Data Scout is Localogy’s series that curates and draws meaning from third-party data. Running semi-weekly, it adds an analytical layer to the industry data that we encounter in daily knowledge building. For Localogy original data, see the separate Modern Commerce Monitor™️ series.
It’s a strange time for the world for lots of reasons. Meanwhile, Covid-era lockdowns are having a polarizing effect on local commerce. High touch fare at the local level (think: salons) is clearly suffering while quarantine-friendly fodder like virtual office tech and e-commerce are booming.
Beyond those examples, there are implications for local commerce vendors who offer point of sale systems, order & delivery logistics and curbside pickup. These fullfillment models are having a moment, as they’re aligned with social distancing protocols. So these vendors are likewise well positioned.
In fairness, these aren’t new technologies, but they’re seeing new demand signals. The big question is if current circumstances accelerate their adoption in ways that are positive and permanent. Will millions of shoppers get exposed to things like curbside pickup develop new habits that sustain into normal times?
If so, who could benefit most from this forced-adoption sequence? We’ve identified three worth watching:
1. Order-ahead, Curbside Pickup and “Order-only” Stores.
Order-ahead technologies aren’t new… just ask Starbucks. But the already-existing merits (saving time, skipping lines, etc.) have been amplified because they’re aligned with social distancing. Through that process, as referenced above, many consumers could realize time-saving advantages and develop a new habit.
This includes everything from curbside pickup at Target to order-ahead fast food (QSR). Altogether, curbside pickup is up 208%, and Sam’s Club just rolled it out nationally. Meanwhile, companies like Rakuten Ready provide advanced logistics for retailers to make it all happen smoothly.
As we covered recently, this is going as far as “order-only” stores. Starbucks is the latest to lean into this trend by closing 400 stores and turning many of them into mobile order-only locations. Besides being social-distancing-friendly, there’s a strong business case with lower overhead and higher margins.
An honorable mention here goes to the related concept of cloud kitchens. they similarly have unit-economic advantages such as lower overhead and high-yield output. Though they are seeing some turbulence, a rise in food delivery could make this cloud kitchens’ time to shine.
2. Retail and Restaurant Auto-Payments
I’ve had a longstanding prediction about in-aisle transactions, though it’s been slow to materialize. The thought is that physical retail logistics could be more streamlined if shoppers can use their smartphones to scan and transact throughout the store, avoiding checkout aisle bottlenecks.
Some version of that has come to fruition through Amazon’s Go stores and its subsequent move into “retail as a service.” The economic benefits and retail streamlining aren’t new concepts, but could social distancing accelerate the long-overdue death of the checkout aisle?
The irony is that it could take a pandemic to save retail. Retailpocalypse has hit the tech laggards hardest. Could forced tech adoption from a pandemic inadvertently and finally vault retailers into tech-savvy practices that give them a fighting chance against Amazon?
Honorable mention here goes to the related area of mobile payments at restaurants. Replacing the always-painful credit card back & forth with restaurant servers, paying directly at one’s table via mobile device brings the “just walk away” perk of Uber and Amazon Go. And it upholds distancing.
3. AR Product Visualization
AR has been slow to gain traction for lots of reasons. That’s mostly because it was initially hyped as the next large-scale shift in computing that will apply to all aspects of our lives and work. It turns out that this isn’t true (and the underlying tech isn’t ready for prime time). But it is fitting for some things.
Like the above principle for new technologies that must solve real pain points, AR killer apps will germinate from things like visual search and product visualization. Google Lens is a wild card for being able to contextualize things visually, including local storefronts.
Product visualization is one area where traction is building already. This lets consumers digitally place a 3D object in their space — popular with furniture, cars, and flat-screen TVs (it also reduces product returns). But in a pandemic, these advantages are amplified in high-touch product areas.
The most notable of these is cosmetics. Since trying on lipstick shades at the mall isn’t an option, consumers have scrambled for alternatives. Fortunately, AR tools like L’Oreal’s Modiface let consumers do this with spatial and graphical precision, plus the ability to transact on the spot.
Driven by Modiface, L’Oreal’s e-commerce revenue is now 20% of total revenue. Like all of the above, this will expose the technology and give it a chance to shine (literally, in this case). The question, as with all of the above, is if that adoption sustains in the return to normalcy.