News

Balancing act

Retailers must juggle staff and technology to give shoppers an optimal experience.

May 13, 2008

This article originally published in Retail Customer Experience magazine, May-June 2008. Click here to download a free PDF version.

Self-service has become an important component of retail. And one grocery chain in the U.S. thinks taking self-service to the extreme may be the solution to crowded queues and angry shoppers.

Fresh & Easy Neighborhood Market grocery stores, owned by the world's fourth-largest retailer, Tesco, introduced a self-checkout-only concept in November 2007 at a store in Hemet, Calif., just outside Los Angeles.

"There is demand for this type of concept, and we expect other U.S. retailers to be watching Tesco closely for ideas on how to tap into this," said Jennifer Halterman, senior consultant at TNS Retail Forward.

Customers now are choosing stores based on the type of service they offer, industry experts say. But in an effort to appeal to customers, retailers are seeking a balance in the way they use self-service and full service. The perfect balance should benefit retailers and customers, improving the experience all around.

Even luxury stores, historically known as the perfect model of full-service, have begun to notice this trend and to use the Internet as a self-service tool for their customers, said Milton Pedraza, chief executive officer of Luxury Institute, an independent research institution that focuses solely on the top 10 percent of America's wealthy.

"I think luxury will and has already begun noticing that full-service is not always the best service and that some functions can be done better by the consumer him or herself, or by having peers help the consumer do it," Pedraza said. "I think those factors will drive luxury to redefine what service means in a broader sense."

Gas stations, convenience stores and grocery retailers have done a good job of embracing a balance of service, said David Hogan, vice president and chief information officer for the National Retail Federation, the world's largest retail trade association.

He said it's important that these stores are "always asking the question 'what does this do for the customer and how will it enhance his or her overall shopping experience?'"

Understanding the customer

Juggling full- and self-service largely depends on a store's objectives and demographics.

For example, if the store's customers are from two-income households with children, the retailer needs to take advantage of customer-friendly technology such as self-service check-outs and hand scanners for merchandise.

"These technologies enable the customers to make some basic purchases quickly, and they allow customers to spend more time with family and friends," Fram said. "Technology and staffing requirements need to be synchronized with customer and services to solve problems. Technology and staffing requirements are support functions."

The secret to a successful customer service plan, with regards to technology, is to know if a store's key demographic will embrace self-service technology, says kiosk consultant Francie Mendelsohn, president of Summit Research Associates. Even then, giving people the option of both types of service seems to be the route for retail stores.

"To give people the option is still the smarter choice," Mendelsohn said. "That may not be true in 10 years, but it is the case now."

Ready to go

Fresh & Easy markets offer only self-checkout with assistance as needed. Each store has eight to 10 self-checkout lanes, divided between express and non-express. Fresh & Easy has continued to embrace this concept into 2008 and has added more stores.

The chain has expanded to about 50 stores in California, Nevada and Arizona. Tesco has slated to open 200 U.S. stores by February 2009.

Mendelsohn says self-service kiosks had the same problem 10 years ago when they first entered the retail arena.

"You've got to make them as reliable as ATMs have been," she said. "If your whole business model is based on self-service, you had better not disappoint your audience."

Another argument against total self-service is that some demographics, particularly the older ones, will not be open to using technology by themselves. However, no credible data supports that point.

"The human touch and the human interaction is powerful for most things," Luxury Institute's Pedraza said. "You develop a relationship with someone who is knowledgeable about a store, someone who you trust. I don't think that will ever go away. But some aspects of the customer experience will be automated in some way and will be accepted by consumers, including older ones, as more efficient, easier and more friendly if they do it themselves."

In demand

Consumer demand is one of the reasons retailers have added self-service. A 2007 study by BuzzBack Market Research, a provider of self-service technologies, found that modern consumers prefer to deal with retailers that offer self-service options.

In the study, 77 percent of consumers said they were more likely to do business with organizations that offered self-service, and 92 percent said they value combining mobile devices — such as mobile phones or PDAs — with the Internet and self-service kiosks or ATMs to improve their overall service experience.

"People want more control of their interaction with your business," said Bill Nuti, NCR president and CEO, in a news release. "Why wait for assistance with transactions they can more quickly and easily do themselves at guaranteed quality? Consumers increasingly expect to be served where and when they choose, and are putting pressure on businesses and government agencies to deliver seamless service through the integration of self-serve devices, including the Internet, mobile devices and multipurpose kiosks."

However, some customers consider self-service as doing the work of employees without being paid. To boot, some employees look at it as a ticket to the unemployment line.

"The company is more productive, but we're shifting work to consumers. So from a macro perspective, are we more productive or less?" Mary Jo Bitner of the Center for Services Leadership at Arizona State University said in a Time Magazine article.

For those who are unsure how self-service will be embraced, Dave Hogan, senior vice president and chief information officer for the National Retail Federation, suggests setting up pilot programs to test acceptance.

"The [stores] that have moved forward with self-service have determined that there is a true business rationale for this type of expenditure," he said.

Innovative tech

Making sure employees do things to help customers on a personal level is one of the keys to balancing service. But stores also should use innovative self-service technology that makes shopping easier for customers, said Frank Riso, senior director of Motorola's Retail Industry Solutions Group.

"We're starting to see more self-service applications that allow users to interact with the store," he said.

Technology aside, it's ultimately about the customer experience and how customers want their visit to the retail store to look. How customers are served is another way to promote a brand, Pedraza said.

"I believe the stores will give consumers the option of how they want to be served so they can optimize each customer's experience with that brand."

Patrick Avery is editor of SelfServiceWorld.com and a regular contributor to Retail Customer Experience magazine.