The Future of Retail Technology

By Lisa Terry — July 09, 2012

The brick and mortar store is under attack. The economy is one reason, but so is a trend toward customers treating stores as showrooms where they can check out a product before buying it cheaper from online-only retailers—even via their mobile device while still standing on the store’s floor. Forbes estimates 6,000 to 9,000 store closings in 2012 among national and regional retailers, outside of bankruptcies—50 percent higher than normal churn.

But 93 percent of retail sales still occur in stores. So many
multichannel retailers are struggling find ways to lure customers back in their doors. One thing is clear: technology will be essential
to understand, attract and satisfy an increasingly informed,
demanding shopper.

Fast-forward three to five years: Stores are thriving, thanks to savvy investments in well-thought-out technology. Join our tour of the stores of the future.

Getting Them There
Enticing customers into the store starts when they’re out of the store, but not in using the scattershot marketing we see today. Here’s how a customer purchase of the future will look:

The customer goes online to research her purchase, visiting several sites and posting her likes to wish lists or social media sites such as Pinterest, or styling sites where the customer uploads images of what she already owns via QR code scans or camera. A retailer where she has opted-in can see those items and push out customized promotions based on her history. Our shopper checks to make sure the products that interest her are in stock at her local store—thankfully the retailer had deployed a robust, omni-channel retail platform in the cloud so its single data store is accessible to all channels in real time. She has some questions, but recalls that last time she was there the salespeople were knowledgeable an able to quickly get answers to things they didn’t already know via their tablets.

That retailer can not only see that she owns, say, a walnut living room set, but will also have far more data to tap to predict what art she’ll like or accessories she’ll favor, based on rich analytics of other people who own the set who also live in urban settings, are between 18 and 34 and favor mid-century modern styles. How the retailer responds to this information would vary if she was, say, a Boomer instead of a Millennial, since boomers tend to have different responses to issues around privacy versus service.

On her way to work she drives within the geofence her favorite retailer has created around one of its stores using GPS or cell tower triangulation, so she receives an alert notifying her of an in-store promotion highly targeted to her tastes. Later she passes a digital billboard for the same retailer. She remembers her previous research and decides to go there after work.

Making the First Impression
A fatal flaw in today’s loyalty programs is retailer’s inability to know the customer is there until checkout.

In the future, upon arrival our shopper will check in via her mobile phone to the retailer’s site on a social network such as FourSquare, so she can gain points in a retailer-sponsored contest or collect a reward. Alternatively, “face recognition software is making its way mainstream and will play a role here as adoption and acceptance of the technology grows,” says Jay Giron, vendor business manager, Data Capture/Point of Sale, Ingram Micro (www.ingrammicro.com). Or, she may use an interactive digital sign or kiosk—and receive an electronic coupon for that decorative pillow she’s been eyeing online. But she only does this in her most favored stores—in the others, sensing technology attached to digital signs at the entryway tell store associates that a Millennial female just entered the store.

That presence technology is integrated with the store’s workforce and task management systems, which quickly determine who is the best associate to pull off task to go greet this shopper, automatically sending her CRM file to the associate’s mobile computer.

The associate can then greet our customer and guide her right to the pillow set and the coffee tables, even showing her a multimedia presentation on all the color and styling options available.

If it’s a mass retailer, instead of an associate, our customer will receive a map on her phone suggesting a route through the store based on her past shopping habits and her shopping list—while also working in stops at some promotions she’ll likely appreciate. “It’s getting the customer through the store and finding places to entertain and educate them,” says Barry Wise, industry consultant, Epson America (pos.epson.com). “That can lead to purchases they may not have traditionally made.”

Meanwhile, the store’s geofence can track where she goes and what she does—because she’s allowed that, of course—and can use that information to create marketing that’s more relevant to her. “Retailers can learn a lot about buying behavior, how long she’s in the store, the number of campaigns she’s responded to, and they can see it in real time through a console,” says Dan Louden, VP marketing for Digby (www.digby.com). “That’s something retailers have not had access to before.”

Keeping Consumers Entertained
The idea that stores must entertain has been tossed around in retail circles for years; three years out, that idea is getting its due, though it will vary considerably by vertical and brand. Typically it’s not entertainment for entertainment’s sake, but to enhance the fun of visiting the store and experiencing the products.

Already, lifestyle retailer C-Wonder outfits each dressing room with a touch screen that allows customers to pick their music, adjust the lighting based on their mood and call for help to get another size. Stores of the future will touch on all senses, says Peter Larocque, president, U.S. Distribution for SYNNEX Corporation (www.synnex.com/storesolv), including in-store audio with influential tracks and different scents.

 “There are also efforts underway with regard to holograms—which could make for a cool, entertaining and interactive customer experience,” says Justin Scopaz, VP and GM, Ingram Micro Data Capture/Point of Sale, Ingram Micro.

“The key is personalization,” says Dana Warszona, senior marketing manager, retail solutions, for Motorola Solutions (www.motorolasolutions.com). “If you give the customer a better experience, there is a higher likelihood you’ll close the sale.” Some retailers are already combining personalization and an enhanced store experience by offering activities such as a virtual build-your-own sneaker applications, notes John Nicewick, marketing director for TE Touch Solutions, a business of TE Connectivity (www.elotouch.com), which makes Elo TouchSystems products.

Information On Demand
Today retailers are just trying to catch up with consumers when it comes to accessing information on the store floor; in the future retailers must do more for the consumer than they can do themselves.

“Retailers have not had to focus on the experience,” says Jerry Rightmer, president of Starmount (www.starmount.com). “Now they have to be better than anything on the Internet,” with mobile associate and self-service that enhance shopping.

One way this will happen is via digital signs—from video walls to large screens to small screens offering information on specific products. “We’re getting more inquiries for 10- to 15-inch displays, and now for interactivity” on those displays, with built-in media players and power-over-Ethernet, says ViewSonic’s Ornstead. Another digital sign use: posting an item and “only five left,” suggests Jason Firment, POS solutions director for BlueStar (www.bluestarinc.com).

Some customers may choose to shop virtually. “Retailers will take the full-motion technology in video games and adapt it into a ‘virtual shopper,’ giving customers the ability to virtually move around the store without physically moving at all,” creating an avatar and seeing themselvesin items not in stock, says SYNNEX’s Larocque.

If our shopper was visiting an apparel store she’d likely consult its universal sizing app, which lists her size in one brand versus another. Motion detection activates displays as she approaches, showing the latest fashions on the runway along with stylist tweets about the looks; gesture recognition can even read her eye movement and mood. “Video messaging will be everywhere,” says Gene Ornstead, director of DTV and business development for ViewSonic (www.viewsonic.com).

Then she would scan the QR code, or use NFC, to scan a hang tag and see the price as well as an image on her phone or on 3D digital signage of how that garment will look on her, based on the highly granular measurements she already had taken in this store. Bridal shops are already using QR scanning show bridal parties alternate colors or accessories. When she’s ready to try on for real and needs another size, an associate quickly locates it on the return rack via RFID. Our shopper then shares the image with her friends via social media to get their feedback.

But today our shopper wants to buy a new inflatable kayak for her new boyfriend, so after showing her some, the associate walks her over to an alternate reality application where she can try it out via an alternate reality application and view a tutorial on assembly. Thanks to the kayaks she already viewed online, the store associate “can see the item you added on your wish list on their devices, and it’s a higher-level conversation,” says Sandeep Bhanote, VP and GM, Verifone Mobile Retail Solutions (www.verifone.com).

Then, using a nearby kiosk, she checks several competitor e-commerce sites for prices and user reviews—a must for shopper trust—and up pops a comparison of those offers to the complete package she’ll get by buying in this store, today. The associate notes the special promotion she also received for this item to further encourage her—associates must be aware of all the information and promotions the customer is seeing, something that’s often lacking today, notes Bluestar’s Firment.

She decides to accept the offer. Along with placing the order on the spot and taking payment, the associate prints out a list of accessories and maintenance instructions on a nearby wireless printer so she can refer to them easily, directs her to an area where she can practice inflating a  kayak herself. He also invites the couple to an upcoming in-store event. Aspirational experiences that reinforce the way the customer sees him- or her-self, supported through in-store experiential events, will be critical to attract shoppers to brick and mortar, says TE Connectivity’s Nicewick.

In addition to e-mailing her receipt, he also prints a paper receipt. “People will want both,” says Epson’s Wise. “They will want to security of a paper receipt,” along with the convenience of electronic ones. Meanwhile, the retailer will reference that third party e-receipt service as another source of rich shopper data to feed its business intelligence solutions.

With that transaction complete, the associate’s sales assistant software, powered by artificial intelligence, may receive an alert that this customer bought a cell phone in this store six months ago, and based on sales patterns for others with that phone, may prompt the associate to ask if she’s lost her charger and needs a new one. The associate has access to her favorite brands, color preferences, sizes—info recorded by previous associates, or added to the file by the customer herself—cooperative clienteling. Customers “are rarely asked to share information now,” says Starmount’s Rightmer. She chooses a new charger to buy as well.

Easy Exit
Of course, all the challenges of moving payment to customer phones and retailers’ mobile POS devices will have been worked out three years from now, and the winner was…well, obviously that’s not all that likely, and the answer is tough to predict. Suffice it to say, “there will be a lowest common denominator, defacto standard that allows everyone to participate in payment,” says Verifone’s Bhanote. NFC and digital wallet are likely components.

A safe bet is that checkout will manifest in different forms for different uses: mobile-to-mobile, mobile to fixed checkstand, traditional payments to mobile POS, etcetera. Farther out, our shopper may indeed be scanning the item herself or filling her cart, paying via her phone and walking out the door—but the experts refrain from putting a timeline on that scenario.

Our shopper wants to pay in cash, though, so she finds one of the few checkstands in the store (most customers now checkout via associates with mobile terminals). It looks different than today’s. “Retailers still need a place” for cash/wrap functions, says Gene Cornell, president of Cornell-Mayo Associates (www.cornell-mayo.com). “Right now it’s raised partitions, but designers can design it to be more open” in the future. Securely locked into the cash/wrap is a retail-hardened tablet, a secure, light-duty, IP-addressable cash drawer and a wireless printer, all protected by two cameras integrated with the POS. “In the store of the future the cash drawer can be wherever the retailer wants it to be,” as long as it can be secured, says Stephen Bergeron, VP strategic initiatives for APG Cash Drawer (www.cashdrawer.com).

Upon departure, she crosses through the localized geofence around the store, prompting a thank-you text from the retailer, points on her loyalty account and a link to a survey.

Getting From Here to There
Of course, not all of these technologies will resonate, and no one store will have them all. But retailers can expect that they’ll need at least some of this in the near future to stay competitive. Here are some factors that solution providers and their SMB retail customers must prepare for:

  1. Creating a customer-centric, five-year business plan, including a differentiator. “We’ve seen often that retailers hear about a certain solution, and go to the solution first and figure out how to use it,” says Motorola’s Warszona. “But the first component should be our customer and your business.”
  2. Ensuring connectivity/bandwidth to support video and many users.
  3. Deploying an integrated retail platform. Omni-channel software will be critical to make shopping easy and fun. “Ease of integration is almost more important than functionality,” says Mark Bunney, director, channels and alliance partners for Partech. (www.partech.com)
  4. Making data accessible. To serve up and act on data in real time, applications will need one central, highly accessible place to store it and robust servers. For SMB retailers in particular, this will most likely be in the cloud.
  5. Upgrading power and physical infrastructure to support the weight and power demands of devices spread across the store.
  6. Preparing to rethink business processes and hiring tech-savvy staff.
  7. Making shopping easy and fun for consumers means lots of technology and integration for retailers—and their trend-savvy solution providers. 

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