Disruptive Retail: Some Case Studies

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Disruptive Retail: Some Case Studies
March 25, 2017

2017 is shaping up to be a game changer for retail, as technologies and innovations move out of the lab, onto the sales floor and into the digi-sphere. A first wave of introductions and exhibits presented at January's NRF BIG Show and Expo are being followed by another wave this week at ShopTalk, where Target and Walmart execs just unveiled major initiatives to transform and expand their physical and digital retail spaces.

 

Yesterday, Target Chairman and CEO Brian Cornell shared plans for a new store design that will enhance the customer experience with new time-saving layouts and "fulfillment" features such as a separate entrance and parking pick-up for online orders. Interior upgrades will include improvements to lighting, elevate merchandising presentations, and incorporate such elements as wood grain fixtures and stenciled concrete flooring. Employees will be provided with new mobile technology that will enable them to search inventory, process payments and set up delivery from the sales floor.

 

The plan calls for the transformation of 500 stores by 2019, with the first location to open in October in the Houston suburb of Richmond, followed by 40 more in the weeks following. Shopper response will help shape Target’s plans for additional store redesigns over the next two years.

 

“We are taking what we learn in Houston and that will guide us as we reopen hundreds of stores,” Cornell said. “We're turning stores into showrooms designed to inspire guests.”

 

Plans also call for a two-story, 43,000 sq.-ft. "small format" Target in Manhattan's Herald Square near Macy's flagship store.

 

Walmart eCommerce President and CEO Marc Lore also made a big announcement yesterday at Shoptalk - a new business venture that will enable the retailer to identify and invest in new and emerging retail trends, strategies and technologies.

Walmart Innovation Labs

 

The initiative, called Store No. 8, will work with startups that specialize in areas such as robotics, artificial intelligence, machine learning, and virtual and augmented reality.

 

Lore joined Walmart eCommerce in Sept. 2016 when his company, Jet.com, was acquired by WalMart Stores, Inc. Lore’s role is to grow Walmart’s U.S. e-commerce presence and customer reach through his leadership of Walmart.com, Jet.com, and @WalmartLabs (Walmart’s ecommerce tech division).

 

The new investment business is part of the retailer's push to capture a larger e-com share, which began with the Jet.com acquisition. Store No. 8, based in California's Silicon Valley, is named for an early Walmart store that founder Sam Walton used to test new retail strategies.

Advancements in virtual and augmented reality, robotics and POS systems were among the retail technologies exhibited at the 2017 NRF BIG Show in January.

 

In January, the National Retail Federation hosted 35,000 attendees at its 106th "BIG Show" showcasing new retail solutions and innovation, best practices and emerging technologies. This year, however, there was an overarching theme: 2017 is going to be the year many of these innovations move out of the lab and onto the sales floor.

 

A story in the NRF’s first show daily described the industry as being at “a point where these emerging technologies have proven valuable and are on the cusp of sparking greater change.” Paired with the expectations, connectivity and urgency demands of shoppers, it’s more like a wave of transformation.

 

In his opening address, NRF President Matthew Shay said, “If I had to choose one word to summarize what our (retail) industry – and more broadly, the country and the world – has experienced these past few years, it would have to be ‘disruption.’”

 

Some of those disruptive technologies, or “predictions of the past,” as Shay called them, were on display in a section of the expo floor called the Innovation Lab, a collection of companies sharing their new products and developments in 3-D printing, artificial intelligence, robotics, smart technology, wearables, and augmented and virtual reality.

 

It was in the Innovation Lab that Marxent exhibited, for the first time, a virtual reality furniture showroom developed in partnership with Ashley Furniture Industries. The technology, which will begin rolling out in Ashley Home Stores this year, enables a customer to virtually decorate a room or home with the help of a headset and click of a button.

 

Beck Besecker is the CEO and co-founder of Marxent, which specializes in AR, VR and 3-D solutions for retailers and manufacturers in the home furnishings, building products, residential construction and industrial equipment industries.

 

“Retailers now have the ability to provide a complete display solution and design integration tool with the most accurate recreation of detail, to assist their customers with home improvement options,” Besecker said. “There has always been friction between brick-and-mortar and digital. Our 3-D product solutions for mixed commerce seamlessly blend the best of each at every point in the customer’s journey to increase customer satisfaction and exceed the expectations of modern shoppers no matter how, when or where they want to shop.”

 

Marxent’s “VisualCommerce” platform was one of a number of augmented and virtual reality products on display at the NRF BIG Show, all intended to integrate home and store through virtual product presentation, recreation of real-life details and more merchandise options.

 

Intel demonstrated a virtual reality system called ShopperMx HIVE (Hi- Immersion Virtual Experience), a tool for merchants. Using a VR headset and handheld push-button device, shop owners and store managers can literally take their work home with them – and restock shelves, change floor layouts and visualize new merchandising concepts from the comfort of their living room sofa.

 

HIVE is one of several products in Intel’s Responsive Retail Platform, a collection of tools, technologies and retail partnerships, powered by Intel’s software stack, that the company says will reinvent in-store and virtual shopping experiences. The initiative, said Intel CEO Brian Krzanich in his conference keynote address, is one in which the company is planning to invest more than $100 million over the next few years.

Ashley's virtual furniture showroom, developed by Marxent Labs

 

“We’re excited to see this grow and expand,” Krzanich said. “We believe that retailers are on the cusp of transformation, and it’s never been more exciting to be in retail.”

 

Other concepts and products on display in the Intel booth included:

 

PIN on glass — Created by Ingenico Group, this product turns “any” glass tablet screen into a secure payment processor. Shoppers manually enter their personal PIN on a numbered touch-wheel, thereby enabling checkout to take place anywhere in the store.

 

“Store as Production Center” — A demonstration of apparel brand Eileen Fisher’s collaboration with Japanese knitting machine manufacturer Shima Seiki. This technology can turn a customer’s printed design into a seamless custom knit sweater in about 45 minutes of production (knitting) time.

Energy management and equipment diagnostics — Small Box Energy’s Chameleon platform basically “talks to” equipment and appliances, taking the place of a human operator. Chameleon automates, controls and schedules devices to lower run times, reduce energy consumption and communicate maintenance needs. Similarly, PepsiCo is using a new technology called Spire that constantly monitors the most popular brands and flavors selected by customers at a site’s self-serve soda dispensers. The information is then used by the establishment to optimize drink mixes, maintenance and product delivery.

 

Spot Label — Created by Telefonica, this technology does away with paper tags and signage, allowing retailers to instantly update pricing and promotions and engage customers with digital content.

 

True Fit — This is a collaborative platform in which data from thousands of shoe and apparel brands, stores and consumers is mapped, enabling retailers to provide more accurate fit ratings and size suggestions, make personalized recommendations and offer insights to optimize marketing, merchandising and product development. In addition to collecting such basics as size scans, product inquiries and purchase history, one Intel exec in the booth noted that when it comes to making purchasing recommendations, it’s as important to know what customers are returning as what they are buying.

 

Google, which also brought some new shopping technologies to the show, demonstrated how brick-and-mortar retailers are pairing Chrome Boxes with large format monitors to bring digital signage, catalog displays and promotions to the sales floor. Offering an alternative to kiosks, the result is an affordable display powered by Wi-Fi and Google Chrome. The Chrome Box used in the demo – which featured Ashley HomeStores’ signage and merchandise – wasn’t much bigger than a cigar box and could be purchased for less than $200, according to an onsite Google rep.

Ashley Homestore instore screen powered by Google Chromebox

 

Google was also showcasing its new image analysis capabilities by inviting conference attendees to have their photographs taken and analyzed in the company’s “Emotobooth.” The technology, which enables such things as face identification and reverse image searching, now has the ability to detect a person’s sentiment thus enabling new marketing models based on real-time facial expression and emotional reaction.

 

Taking it a step further Soft Bank Robotics has created “Pepper",  a bright-eyed talking robot that can identify joy, sadness, anger or surprise in humans – and adapt his behavior and interaction according to their moods. Pepper invites engagement with humanlike movement and a friendly conversation opener: “You look like you’ve been on your feet all day… would you like to look at some comfortable new shoes?”

 

Through the use of a technology that analyzes speech, tone of voice and nonverbal communication cues like head tilts or posture, Pepper can “instantly recognize the emotional context of the conversation and adjust accordingly.”

 

Other tech developments and discussions worth noting:

 

As awkward as those big VR headsets may look now, there are smaller housing components in the works, such as clip-ons for glasses and contact lens. Safety, said more than one exhibitor, will be a big issue going forward as the physical obstacles (furniture, people, stairs, etc.) in a user’s real reality differ from those in his or her virtual reality. Similarly, nausea has stricken users who find their sensory mechanisms tilted or overwhelmed with sudden and unfamiliar virtual movement.

 

The Internet of Things and cloud computing continue to open up new realms of connectivity and communication.

 

Augmented reality apps have gone mobile, enabling shoppers to layer in environments, accessories and experiences with the use of a cell phone app.

 

 

 

Here are a few with implications in the home space:

 

Machine learning has the potential to enhance personalization and the customer experience. Example: Houzz’ development of Visual Match, a service that uses “deep learning” to make it easy for shoppers to discover and buy products and materials similar to those that inspire them in the platform’s photos. n Nontraditional partnerships and collaborations present new opportunities for retailers to explore ways to surprise and delight shoppers with unexpected products and experiences. Example: Grandin Road’s first retail concept store, launched last fall in Macy’s Herald Square flagship “with magical, mysterious, accessories and enchanting décor designed to inspire, spook and entertain Macy’s visitors.”

 

Television shopping partnerships and innovations are on the rise. Example: Wayfair and A&E Television’s presentation of “The Way Home,” the first fully shoppable television show, and HGTV’s launch of a new app that uses Amazon’s Fire TV and stick device to enable viewers to click and shop without interrupting their viewing.

 

Social commerce is also on the rise, powered by mobile and several other factors: Shoppers are becoming more comfortable pressing the “buy” button on social media, and they’re drawn to the storytelling, relatable experiences and recommendations on social platforms.

 

A global standard for one-click payment is in the works. “Nothing slows a purchase more than having to populate the payment fields … no wonder shoppers cite one-click as a top Amazon virtue.” While 2017 will be a year of innovation and testing, a lot is going on to make it easier to pay for things online – a secure way for customers to input their information once, to pay for all future purchases.

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