How Self-Driving Vehicles Fit In Perfectly With the Future of Retail
The days of needing to drive to the store to pick up a whole cartful of groceries are gone. If you live near a major metropolitan area in the United States or a populous suburb, nearly everything you can imagine is available for delivery to your doorstep through mobile apps and e-commerce sites—sometimes in a matter of hours. Even the small, local mom-and-pop shops just down the street are quickly changing.
Among the many hardships of the COVID-19 pandemic was that it forced brick and mortar retailers to radically rethink their approach, accelerating the long-term trends of consumers moving away from in-person shopping. After previously relying heavily on foot traffic and in-store customers, they suddenly needed to figure out how to reach their customers online, safely at home, or socially distanced.
Now, as parts of the world emerge from the pandemic (or at least adjust to a less dire “new normal”), autonomous vehicles are poised to help these retailers rebuild even more sustainable, efficient, and long-lasting businesses with new ways to connect to their customers. “Retailers are shifting capital to change their stores,” says Troy Beeler, cofounder of the Future Commerce Initiative, a consulting firm. “All the effort is going into distribution, getting the inventory close to the consumer in a way that the consumer can either pick it up or you can deliver it to them in the most cost-effective way.”
We’re seeing these changes happen today. Fast food restaurants are experimenting with drive-through-only locations. Weather permitting, entire store facades now slide open to allow circulation. Kiosks are wheeling outside. Customers and delivery contractors pick up orders at the curb or via newly installed takeout windows. Consumers seeking the ability to touch and feel products can still do so, but outside, in more limited quantities, and they are encouraged to look up more inventory on the store’s website. “The idea of super-dense interior spaces is no longer palatable,” says Zachary Colbert, an architecture professor at Carleton University. Now it’s all about open-air courtyards, verandas, pop-up tents, parklets, and pickup zones.
It’s not too difficult to extrapolate how these trends, when powered by autonomous vehicles, will further facilitate new, more convenient and efficient retail experiences. Indeed, autonomous driving companies are already rolling out delivery pilots in major American cities. Whether it’s a small independent retailer boxing up products to autonomously deliver in the area, or a customer hailing a self-driving vehicle to take them shopping downtown without worrying about the pain of parking, retailers will benefit in both directions—via e-commerce and in-person shopping—from the continued spread of self-driving technology.
A Changing Retail Architecture
But in order to truly take advantage of these changes, retailers will also have to consider how to redesign the physical layout of their stores inside and out, from the back storeroom all the way through to the cashier, showroom, and even curb space. Do they still need parking spaces at all, if most goods are distributed as deliveries, quick pick-ups, or ferried off by autonomous vehicles? One thing’s for sure: the commercial real estate market is in for major transformation.
Even before the pandemic, marketers faced pressure to transfer in-store branded experiences to the e-commerce world, from better online user experience to streamlined processes for pickup and delivery. That trend has only accelerated over the last year and a half. Jeff Roark, a studio principal at Little Diversified Architectural Consulting, which has designed stores for Whole Foods, Nike, and Home Depot, says the overall square footage of brick and mortar retail locations will get smaller. “Big-box retailers are changing their floor space and a lot of them are just downsizing, period,” he says.
Some of Little Diversified’s developer clients, who had previously tried to attract larger big-box anchor stores, are now dividing retail real estate into spaces for multiple smaller tenants. Meanwhile, mom-and-pop stores that suffered heavily from crowd controls during the pandemic are poised to see a renaissance and may even struggle to meet renewed demand from longtime homebound shoppers. Looking further forward, they’ll benefit from the shrinking footprint of the big box retailers, which they can then take over. But how will they use such newfound available space?
Dr. Gurram Gopal, a professor of industrial engineering at the Illinois Institute of Technology offers one possibility in his March 2021 paper, “Turn Your Retail Space Into Distribution Space,” in Supply Chain Management Review. Reacting to the startling figure of 25,000 neighborhood businesses closing in Chicago in 2020 due to the pandemic, Gopal advocates converting shuttered neighborhood shops and vacant commercial spaces in Chicago into “mini distribution centers” for retailers large and small.
Right now, if you order something to be delivered from your favorite e-commerce giant, it will likely come from a giant warehouse fulfillment center all the way on the edge of town. But, Gopal asks, what if you could get that delivery even faster from a smaller distribution center closer to your home, workplace, or other delivery destination? That efficiency wouldn’t just help the consumer, but the environment as well, reducing energy spent ferrying goods across a longer distance.
Self-driving systems could further augment this idea, allowing any delivery personnel aboard vehicles to focus on sorting and preparing packages for drop-off instead of worrying about maneuvering large vehicles safely and on time through residential areas.
Take it a step further, what if that smaller neighborhood distribution center a couple blocks over from your home also held inventory for small businesses in the neighborhood? What if it sold its own limited inventory up front? Everything from gourmet baked goods to Etsy-esque clothing and home furnishings could be sold this way. Ordering would take place via a smartphone app, so space previously allocated to cash registers and checkout becomes a packing and pickup area. “The layout changes to make it easy for people to pick things up and get out,” Gopal says. In this way, the mom-and-pop shop takes on a heightened role. “The community and the stores support each other. The store becomes the connection. It’s a symbiosis.”
Before the pandemic, retailers’ product aisles and in-house services—such as pharmacy health clinics and pet-store grooming stations—occupied up to 80 percent of a physical store’s footprint. The remaining 20 percent was taken up by a warehouse or backroom dedicated to inventory and operations. In the post-pandemic era, that 80-20 ratio approach may switch. Retailers will allocate roughly 20 percent of their physical space to customer interactions and 80 percent for filling orders and distribution, says Little Diversified’s Roark.
If or when it does, you can count on autonomous vehicles helping retailers of all sizes to bring goods from storefronts and fulfillment centers to their customers, and to bring to them those customers who still want to stretch their legs and shop at the store the old fashioned way—in-person.