Nearly 14,000 stores closed on European high streets in the first half of 2020 and retail sales are down to their lowest level since the ’08 financial crisis.
There’s no doubt that the pressure, stress and financial risk of opening physical stores has never been higher. But there’s good news for those currently treading water; an emergent, new offering for retailers that potentially brings some welcome relief.
Just another acronym?
Retail-as-a-Service (RaaS) is the latest acronym which has the potential to disrupt the retail landscape. While the term is not new, over the past 12 months the level of investment and growth in RaaS has been significant. Up until now SaaS (Software-as-a-Service) has dominated offering retailers a plethora of fast solutions, including analytics, point-of-sale and supply chain. Now it’s RaaS’s turn.
Arguably it is SaaS’s younger, trendier and much more exciting sibling that see’s ‘tech start-ups’ providing innovative solutions that offer retailers rapid capability to ensure consumers benefit from a fully connected in-store experience.
The old mantra still stands true – time is money. In this climate, RaaS gives retailers the chance to innovate, test new technologies and easily upscale or remain competitive without launching multi-million-pound transformation programmes.
This lowers a retailer’s risk exposure, which is also helped by the fact that RaaS providers are niche experts who will continue to innovate, as and when customer pain points arrive, meaning retailers are able to do so too.
So, who’s using it?
There is no one way to provide RaaS. For example, America’s largest supermarket chain Kroger and tech giant Microsoft are developing a bespoke RaaS product to create two connected stores. The solution combines Kroger’s existing smart shelves and ‘scan & go’ technology with powerful customer insights to provide a ‘unique guided shopping experience for customers’.
Then there’s B8ta, probably the most recognisable RaaS platform that operates a holistic service to deliver a premium customer experience. In its Macy’s store, every product comes with a small tablet that enables customers to browse product information and reviews. Suppliers, on the other hand, can update information on the floor in-real time, including marketing and product information materials.
RaaS in the golden quarter
Last year was the worst year on record for Euro Retail and it feels as if European shoppers need a serious incentive to return to the high street. In my opinion, RaaS could be the catalyst here and it’s going to need one retailer to take a real leap of faith with this tech innovation to prove its viability in the UK retail market.
Think about department stores during Christmas trading. Aisles are crowded, store staff are constantly overwhelmed, and many products are positioned nowhere near their regular merchandised location. Adopting a B8ta-style approach would remedy so many of these issues.
Implementing a well-merchandised area of the store with information readily available on the tablet alongside products means sales associates can focus their time and attention on other value-adding areas of the store to deliver on customer experience.
What about this side of the Atlantic?
There’s just one slight issue … all the examples above are from the US market. So, what about the UK?
There’s a few reasons that could explain the slow uptake of RaaS in the Europe:
The downward spiral of department stores – meaning attention and capital has been spent on survival rather than innovation.
The price isn’t right – with business rates, high rents and long leases crippling profitability, retailers don’t have the funds to invest in new business models.
Not the only headache – there are an array of issues facing retailers: a returns tsunami overwhelming supply chains and retail giant Amazon polarising the market, to name but two.
Or, maybe we’re just not ready for it?
Sainsbury’s recently ran a bold trial with a cashier-less store in London. This first in the UK market resulted in a store being refurbished to remove the entire checkout area. Customers simply scanned and paid for their products using an app. Three months later? Sainsbury’s has reinstalled the checkouts having stated that “it’s clear that not all [their] customers are ready for a totally till-free store”.
Is RaaS the silver bullet?
The use cases above suggest RaaS could be the answer to retail’s problems, allowing online ‘pureplays’ to easily open physical stores, and also allowing existing physical retailers to hedge risk and experiment without the high capital upside.
This is the real misconception. The benefits for retailers and customers are impossible to ignore, but for some, this will just be masking poor strategy, below-par brand and sub-standard product. Allowing someone else to manage your stores for you without addressing the fundamental issues with your business will only prolong the inevitable demise.
Retailers must first identify the problems before choosing the solution, not choose RaaS then work backwards to see what it can fix.
Mark Künnen is a Specialist Market Manager, Clarity 360 EMEA, based in Frankfurt
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