What will retail’s future look like?

Every retail service related business faces major challenges today on account of changing consumer work habits. Addressing these challenges is not for the faint of heart, as many traditional retail venues are losing customers due to changing work habits that are not fully understood, even by service professionals.

A panel of experts at the recent National Automatic Merchandising show at Chicago's McCormick Place sought to unpack consumer work habits and how traditional service industries can reposition themselves to meet these changing consumer needs. The session, moderated by Benjy Ward, principal of the Chicago office of Gensler, a design firm, was titled, "Retail Reimagined: An Interview with the Experts."

Neil Thompson of HMS Host describes his effort to engage with customers at different points of contact.

Foodservice lags in technology

Panelist Neil Thompson, vice president of digital at HMS Host, which operates airport concessions, went as far as to say the restaurant industry (which he considers HMS Host a part of) is lagging other industries in adopting technology to meet changing consumer needs.

"Basically every industry over the last 30 years has had an increase in index labor productivity through digital transformation and technology, except the restaurant sector, which has remained very steady, very constant, all the way through the last 30 years," Thompson said.

Thompson described what his company is doing as a service provider to better engage with airport travelers. The company is looking to interact with the guest earlier and create a smoother experience.

There are three "gates" to do it. First is the booking process. HMS Host is looking at being part of a booking process with a strategic partner.

"You can book your favorite HMS Host restaurant for breakfast and know that you have a reservation and choose your table just like you do on a flight," he said.

The second "gate" is enroute to the airport in their rideshare where the consumer can browse menus and place an order.

The third one is to engage with guests via mobile while they are waiting in security lines. HMS Host has partnered with Twilio, a company that provides programmable communication tools for sending and receiving text messages.

Uber Eats can show up at the gate and give you your meal as you await your plane.

Robert Gebhardt explains the importance of technology in understanding consumer work trends.

What will become of the office?

The future of the office is less clear as businesses are now allowing workers to split their week between being in the office and at other locations.

Studies show 80% of employees want to work remotely a couple days a week, said panelist Robert Gebhardt, experience services lead for the Americas at Jones Lang LaSalle, a commercial real estate company.

To the extent people will be at the office, the need for amenities like food and refreshments is greater than ever, Gebhardt said.

"What will the footprint of the cafeteria look like and how will it function? It's much different," Gebhardt said. "It's no longer a few hours a day. It needs to be a 24-hour space because employees aren't coming in 9 to 5 anymore."

"The purpose of the office is to connect the employee with the culture that is that company, that brand, that recognition," he said.

Gebhardt acknowledged that it is difficult to know what services to provide when the workplace population changes from day to day. Here is where technology plays an important role.

The technology imperative

"We're using a lot of predictive technology to help us figure out trends and understand what we need to do in preparation for that," Gebhardt said.

"They (the customers) want flexibility when they come to work, and when they come to work one of the amenities they want is they expect it to be healthy and nourishing," Gebhardt said.

Mark Walker notes the importance of fresh food in the workplace and the need to charge for it.

Food quality imperative

Panelist Mark Walker, vice president of convenience retail at Aramark Corp., agreed the convenience services industry needs to focus more on fresh food. Convenience services has had a tendency to be the "lowest common denominator" and put a sandwich on the shelf with a 15-day shelf life.

"There is intense pressure to make sure we have the highest quality fresh product," he said. "It's a challenging thing to do when you have such a low traffic environment. But it can be done."

Convenience services do not have to be a low cost provider, Walker said, noting that Jersey Mike's sends a sandwich with chips via a courier and charges $22.

"We have the right to charge and… we have to bring that information to our clients and have a different discussion than we have previously," he said.

What about food waste?

No sooner did the subject of fresh food arise than did the question of managing food waste.

In response, Walker observed that convenience services has "overworried" about food waste.

"If you're less than double digit waste, send people out to your location and understand why, because if you're not merchandised plentiful and bountiful, people aren't buying it," he said. "You're going to either be in or you're going to be out, but waste is part of fresh food and we have to get used to it."

What about employee pay?

Employee pay also needs to improve, Walker said.

Aramark changed its pay system for students working a mobile food cart and was able to improve sales. By paying the students on a commission basis, the way stadium hawkers are paid, mobile cart sales went from $80 a day to $500-$1,000.

"They were chasing people around campus to sell product," Walker said.

The human connection

The panelists also agreed the industry has to refocus on the human connection in service environments, something that has been weakening over the years when it should be improving.

"We can bring technology in to support everything we do, but we need human beings in those environments," Walker said. "Now their head isn't down in a cash register. Now that employee who was the cashier is repurposed to be a customer service agent."

"What we're really trying to do is offer the guest choice," Gebhardt said. "If you want an experience that is just a couple minutes and you're not going to talk to anybody, I think you would default to that in the moments that you want that." There will also be times you want interaction.

Virtual kitchens here to stay

The panelists agreed that virtual kitchens will be playing a bigger role.

Thompson said virtual kitchens offer a way to utilize existing kitchens in low rent locations to provide a new service to customers.

"You have to have the digital platform for the customer to even know they exist," Thompson said.

Different service providers can also share staffs in these virtual kitchens, he said, although most of the equipment cannot be shared due to brands' different requirements in preparing the food.

"Technology is way beyond the transaction," Walker said as the session came to a close. Cooking technology, for example, allows high quality to be served fast.

"Digital technology is the vehicle that we use, the mechanism, to get you the food you want in the way you want, exactly the way you want," Thompson said. "We're at the ground floor of this massive change."

Photos courtesy of NAMA.