming out are looking for data-oriented jobs. So the entry-level worker, that has been the heartbeat of retail, just isn't going to exist.

So how do you provide that experience when you don't have the people? And it really is going be through a more automated approach, a more self-service approach. But you got to make it easy from a user interface, for people to be able to react and find what they want. It takes longer to drive, oftentimes, to a facility, to a retailer, than it does to actually do the shopping. And people aren't going want to do that and come to your store if they don't get an experience that makes it more attractive to them.

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About Dan Patterson

Dan is a Senior Writer for TechRepublic. He covers cybersecurity and the intersection of technology, politics and government.

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