Retail is dead, long live Retail!

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What we call in this article: retail, POS, physical store, store or brick-and-mortar boils down to the same thing that is a business with physical presence it can be a clothing store, a shopping center, a supermarket, a grocery store, hardware store, ect..

In case you were living under a rock lately, AI is disrupting different markets, from medical to banking and industry. Brick and mortar businesses are no exception, AI is already changing the way people buy and shop. The Internet has already attacked the brick-and-mortar market in the 90s by taking a good chunk of the market. Physical stores resisted the Ecommerce invasion by embracing it with technologies like drive-to-store, an online presence, and customer analytics.

We've all heard about the cashier-less store of Amazon. AmazonGO was a strong demonstration that Jeff Bezos threw at the sector of retail. The statement was clear, AI is coming (is already here) and it will replace a lot of jobs !

This is a serious threat to every physical business owner. Without talking about AI, retail was already a tricky business. Rent of POS is getting higher and higher, driving customers to stores by marketing campaigns is very difficult and staff planning and logistics are unpredictable.

All this draws a pessimistic future for retail, but hang on till the end and we'll help you understand that the game is not over yet.

Retail vs Ecommerce

If we take an overview of the evolution of physical retail and E-commerce, we'll see Ecommerce taking over for the simple reason that: it was convenient, more innovative, flexible and price-competitive. Websites and apps know exactly who customers are (age, sex, background...), how do they interact with the products and what drives them to come back. Since Ecommerce is digital native, it's easy to test and iterate marketing strategies with little risk (A/B testing for example). Adapting to new behaviors and trends is also a very powerful tool in the digital arsenal.

When we compare with traditional retail (brick-and-mortar generally), we'll find that: stores don't know exactly who their customers are, maybe they have an idea about the customer target but usually that is not backed up by data and it is very difficult to follow trends and adapt to the market. Marketing strategies in retail are very rigid, once the strategy is deployed, it's difficult to measure the ROI, it's almost impossible to change an active strategy for the simple reason that there's no data collected in real-time to enable quick decision making. Managers would then rely on rules of thumb and employees' human-biased point of view.

Furthermore, with AI advancements E-commerce is evolving rapidly, but not so much for brick-and-mortar businesses. If this trend continues, E-commerce and tech giants like Amazon will gain more and more market share.

So what's the solution here? what could retail do the be competitive and stay in the game in the future? well, let's discover what AI has to offer.

The future of retail with AI

Elon Musk said something like:

We have to merge with AI if we want to not get left behind

We think that the same thing should (must) happen to brick-and-mortar. Many sectors are leveraging the advancements of AI to take this train before it's too late. It's a global race at a national level, and in this game, winners take all. AI is indeed disrupting many sectors, we can view this from another angle by asking the question why are these sector letting themselves being disrupted? well, the answer I suppose is simple, the moment a company stops innovating the moment it's dead (Elon Musk again). AI is a double-edged sword, if it's leveraged correctly at the right moment, it can bring businesses to a whole new level.

Stores advantage

We deeply think that physical stores are here to stay, there's nothing that's going to replace a good fitting room in a clothing store or the smell of fresh produce at a grocery store. POS has a massive advantage over internet businesses and it's real human physical interaction with the customer. We all had at least once a bad online experience where we felt left behind with no one to help us fulfill an order or return a product, ending up with a smart-dumb chatbot answering the wrong questions. When it happens we feel lonely and isolated, ending up thinking about old times where Terry was there to tell us that everything will be alright and we'll be taking care of right away.

Humans are social beings and nothing is changing that, we are hard-wired to interact with each other and socialize. The problem is, physical stores stagnated with methods from the 90s making them less and less competitive.


The future of physical points of sales as we see it, is far beyond sales. Stores have to reinvent the way customers shop. The mistake is thinking that customers are here to buy products with good prices. Let's think of Apple's marketing strategy, it is never about the product itself but rather about what the product can bring to the customer. People owning Apple products feel like they are special, creating a deep commitment to the brand, Apple does everything differently, making their customers have a sense of tribalism (a deep psychological cognitive characteristic of humans).
So if it's not about the product, what can stores do? Well, it's all about experiences. The physical point of sale must a special location for customers to visit. It must engage the customers emotionally at a level that it'll deeply impact them. When a person is impacted emotionally, it will create a special feeling that pushes the customer to come back and relive that moment, it's as simple as that.

Personalized shopping

To create that emotional feeling for customers, the shopping experience must be tailored to the person.

Imagine entering a store where someone welcomes you with a smile greeting you with your name, Asking you how was the last item you purchased and recommending to you items that based on your taste and style. Imagine standing in front of a mirror, interacting with it and trying different tailored styles, selecting 2 of them and head to the fitting room where the items are waiting for you to try and when liking an item just grab it and leave without waiting in line to pay.

That's what we call in E-commerce, a good user experience. When a customer experiences a frictionless, personalized and enjoyable shopping experience, he'll come back wanting more.

In the store of the future, the shopping experience must be personalized just like on the internet. Discounts should be offered to the most loyal customers, and ads must target new customers to drive them to stores.

Know your customers

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The key to making the future we talked about above a reality is knowing the customer. Just like websites know exactly who you are, your habits, preferences and browsing history to make a nice user experience, physical stores should do the same.

Current technology enables stores to count customers, analyze behavior and even track where shoppers look. This technology is not cheap, not very reliable and certainly not scalable.

What if there's a way to know everything about your customers now, without investing a lot of money into expensive hardware?
What if such technology was available to small and large businesses with a pay-as-you-go model?

That will certainly have a huge impact on businesses and it is possible today with the advancements in AI technology.

When we search for a common factor for brick-and-mortar businesses worldwide, regardless of size and sector, the constant variable is surveillance cameras. Even the smallest of grocery shops have them, they are cheap to install and to maintain, it's an old stable technology but most importantly it's a huge source of unexploited data.

CCTV Camera footage is a valuable source of information (data), when you want to rewind to look for an event, you can certainly do that and identify individuals, behaviors and much more. The catch is such operation is very time-consuming. That's where AI comes in handy.

Don't panic, AI is just a term to designate a bunch of computers working for you. The sub-field of AI of processing video with computers is called "computer vision" and we'll explain all that to you and what we do at NooxVision in our next article.

Thanks for making it this far and stay tuned!