Cause and Effect Series: The Technology Effect
Technology has no doubt created unparalleled efficiencies for brands and retailers, but it has also created challenges detrimental to the customer experience.
One of the most impactful shifts at retail that has been the effort to replace human beings with technology. We saw this recently with Amazon replacing 750,000 workers with 100,000+ robots.
One of the ways this has been most felt by the consumer is the implementation of self check out. Self checkout has had profound impact on the way customers buy as some retailers have made it actually more of a hassle to purchase at a retail location.
Walmart is an amazing example. In many stores they have almost eliminated “people” serving customers at the checkout line, pushing everyone to self checkout. You could have a grocery order of 130 items and there you are checking yourself out, 1 item at a time. While there was talk that Walmart would be moving away from this, this summer we experienced this in many locations we visited in Toronto had a phenomenon of only 1 human managed checkout while everyone else was pushed to self checkout. Customer frustration could be felt in the air with often only won staff member attending 10+ machines with customer attempting to process their own orders.
The impacts of all of these shifts aren’t always seen in customer satisfaction surveys because with so much choice and competition, many consumers simply shift buying habits and move away from what is not undesirable.
Other retailers like Canadian Tire have tuned into moving away from competing on price means moving towards better service and better customer experiences.
Here are some ways that technology has negatively impacted customer experience:
Cause: Retailers forcefully pushing customers towards buying online through competing on price and creating instore experiences that are so unpleasant it becomes easier to simply shop online.
This approach doesn’t consider that some products are needed now, and some products need to be seen and felt.
Those customers get the short end of the stick when trying to buy from a retailer who is making changes that appear to be to deliberately pushing customers away from their retail stores.
- Effect: Customer loyalty can shift from one retailer to another, where your product may not have the same positing, recognition or be there at all for that matter.
- Cause: Self-check out is causing serious inventory control issues across retailers which impacts your sales, and you may not even be aware it is happening. Its too easy to swipe the same product through many times vs each individually and this results in brands having no idea what their actual stock positioning is.
- Effect: Product being out of stock, customer loyalty shifts to product that is in stock and may even have a lower price. Usually, the store ensures that their private label is always in stock, so your customer always has an alternative if your product is not available!
- Cause: AI is still flawed as it relates to inventory management and because some retailers have made themselves so reliant on AI for inventory management, the effect is felt but your customer and again you may not even realize how much inventory management is affecting your sales.
- Effect: Product being out of stock, customer loyalty shifts to product that is in stock and may even have a lower price than yours which can be the case when competing at retailers that offer private label.
- Cause: AI is still flawed as it relates to inventory management and because some retailers have made themselves so reliant on AI for inventory management, the effect is felt but your customer and again you may not even realize how much inventory management is affecting your sales.
Big brands tackle these challenges through national merchandising teams who visit retailers regularly, boots on the ground to ensure that inventory is being properly managed.
Another way smaller brands have been stifled by technology is just like they don’t have the budget for national merchandising coverage, they also may not have the budget (or perceive that they don’t) for AI technology within their own organization. This is a huge miss. Smaller brands will find it very difficult to compete without integrating and leveraging technology in process, and as each year passes.
If you enjoyed this segment from our whitepaper “How Smaller Brands Can Overcome Cause and Effect at Retail in Canada” please feel free to download the whole whitepaper free.
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