Beware of shiny objects: Why tech alone won't save retail

Gavin Allen: What impact is smart retail having on the customer experience? And how do smart retailers keep customers on board with all the rapid changes?

Christine Russo, Retail technology adviser / Creator and Host, “What Just Happened” podcast

Christine Russo: We do need to be very careful about chasing shiny objects that confuse the customer. The main thing customers want is convenience, not distracting bells and whistles. They want fast and easy checkout, inventory levels, way-finding: it’s convenience, not gamification of the shopping experience. Do they want self-checkout? Maybe, if it's easy to use. But the psychographic of walking into a store, not seeing anyone and then walking out is something that in the US is lagging behind the technology. And the real retail winners are answering demand. For instance, Amazon’s “Buy with Prime” allows you to go to a brand’s website and pay through your Prime account, getting shipping visibility, all your payment choices and your existing perks. Buying on a brand's website can be very clunky after you’ve experienced the ease of that.

Gavin Allen:Which retail technologies are delivering and which are still underwhelming?

Christine Russo: The US chain store Tractor Supply Company (TSC) is setting the standard. They have a multimodal AI search tool – either in-ear, or on a handheld device – which is part of their GURA program. That stands for the way they approach customers in stores: Greet / Uncover needs / Recommend solutions / Ask to pay. This AI solution is very quick with its product recommendations, making every customer an instant expert and giving them the information they need. You could be getting feed for your sick goat or need some pharmacist-level information at a drug store: at TSC the device is checking inventory, recommending the appropriate solution, directing you where to get it – it’s an incredible service level, with tremendous return on investment for them.

What is underwhelming? In the US, it’s self-checkout. It’s a very clunky experience, from scanning to bagging, not getting the discount or having to ask for help. It’s really unpleasant. Nobody likes it.

Gavin Allen: Are they just teething troubles? Will unmanned shopping work as the tech gets better?

Christine Russo: The tech is better. In other countries... At Zara, in Milan or Amsterdam, you drop all your items in a bucket-like round device and they price up everything in one swipe. It rings up and out you go. That should become the baseline. But scanning one at a time, as if you're a cashier, doesn't make sense. Now the customer is mad: “Why am I doing this?” But even with the whole bag swipe, there’s no after-sale technology set-up, i.e., we know you bought this skirt a month ago and we have a new top that goes with it; it's in this store near you, or it's online here. I think that would be an excellent development across categories.

Gavin Allen: So, a tech initiative can’t just work for the retailer – the convenience has to be a win-win for both retailer and customer?

Christine Russo: Exactly, and the customer is smart enough to know when they lose and the company is trying to win. That's not what they want.

Gavin Allen: What about successful win-win collaborations between retailers and tech providers – what should each side prioritize?

Christine Russo: Both parties should work backwards from putting the customer first, and then together fulfill their objectives. For instance, in the US, Target made changes in their organization, operations and staffing that didn't put the customer or their brand offering first. They lost their “secret sauce” and lost their way. Tech provider and retailer have to be two circles in a Venn diagram, with the overlap at the center being the customer.

Gavin Allen: How are AI agents, automation and APIs reshaping the supply chain, logistics and operations?

Christine Russo: They’re probably the areas of the organization most benefiting from AI. “Back of house” was the most legacy-operated, so the jump is significant. AI can fill in so many productivity gaps and efficiencies, so has a major impact. Retailers are changing the orchestration of their entire operation based on what AI agents and generative AI can do for them. The ecosystem is changing as they leverage more data and, importantly, add speed, reacting to changing customer patterns and demands.

Gavin Allen: There's an economy of scale with technology that potentially favors the big chains. How can smaller retailers compete?

Christine Russo: It's very tough for them. A lot of independent chains lean into the physical experience and the human side. They take the other tack. Walmart’s wayfinding and stock location on an app, or data collection and recommendation, is not going to happen in most smaller stores. But even there, tech providers such as Shopify or Toast are offering a world of options for smaller independent retailers.

Gavin Allen: Even small retailers have to embrace technology and find what works for them if they're going to have a longer-term future?

Christine Russo: Yes, customers start to expect certain conveniences, even in smaller, independent shopping environments. Small retailers need to have synchronization across digital and in-store and know their customers’ past shopping and purchase history. That’s basic data to enhance the customer experience. And when a customer has a great experience in one place, they want it at their corner store and everywhere. Familiarity is very important. It becomes a tipping point. The other challenge in the US is we're much more fragmented in terms of end-to-end service providers. There are different leaders in different areas and that fragmentation leads to a lot of new companies and exciting new solutions, but it makes it a lot harder for the retailer, and leads to slower, uneven adoption of smart technologies.

Gavin Allen: What is the biggest untapped opportunity for smart retail businesses in the next five years?

Christine Russo: One area that is emerging is location intelligence and out-of-store information – analyzing where customers are, how they behave, what cars they drive and what that might mean from a shopability standpoint. It's primarily owned in the US by prominent tech solution providers, with the retailer buying that information from them. If they did it themselves, they'd have access to more actionable and monetizable information. Location intelligence should move from third-party to store-owned. Walmart already have this type of tracking, but it's not interconnected. It needs to connect from store to store and not just within a smart store.

Gavin Allen: What mistakes are companies making when they embark on smart retail transformation?

Christine Russo: The key mistake is thinking that everything has to be perfect. Instead, they need to move service providers to proof of concepts: no long-term contracts, just test and react. Edge computing allows this, so not using an edge computing hybrid would be another very big mistake. In a high-cost, risk-averse environment, you can have paralysis. But technology now allows smart retailers to test and move more quickly, on more things.

Gavin Allen: Are you confident it’ll get there and that customers are set for a better and better experience?

Christine Russo: We hit a fork in the road about a year ago, with the really tech-enabled monsters such as Walmart, Home Depot and TSC, which are self-building their own systems and solutions, and are starting to pull away. There’s been a huge acceleration of the retailers that are doing it well – acquiring new customers and keeping them. APIs really did catapult smart retailing to level 2.0 But with AI, and agentic AI, we're really going to the stratosphere. It’s a totally different shopping experience for the customer, and as long as they're delivering on what their promise is, then it’s good for retailer and customer alike.