The democratization of technology such as artificial intelligence (AI) is creating an entirely new playing field for retailers and restaurants — even small businesses.
In a survey of 4,000 retail and restaurant owners and managers, Square and Wakefield Research found that all respondents saw their businesses improve since adopting technology and automation. Drilling into these benefits even further:
- 47% said automation has helped them improve the customer experience
- 45% has seen improved employee retention and increased profit
- 42% has seen greater innovation within their organizations
Likewise, 4,000 consumer respondents noted that they have reaped the benefits of automation — so much so that 67% said they prefer to use technology instead of live staff for a host of reasons, including checking product inventory, ordering out-of-stock products and gathering relevant product information.
The Future of Commerce
For the fourth year, Square has partnered with Wakefield Research on the Future of Commerce research study to understand how retailers and restaurants are investing in operational efficiency and growth. Additional key takeaways include:
- New revenue opportunities abound: 100% of restaurant respondents in the U.S. plan to expand their businesses over the next 12 months by offering new products or opening additional locations. Up to 78% said they plan to experiment with non-core offerings like meal kits, subscriptions, events and more.
- Flexible experiences are key: To create experiences that truly align with consumer needs and behaviors, retailers are implementing faster and easier communication channels with customers (42%) and accepting a wider range of payment options, such as buy now, pay later (39%).
- Customers are open and eager: A staggering 82% of consumers agree that receiving communications from local businesses makes them feel more connected to these businesses. With 36% of retailers planning to expand and diversify their customer base over the next year, they need to adopt a more consistent and diverse marketing strategy that encompasses various channels.
Tactical Takeaways from the Data
Small Business Xchange sat down with Roshan Jhunja, Square’s Head of Retail, to dig deeper into this year’s research findings and the implications for small businesses.
Small Business Xchange (SBX): It appears that the retail industry is finally starting to implement and realize the benefits of AI. Are there any distinct challenges and opportunities for small businesses that you’ve uncovered with this research?
Roshan Jhunja: While AI has helped improve business efficiency and the overall customer experience, there’s still a general fear that AI will make your business appear inauthentic and impersonal — robotic, so to speak. There’s clearly an adoption curve for consumers, but retailers can win trust in a few ways, such as offering personalized experiences that are assisted by AI, using authentic channels and approaches to connect with customers, and infusing your brand identity throughout customer touchpoints.
SBX: How can small business owners and operators set their team up for success as they test and implement AI?
Jhunja: The test and learn phase is an essential part of adopting any new technology. While this may feel disruptive for your team in the early stages of adoption, business owners should reinforce that this technology will bring long term value to their team. There are clear use cases to point to including automating tedious operations, speeding up workflows, and regaining time.
SBX: Technology adoption was a big part of the research. What are some common challenges small businesses face while selecting, implementing and scaling their use of technology?
Jhunja: The selection phase is critical in choosing tools that are integrated and work together. Oftentimes businesses don’t realize that their hardware and software don’t talk to each other until after the technology has been implemented, which means they don’t have a seamless 360-degree view of their business. Don’t forget to consider whether the tech is simple and straightforward for your employees too — because a steep learning curve will hinder adoption and present problems in the long run.
SBX: What are some of the low-hanging fruit opportunities for small businesses specifically to improve customer experiences?
Jhunja: Businesses can enhance their customer experiences by empowering employees with easy-to-use technology, which will maximize staff time and expedite service to customers. For instance, suggested actions in Square Messages uses generative AI to help sellers predict next actions to offer based on a conversation with a customer. To differentiate yourself against competitors, lean into AI for personalization too — whether it’s for your marketing emails, loyalty programs or events.
SBX: Are there any analog methods that you think will help drive small business success in 2024?
Jhunja: Since in-store is expected to grow more this year, small businesses with physical storefronts should embrace a multi-hyphenate approach by considering different ways to repurpose their spaces. Based on our Future of Commerce research, retailers plan to offer in-store dining (61%), paid advertising space (60%), and selling or renting event space (56%). Not only are these opportunities to engage an existing or new customer base but offer a new revenue stream for your business as well.
SBX: How can small businesses best capitalize on consumers’ eagerness to connect with local businesses via inbound and outbound marketing?
Jhunja: More people want to shop at local businesses, so it’s never been a better time to capitalize on this wave of support! Consider partnering with other local businesses in your area to host joint events or offer unique product bundles. These are initiatives that can easily increase brand awareness and drive sales. Social media remains a key channel to connect with your customer base, where you can highlight your employees to show appreciation and humanize your business.
SBX: How do you believe the small business community will evolve in 2024?
Jhunja: While the Future of Commerce research cited almost all respondents planned to expand their business this upcoming year, it’ll be important to determine what channels make sense to focus on for growth and then stay laser focused — whether it’s launching new products, increasing staff, or creating a new location.
I expect the in-store experience to evolve even more this year. My advice to SMBs is to not replicate everything the big stores have, but to take the essence of what they’re doing, such as providing more experiential options or making the shopping experience as seamless as possible using technology. Consumers will appreciate the way you bring these elements down to the community level.