The path of least retail resistance
The path of least resistance requires less effort. And in retail, as in many aspects of life, it’s quite popular
Amazon have built an entire retail empire, in large part, by removing effort (often referred to as friction) from how we shop.
- Instant search and relevant recommendations on their website reduce the time and effort usually associated with finding what you want online.
- Fast and affordable delivery of goods, removes the effort needed to collect your goods.
- Physical “buy now” buttons (supplied by Amazon) for replacing common household items remove the need to even go online.
- And now a voice command speaker quite literally removes the need to even lift a finger when shopping
It’s not just these solutions but these kinds of innovations (across a whole range of industries) that have changed consumer attitudes to shopping and made the path of least resistance more important than ever. Expectations among consumers the world over have been elevated so that things we once considered break throughs, no seem rather mundane.
Like the ability to safely land a commercial jetliner. People just don’t seem that impressed by safe landings anymore. They get more excited by things like extra legroom, or the inclusion of comfy socks and some noise-cancelling headphones. Somewhat humble achievements when compared to a safe landing, but this is what delights today's traveller and grabs all the attention.
Amazon leads the way (again)
For Amazon, one of the things grabbing attention lately is their recent foray into physical retail. Grocery is their biggest play here and it makes sense because it turns out that no matter how much effort you remove from grocery shopping by taking it online, there remains quite a large and stubbornly resistant group of people that want to hop in their car, drive down to the supermarket and pick out their own produce.
In fact, grocery as a category (along with fuel and automobiles), has one of the lowest online penetrations of any major retail vertical. Amazon is the dominant player in this space with 20% market share but the problem is that some estimates put online grocery shopping at less than 1% of all food and beverage sales in the US.
Online sales will inevitably grow, but not fast enough to make Amazon the dominant force in grocery any time soon - not by a long way. So last year Jeff Bezos purchased upmarket supermarket chain Whole Foods for 13.7 billion dollars. Whole Foods remain a relatively small player among bricks and mortar grocers in the US accounting for just 1.2% of total grocery sales in 2016, however, that is still 6x the grocery sales Amazon managed during the same period. With this acquisition Amazon’s overall share of grocery jumped considerably and they are now much better placed to close the gap on category behemoth Walmart.
To close the gap, many people have surmised that Amazon will apply its familiar formula of removing friction and effort to the bricks and mortar grocery shopping experience, starting with small format stores.
To remain competitive other grocery chains will have to accelerate the introduction of frictionless technology – and brick and mortar retailers generally will have to do the same - or risk seeing Amazon come after them next, and win the battle for offline sales as well.
The recent launch (and possible expansion) of Amazon Go provides the strongest indication yet of how the online juggernaut thinks they can remove friction from physical stores, and in the process make themselves the path of least resistance for offline shoppers.
More examples of frictionless shopping experiences
Amazon are not the first to undertake this kind of innovation and they certainly won’t be the last. Brands with physical locations have made removing friction from the customer experience a key focus in recent years. Some, like Amazon Go are at the early stage of the adoption cycle and may still find that their ideas do not catch on, or turn out to be uneconomical. Ideas from some other brands are already proving very successful at attracting customers and growing sales.
Two years ago 7-Eleven in Australia launched the enormously successful “Fuel Lock” app, which removes friction from the process of finding and paying for the best priced fuel near you. Among fuel retailers they were awarded the “2018 Most Satisfied Customers Award” by Canstar - thanks largely to this world first innovation that drives value and convenience.
7-Eleven in Korea recently launched vein mapping technology at a single store to test if it can speed up the check out process. Simply scan your wrist, which contains a unique pattern of veins that can be linked to a credit card, which hastens you exit.
Convenience has always been at the heart of McDonald’s brand. From kiosk ordering in restaurants to curbside delivery and the recently launched mobile order and pay; the QSR giant is successfully reducing friction for millions of guests at their restaurants around the world every day.
In New Zealand Foodstuffs have recently announced a partnership with IMAGR who are creating a shopping basket that scans products as you shop and checks you out automatically at departure.
Hilton Hotels award winning loyalty app enables mobile check-in and allocates you a room which can then be opened using the app, which acts as a “digital key”, thus removing the need to check-in via reception at all.
Making things easier for customers gets results
These sorts of innovations are designed to remove friction from the customer experience and make these brands the path of least resistance among their competitors. The result is improved loyalty (Share of Wallet), more frequent visits, higher average transaction value, better brand scores and improved customer satisfaction.
Focusing on removing friction is one way that bricks and mortar brands can grow sales quickly without the need to expand their physical footprint. A good starting point, and something all the examples I cited have in common, is a clear focus on some combination of recognition, relevance and reward
- Recognition – because brands need to know more about the who, where, what, and why of our individual shopping moments
- Relevance – because brands then need to make best use full of this information by personalising the shopping experience with relevant content and features at just the right time
- Reward – because in addition to a better experience brands also need a way to incentivise return visits and other desirable behaviours
A frictionless customer experience often starts with fast and seamless recognition, so it’s a great starting point for retailers that want to make themselves the path of least resistance. Before I go a bit deeper on this I’d love to hear more examples of how organisations are using recognition technology to create frictionless experiences.
An abbreviated version of this article was originally published on theregister.co.nz