Retailing and Technology: Once an Afterthought, Now a Brave New World
In a post last month, we mentioned the continued debates over brick-and-mortar and e-commerce driving innovation in the retail industry. Ultimately, technology enhances a shopper’s experience but does not necessarily replace it.
Much has been discussed about the success of retailers who embrace the omni channel experience. Whether it be e-retailers such as Bonobos or Warby Parker who move into the bricks-and-mortar world to enhance their virtual business or bricks-and-mortar retailers, such as discount store Dollar General and off-price clothing and housewares retailer TJ Maxx, who expand their presence online in order to enhance their traditional bricks-and mortar business, it’s all about providing the customer with multiple options to look, buy and strengthen their connection with the brand.
These omni channel options arrive at the consumer’s hands in a variety of ways we would never have imagined just a few short years ago. Terms like personalized solutions, wearable technology, visual search and augmented reality are just a few. Personalized solutions can be as simple as pop-up advertising when a customer visits a website or a pre-visit questionnaire that allows the customer to input user preferences, which then guides the entire experience from that point onward.
For many people, particularly as we are barely out of the holiday shopping season, shopping is a transactional activity: search the site, see what you like, get in the store, make the purchase and be done. However there’s a whole new retail customer experience developing, inspired by a younger demographic, and it will be here before we know it. Visual search, taking its cues from facial recognition software used by security companies, allows a shopper to upload his or her own photos from a smartphone to the retailer’s site, in order to exact match a product or complement an outfit. Perhaps more futuristic, Lacoste has implemented an in-store augmented reality experience in which shoe customers can place their foot over an in-store graphic and pass their smartphone over their foot. In the process, the smartphone displays what the shoe would look like when worn, allowing the customer to decide if it’s worth flagging down an associate to try on the product. Regardless of the methods chosen, retailers continue to push the envelope when it comes to technology, which means privacy, security and strength of the technology backbone will continue to be a focal point of retail companies.
Peeling back the onion, it’s not just the customer experience that demands adoption of sophisticated technology. Retail is emerging as an industry that not only makes big investments in technology but even seeds early-stage innovation. Many big name brands such as Nordstrom, Walmart, Staples and Home Depot have all launched innovation labs exploring big data analytics and mobile technology in addition to the customer experience. Suddenly retail powerhouses are becoming incubators for next-generation technology. Imagine what groundbreaking applications might be developed in-store and how they could be commercialized? Some applications could give a significant competitive edge to a struggling retailer. What might this mean for the retail workforce? With creativity and persistence, what used to be a high-turnover industry may come to attract the best and brightest minds particularly in technology and engineering. Formerly slow to adopt new technology due to thin margins, retail may one day be on the cutting edge of technology investments, and the “back office” functions, as they are now known, may not be hidden away for much longer. They may become the showpiece of the stores in the future.
The bottom line? Retail companies must keep innovating because consumers want it. E-commerce has not caused the demise of retailers. Instead, retailers have wisely seen the consumer’s thirst for new and exciting experiences beyond showrooming, and they are starting to respond and even outpace customer expectations. As outlined in NYU’s joint report with IBM, Retail 2020, retailers need to make creative use of their space for consumers to experiment, play and interact with the products and brands. And, like the Boomers before them who inspired the original shopping mall experience, Millennials will drive a lot of the change occurring in retail through the next few decades. It should be interesting to watch.