How is New Innovative Technology going to affect the Future of Retail - LinkedIn (7)
1. How is New Innovative Technology
going to affect the Future of Retail?
George Fairfield
August 2015
2. Contents
An Introduction…........................................................................................................ 3
Digital Wallet & Mobile Payment Services.................................................................... 4
Bluetooth Low Energy Beacons.................................................................................... 5
Wearable Technology.................................................................................................6
Apple Watch........................................................................................................... 6
Google Glass........................................................................................................... 7
Augmented Reality Shopping...................................................................................... 9
Drone Parcel Delivery Services .................................................................................. 10
Car Boot Delivery Services......................................................................................... 11
RFID Tagging............................................................................................................ 11
The Internet of Things............................................................................................... 13
Smart Appliances...................................................................................................... 14
3D Printing............................................................................................................... 14
Bitcoin..................................................................................................................... 15
IT Infrastructure & Software...................................................................................... 16
To Conclude…........................................................................................................... 20
3. An Introduction…
Consumerlifestylesare changingrapidly andthisisimpactingthe waypeopleshop.With
our increasinglybusylifestyles, changingdemographyandagreateraccessto
technology,itisnolongersufficienttocaterjustfor the highstreetcustomeror the
online customer.Insteadretailersmustadoptan omni-channelapproachinorderto
achieve success.
Consumersare increasinglydevice agnostic,wantingtoshopinthe most convenientof
ways.AndyClarke,CEOof AsdaWalmartcommented, “I’ve beeninretail for30 years.
There has beenmore change inthe last5 yearsthan the previous25” whichlargelycan
be attributedtotechnological advances. Fortechnology tobe of value itneedstocreate
engagingexperiences. Forretailersthishasmeanta complete mobile revolution.The
introductionanddevelopmentof smartphonesin particularhascausedlarge changesin
consumerretail trends. Now 58%and 45% of people use theirtabletormobile
respectivelyforshoppingactivitiesand53% use theirmobile phone tocompare prices
while outshoppingfigures.Thisoption didnotexist15 yearsago.Applicationsneed
goodvisual merchandisingandtobe optimisedtoworkonmobiles,cateringfor the
moderntouchscreenshopper;andretailersmusthave the capabilitiesto leverage such
applications.
Andthere are more technological advancestocome.The future will be heavilytech-
drivenwithgreatercustomerexpectations and,asa result,itisimportantfor retailersto
leverage these innovativenewtechnologies.Thisdocumentaimstooutline the major
innovative technologiesthat are likelytoimpactthe future of retail.
4. Digital Wallet & Mobile Payment Services
Digital walletandmobilepaymentservicessuchas,‘Apple Pay’&‘AndroidPay’allow
people touse theirsmartphonesandothermobiledevices, suchasthe Apple Watch,to
make paymentsatcontactlesspointsof sale.The aimisto simplify the payment
experience forcustomers.Byreducingwaitingtimes, achievinghighercustomer
satisfactionandhigherconsumerconfidenceinthe securityof transactions there is
potential forgeneratingopportunitiesforincreasedsales.Currentlythe technologyis
onlyavailable inthe USand the UK but there are plansto expandintothe large markets
of Europe,Australia,ChinaandJapan.
While suchtechnologydoes noteliminateall paymentrisks,the systemshouseextra
layersof securitythatmeancreditand debitcard numbersare nottransferredwith
payments;insteadavirtual accountnumberisusedtorepresentcustomers’
information.The systemalsonotifiescustomerswithapaymentconfirmationassoonas
a purchase is made,makingiteasyto catch any suspiciousactivity.Mobile applications
such as ‘FindmyiPhone’and‘AndroidDevice Manager’ alsoenable customersto
instantlylocktheirdevicesandwipe itcleanof personal data.At presentcontactless
cards in the UK are cappedat a £20 transactionmaximum(tobe extendedto£30 in
September2015).However,given the
additional security,digital wallet
serviceshave notransactionlimit
subjecttoretailersupgradingterminal
software.The systemalsoensures
creditchargesare processedatlow
card presentrates.Retailersusingsuch
servicesare exemptfromfraudliability
happeningwithintheirstoresasApple
Pay incorporatesthe latestsecurity
standards(EMV) mandated bycard
providers.
In the US 1 millioncreditcardswere registeredonApple Payinthe firstthree days of
availabilityandthere were 220,000 vendorsatthe time of the launch.Within1 month,
Apple Payaccountedfor50% of all McDonald’stap-to-paytransactions.Itisestimated
that there are over700,000 AndroidPayreadystoresinthe US and over1,000 mobile
applicationsare configuredtoworkwithsuchservicesonthe AndroidMobile
ApplicationMarket. However,despite this,adoptionof suchpaymentservices are lower
than predicted,butitishard to tell if thisisdue tolow consumeror retaileradoption
rates.However,withthe incorporationof loyaltyschemesandcouponsthroughApple’s
Apple Pay on an iPhone & an Apple Watch
5. ‘PassBook’applicationandAndroid’sequivalent,thisissettoincrease dramatically.Itis
perhapsthen notinconceivabletoimagine storesinthe not-so-distantfuturethatno
longerrequire islandpointof salesterminals. Retailersinsteadwill evolvedigitalOmni-
channel checkoutmodelsthat involve aguided,mobile equipped,associatebased
experience.The resultwouldbe the openingof preciousstore space,enablingmore
revenue-generatingdisplaysandencouragingincreasedinteractionbetweenassociates
and shoppers.
Bluetooth Low Energy Beacons
BluetoothLowenergybeaconsare a type of a low-cost,micro-location-based
technologythatuse Bluetoothlowenergy(BLE) forcommunicatingwithbeaconenabled
devices.Itworkssimultaneouslyalongside
mobile software suchasApple’siBeacon
or Androidequivalents, tobroadcastor
receive tinyandstaticpiecesof data
withinshortdistances. The benefitto
retailersisthatitallowsretailerstodeliver
targetedcampaignstocustomers’mobile
devices,whenenteringastore or instore
specificlocations.Suchtechnologyis
compatible withall iOSdeviceswith
Bluetooth4.0 ( iPhone 4S andlater
generationand lateriPadMini (1st
generation) andlater,iPodTouch(5th
generation) andthe newlyreleasedApple Watch),MacintoshComputerswithOSX
Mavericks,all Android4.3+ devices &Windowsphone deviceswiththe LumiaCyan
update or above.If customershave the shop’smobile applicationontheirmobile
device,then withoutanyinteractionwithamemberof staff,itispossibletoprovide
itemdetails,prices,store location,links topurchase itemsonthe company’swebsite,
and targetedoffersbasedoncustomer’sonline history.The technologycaneventrigger
remote eventssuchasblinkinglightsinside afridge togeta customer’sattentionwhen
theywalknearby,andenable retailerstogainmore informationontheircustomers.Itis
hopedthatsuch technological advanceswill improvecustomerexperience in-store by
providingcustomerswithall the informationtheyneed,boostingconsumersatisfaction
and givingagreateropportunityforincreasedsales,while atthe same time enabling
retailerstohave a smarterand more targetedapproach.
The Beaconsare alreadybeingtrailedbyretailersincludingUSApple Stores,Virgin
Atlanticat HeathrowAirport,andabout100 RegentStreet stores.A USMcDonalds store
Beacon's sending personalised offers in stores may be a
familiarsight in shops in the future
6. ran a 4 weekpilotscheme usingthe beacontechnologywithmobile notifications
pushingpromotedproduct andsalesincreased byover7%.Thisincrease wasdescribed
by the CEO of Beacon hardware producerPiper,RobertHancor, as a, “significant
statistical change incustomerbehavior”.House of FraserAberdeenhaspiloteda
Mannequinbeaconscheme whichwill provide customerswithall informationonclothes
the mannequinsare wearing.Asaresultof the successof suchpilots, ABIResearchhas
predictedthatBeaconhardware saleswill hitover60 millionunitsby2019 and so itmay
be reasonable toassume thatsuch technologywillbe commonplace inretail storesby
2020.
Wearable Technology
Wearable technologyincludes clothingandaccessoriesthatincorporate computersand
advancedelectronicswithin.These designs,often have clearpractical functionsand
features,butcanalso havinga purelyaestheticagenda.Whilethere have beenmany
attemptsat wearable technologyinthe past,none of these have reallycaughton.
However,recent technologicaladvancesandthe investmentbymajorplayers - for
instance with the Apple WatchandGoogle Glass - theirpopularityisonthe rise.Juniper
Researchestimatesthanthere willbe 15 millionwearablesmartdevicesbyDecember,
2015, setto increase to70 millionby2017.
Apple Watch
The Apple Watch,releasedinApril 2015, has beenpredictedbyForresterResearch,to
exceedsalesof over10 millioninthe firstyearalone,makingitthe bestsellingwearable
wristweartechnology todate.If the figuresare correct, salesof the Apple Watchwill
exceedthatof all previous
watch/wristweartechnology
combined. Spatial andoperative
constraintsdue to issmall size
meanit will notbe able tosupport
full webbrowsingorapplications
designedforthe iPhone,pushing
retailerstorethink theirtraditional
advertising,marketingand
communicationstrategies.Major
online retailers,includingUSgiant
Amazon,AsosandZara, have
alreadylaunchedapplicationsdesignedspecificallyforthe Apple Watchbutwithlimited
capabilities.Amazon’sAppleWatchappfor example onlyhasthree functions:anitem
searchusingApple’svoice recognitionsoftware,Siri;the abilitytosave productstoyour
The easy integration ofApple Watch, iBeacon and Apple Pay will see a
large increase in their use in the future, by consumers and retailers
alike.
7. AmazonWishlist;andtocheck-outusingAmazon’s1-clickorderingsystem.These
applicationsintegrate easilywiththoseoniPhone andwhileeachplatformhasitsown
unique benefits,bothapplications couldworktogethertodeliveranall-roundcustomer
experience.OtherApple WatchdesignedapplicationssuchasSalesforce1deliverinstant
personal notificationsaboutbusinessprioritiestosalespeople,service agentsand
marketers,supportingthe workforce andaimingtoboosteffectivenessandproductivity.
The major impactof the Apple Watchon the future of retail throughwill be its
integrationwithotherAppleownedsoftware systems,iBeacon&Apple Pay.Such
technologywillenhance in-storelocationspecificcommunicationwithconsumersabout
newor special promotionsandproducts.These canbe tailoredtocustomersthrough
the data collectionof theirshoppingtrendsandonline habits.Customerscanthenpay
for productsusingtheirApple Watchwhichisdeemedmore secure thanusingaphone
(due tothe needtoentera passcode whenputtingthe Apple Watchon) andease of use
(as itonlyrequiresone swipe),soconsumersdonothave toremove theirphone from
theirpockets.Together,itishopedthatthiswill improvethe informationavailable to
customersandreduce waitingtimesresultingingreaterconsumersatisfactionand
generatingmore sales.At the same time,itprovidesmarketerswithawealthof dataon
customersthatcan be usedto observe how adigital advertisementcandirectlyimpact
physical behaviour.Thiswill allowrevampsof planning,merchandising,sales,marketing
and othercore businessstrategies. Lowe,the integratedmarketingcommunications
network,employsover45,000 people equippedwithiPhones.Theybelievethatif these
people were equippedwithasmartwatchas well toprovide connectivityandmore with
theiriPhones,then theycouldworkwithbothhandsratherthanholdingiPhones
increasingproductivitysignificantly.
Google Glass
Google Glassisa pairof augmentedrealityglassesmakinguse of anoptical head
mounteddisplay. Itbecame availabletothe publiconMay, 2014, butin January,2015 it
was announcedthatGoogle wouldstopproducingthe Google Glassprototype but
remainedcommittedtothe developmentof the product.More recentlythere have
beenrumorsof the possibilityof aGoogle Glass2. Augmentedrealityglassessimilarto
Google Glass,have beentrialedbefore. Intermarché,aFrenchsupermarkethasbeen
testingARglassesinMennecysince 2013. Customerswearaugmentedrealityglasses,
whichshowdirectional arrowstoshoppersinorderthe helpthemfindproductsstored
on theirsmartphone shoppinglists.Shopperscanthenindicate apurchase by lookingat
barcodesand noddingtheirheads,andthe glassesmaysuggestadditional itemsbased
on the shopperslocation.SimilarlyitisthoughtthatGoogle Glasscouldbe usedin
future to compare itemsprices,review similarproducts,checkinventoryavailability,
place ordersfor out-of-stockitemsandreceivesuggestionsformatchingorsimilar
8. accessoriesanditems.Retailersadoptingsuchtechnologymaysee increasedloyaltyif
theycan embedin-store navigation,personalizedpromotionsandshoppinglists
effectively.Itmayalsomeanthe checkoutzone decreasesinimportance,providinga
threatto those reliantonimpulse categories.There are alsopossibilitiesforretailers
usingGoogle Glassforhands-free ordercommissioninginwarehouses,decentralized
fulfillmentcentersandstore locations.Mobile orderfulfillmentmayalsobe made more
efficientbyusingthe glassesforbarcode scanning,adoptinga‘pick-by-vision’approach.
TescoLabs has recentlypilotedit’sGoogle Glassapplication,inwhichcustomerscan
browse goods,viewnutritioninfoandadditemstotheironline basket.PabloCobely,
TescoLab’s InnovationEngineer,
describedGlassas‘nota newplatform
to shoppingasit’sfunctionalityis
differentandmore immediate.Instead
it complimentsotherdevicesand
integratesshoppingintoeverydaylife’.
He alsoidentifiedsevenkeyareasin
whichitwouldbenefitretailinthe
future consitingof:quickeraccessto
relevantdata;clientspecific
suggestions;geo-targetedpromotions;
more personalisedcustomerservice;
facilitatedreal time virtual sales, more
foottrafficand salesincreases.
As wearable technologysuccesshasbeenrelativelyrecent,suchinnovative technologies
are perhapsnotyetoptimizedforretail uses.However,one can imagine thembecoming
more commonplace withinthe next tenyears,asefficiencyismaximized.
The use of Google Glass® in retail may be a more distant reality
than that of Apple Watch®, but given its potential, it is hard not
to imagine a retail future without it.
9. Augmented Reality Shopping
AugmentedReality(AR) technological advancesmayhave large effectsonthe future of
retail,changingcustomers’ experiencesbothathome andinstore.Several large
retailerssuchasH&M have alreadyincorporatedARtechnologyintotheirmobileapps
by basingthemonthe AR platform, ‘Goldrun’.The Goldrunplatform enablesusersto
locate,interactwith,andtake
photosof GPS-linkedvirtualobjects
positionedinthe real worldandis
equippedwithpowerful
promotional andsocial networking
toolstailoredforthe mobile
environment.The aimisto improve
customerexperience and generate
greatersales.Holiton,anAR
solutionsfirmhasgone furtherby
conceptualizingplansfora‘smart
store’.Customerfaceswill be read
uponentryusingfacial recognition
technologyandwill allow retailerstopull uptheirshoppinghistoryandrecommend
products.Both ideasare designedtodrive customerstobothphysical andonline
destinationsandhence increase productsalesandenhance brandengagement.
AR technological innovationsare alsobeingusedtoenhance customer’sin-store
experiences.Legohasintroducedkiosksthatshow acompletedmodelwhenthe box is
heldupto a camera; L’Oréal recentlytrialledModiface’s3DAR Makeupand Anti-aging
mirror;and Macy’s, a US run mid-range chainof departmentstores, recentlyopeneda
AR clothes-trying-onmirroratits flagshipNew Yorkstore.IBMhas createda ‘Memory
Mirror’ that capturesa 10 secondclipof a customertryingon multipleoutfitsandthen
offers the abilitytoreview differentoutfits.Suchmirrorsaimto attract customerswith
visual suggestionsandoptionsforcomplimentaryfashion,style andwardrobe ideasas
such expeditingthe fittingroomprocessandprovidingahassle free experience,
enablingabettercustomer-associate interaction.Italsoprovidesgreatertheft
protection(aslongas clothesare RFIDtracked),inventorytradingandmanagement,
alongside increaseddatacollection whichallows more targeted loyaltyprograms,sales
trackingand social mediasharing. Suchmirrorscan alsominimise the riskof losingsales
by enablingcustomersto‘tryon’ out-of-stockitems andenable retailerstogaininstant
customerfeedback onneworup-and-comingranges. IntelligentShelving,eye catching
digital displaysoralternativelyhologramshave alsobeenproposedwiththe abilityto
easilyupdate the displayinordertorunspecial promotionsnearsell-by-dates, so
Augmented Reality 'Magic' Mirrors could provide customers with a more
complete shopping experience and retailers with increased consumer data
10. helpingshiftlowmovingstockwithouthavingtocreate elaborate promotional
campaigns, while maximisingtime,space and profit.
Drone Parcel Delivery Services
Retail deliveryservicesof the future maybe muchaffectedbythe possibilityof parcel
deliverybyunmannedflyingdrones.AmazonCEO, Jeff Bezos,hopesdrone deliverieswill
be realityby2020, withpilotschemes beingsetup inmajorUS citiesbythe endof 2015.
The Amazonscheme,named‘AmazonPrime Air’will relyonOctocopterstodeliversmall
parcelsto homesupto 10 milesaway,within30minutesof placing anorder.Google has
alsotrialleddrone deliveryschemesusingfixedwingdronesinordertodeliverfaster
and overlongerdistances.Google’sdronesdonotlanddue tosafetyfearsandinstead
lowergoodsona line from150 feetabove the ground.The scheme wassuccessfully
trialledin2014 beingusedtodeliverdogtreats,medicationsandcattle vaccinesto
farmersinthe Australianoutback.GermanlogisticsgiantDHLis alreadyusingunmanned
dronesto deliversmall parcelsof
medicationandurgentgoodstothe
Germanislandof Juist,located12
kilometresoutintothe NorthSea.Drones
flyunder50 metresaltitude toavoidflight
authorityregulationsandwhile the
scheme hasonlybeenrunningfromearly
2015, ithas receivedmuchpraise from
local residents.However,concernsstill
remainaboutthe safetyof the technology
and whetheritwill complywithflight
authorityregulations.Insome countries,
unmanneddronesare forbidden or
ownershave tomaintaineye contactat all times or dronesmaynot be allowedwithin
50 metresof any buildings oranddronesmaynot flyat an altitude of more than50
metres.However,the speedinessof deliveryandthe environmentallyfriendlynature of
the projectalongside furtherinnovative drone technologyadvanceswill likelyseethe
increaseduse of drone deliveryservices.
Drones could become increasingly commonplace in the
future as part of retailers delivery fleets.
11. Car Boot Delivery Services
Similarlytodrone parcel deliveryservices,innovative technologymaysoonallow
retailerstodeliverparcelstoyourcar’s bootwhilstparkedatwork or elsewhere.In
Barcelonaat the 2014 Mobile WorldCongress,Volvotrialledsuchaprogramme.Users
of Volvo’s‘VolvoonCall’appwere giventhe optionof choosingtheircaras a delivery
optionwhenorderingonline.The
approximate locationof the carwas
thenpassedtothe deliverycompany
alongwitha digital keythatwould
give the deliverydrivertemporary
access to the vehicle’sboot.Of the
100 people involvedinthe pilot,86%
agreedthe service savedthemtime
and woulduse itagain.A similar
scheme iscurrentlybeingtrialledby
Amazon,DHL and Audi forAmazon
Prime customersin certainlocations
aroundMunich. Amazonare alsoworkingona similarsystemtoallow goodstobe
returnedviacar boots. However,customers’securityconcernsstill needtobe
addressed. Byprovidingalternative deliveryservicesthatsuitcustomer’spersonal
needs,retailersmayattractincreasedsales,generatelargerrevenuesandencourage
customerloyalty.
RFID Tagging
RFID technologymaynotbe an innovative technology,havingbeeninventedin1973
and widelyusedinretail since 2003. However,the changingrole of RFIDtaggingin
currentyears andthe potential effect itcan have on retailersinthe future iswhyitis
includedonthislist.
RFID isan ID systemthat usessmall radiofrequencydevicesforidentificationand
trackingpurposes.The trackingsystemincludesRFIDtags,a read/write deviceanda
hostsystemapplicationfordatacollection,processingandtransmission.OriginallyRFID
technologywastobe usedfor supplychainmanagement.In2003, Walmart proposeda
projectbywhichall supplierpalletsandcrateswere RFIDtaggedin orderto create a
more efficientsupplychain, withthe aimof optimizingproductdeliveries tothe right
place at the right time.However,due tohighcosts andconcernsas to the benefits, the
projectwasscrapped in 2007.
Car Boot Deliveries may also be a feature of the near future,
saving customers time and money
12. However,RFIDstill hasmuchpotential inhelpingretailersbecome more competitive
withonline sellersthrough omni-channel sales.Itcanbe usedto close sales,onbuyer’s
terms,instore,on the web,onsocial mediaor a combinationof these.Itcanbe usedto
ensure customersthatproducts
advertisedonthe webare available in
store withfrequentinventory
countingprovidinggreaterstock
accuracy. It alsoallowsstore
associatestocheckthe inventoryof
an entire rackof clothes bysimply
walkingaroundthe displaywitha
handheldreader.Softwarethen
displaysalistof sizesor stylesthat
needtobe replenished,andthe
associate can focus on the required
itemsinthe stockroom.It providesaquick,automated,costefficientandaccurate way
to track inventorythroughthe supplychain andinthe retail environment.The abilityto
keepa fullystockedfloorwill freeup time forstaff,increase laborsavingsandreduce
clearance itemsdue toincorrectinventoryandexcessordering. Thiscanhave a major
profitabilityimpact. Asaresult,at presentinventorycountscouldbe done upto24
timesa yearusingRFID,enablingretailerstokeepinventory percentage accuracyinthe
high90s. However,withfurtherinnovative advances,retailersmaybe able totrack
productsaroundtheirstore and keepa live inventorycount.
Bill Connell,Macy’s’ seniorVPof logisticsandoperationsstatedthat “Youcan’t be good
at omni-channel,withouthavinghighconfidence atstore level,atsize andcolorlevel.”
Macy’s pilotedthe scheme withRFIDtagsbeingbuiltintoitemtags.Due tothe pilot’s
success, in2014 Macy’s rolledoutRFID infrastructure inall 850 US storesand withthe
aimof havinghalf of all replenishmentvendorssendingRFIDtaggedproductsby
September2014. Zara, one of the majorUK retailerstoembrace thistechnology
estimate that2 assistantscan take a store’sinventoryinhalf anhour,whereas
previouslyitwouldhave taken10 staff members 5hours.RFID technologyhasalsobeen
usedto enhance customerexperience.Burberry isusingRFIDclothestagsthat activate
changingroommirrors,withvideo’saboutthe makingof the piece and showingiton
the catwalk.Such technologyis ideal forapparel andconsumergoodsretailersasit is
mosteffective withthousandsof stocktakingunitsandhighvolume sales.Ultimately,
the technology allowsfasteroptimal reordercycles,reducedcycle stock,reducedout-
of-stocksanda multi-channel capacitythat generates lowercostsandtherefore greater
salesrevenues.Giventhe advantagesof sucha technology,itislikelytobe increasingly
usedbyretailersinthe future.
RFID Tagging will enable quicker inventory counts, and greater
inventory accuracy
13. The Internet of Things
The Internetof Things,or The Internetof (Nearly) Everythingasitis otherwise known,is
a networkof physical objectsor"things" embedded withelectronics,software,sensors,
and connectivity toenableobjectstoexchange datawiththe manufacturer,operator
and/orotherconnecteddevicesbasedonthe infrastructure of International
TelecommunicationUnion's
Global StandardsInitiative.
The Internetof Things
allowsobjectstobe sensed
and controlledremotely
across existingnetwork
infrastructure,creating
opportunitiesformore
directintegrationbetween
the physical worldand
computer-basedsystems,
and resultinginimproved
efficiency,accuracyandeconomicbenefit.
Considerthissituation:Youwalkpasta store forwhichyouhave a pairof shoesinyour
online basketonyourmobile application.A Bluetoothlow energybeacondetectsyour
presence andpushesanotificationtoyourApple Watchtellingyouthe shoesare in
stock andgivingyoua couponto redeemif youpurchase themtoday.You goin to the
changingroomto try themon and the ‘Magic Mirror’, detecting the RFIDtag inthe
label,showsavideoof theirproduction&recommendsapairof trouserstomatch. You
take a picture withyourphone touploadto social mediaandgainpositive reactions.
Google Glassnotifiesyouthatthe trousersare cheaperonline. Youpayforthe shoesby
swipingata designatedpointof sale withyourAppleWatchandget themdeliveredto
your car boot while youcontinue shopping.Youalsoorderthe trousersusingGoogle
Glass,selectingdrone-to-doordeliverysotheyare there whenyouarrive home.
Sensorsprovide bothconsumersandretailersinformationinordertomake decisions,
and byusingthe data providedandseamlessintegrationbetweenvarioustechnological
innovations,boththe retailer’sandconsumer’saims(greatersalesnumbers,andmore
personal shoppingexperience respectively)are realized.The Internetof Things
essentiallydrawstogetherall available innovativetechnologiestodeliverthe best
experience possible.While ascenariolike thismayseemquitedistant,all the technology
neededisreadilyavailable,soitispossible thatretailersmayoperate insuchaway in
the next15-25 years.
The Internet of Things may sound like science fiction but it is probably nearer
than we think
14. Smart Appliances
Smart Appliancesare home appliancesthathave beenconnectedtothe Internet(as
popularizedbythe Internetof Things) andoftenare connectedtoeachother.Samsung,
the leadingsupplierof smartappliancesatthistime,hasvowedtoensure thatall its
newproductswill be able tobe interconnected.IHSInc.expectstronggrowthinsmart
appliancesfor2015-2020 witha compoundannual growthrate of 134%, estimatingthat
there will be over700 million smartconnectedhomeappliancesby2020. Appliances
such as Samsung’s RF28HMELB fourdoor refrigeratorincludebarcode scannersonthe
door inorderto monitorfridge contents,andcanautomaticallyaddfoodtousers’
online shoppingaccount. Alternativelythiscanbe done bymeasuringthe weightof
fridge shelves. Theycanevensuggestrecipeswithleftoverfood,switchthe ovenonat
the requiredtemperatureandseta timerviawirelessconnectionwhile showingthe
cook a recipe onthe screen. Suchtechnologymayextendtootherdevices,with
dishwashersable toordertabletsand
cleaningproductsandbinsordering
binbags. Theyhave the potential to
have a large effectonhowthe retail
industryoperateswithsmart
appliances orderingproductsfor
deliverybefore consumersrealise they
have ran out. Asa result,suchsmart
appliancesmaycause large changesto
supermarketretailers,forcingthemto
operate witha greaterfocuson
deliveryservicesandlesssoonthe
checkoutzone.
3D Printing
3D Printinghasbeenaroundsince 1984, andis commonlyusedinindustrytoproduce
bespoke parts.3D printersworkbydepositingmaterial,layer-by-layertocreate a solid
object,fromthe groundup, a processknownas additive manufacturing.Plasticis
currentlythe mostcommon‘ink’,butothersinuse include ceramics,metal,sand,sugar
and chocolate. The processisenvironmentallyfriendlyasiteliminatesunneeded
material fromthe designprocessandmanyof the ‘inks’canbe recycledor are
biodegradable. IndeedBoeingwanttoprintan entire plane by2050, due to the ability
to save on material andlabourcosts.
3D Printershave historicallybeenhighlytechnical andcostlytobuy.Howeverwith
recentpatentexpiration,there has beenafloodof new 3D printersintothe market
Smart Fridges will be equipped with LCD screens, with the ability
to suggest recipes & order deliveries before consumers realise
they are needed
15. makingthemmore consumerfriendlyanddroppingaverage pricesfromthe tens-of-
thousandstothe hundreds.Withthe expirationof keypatentssettocontinue overthe
nextcouple of years,CreditSuisse predictanincrease of upto 30% in 3D printersales
whichwill have significanteffectsonretailers.We are likelytosee anincrease in3D
printersinstoresandin homesdue totheirabilitytoprovide immediacyand
customization.
3D printingmeansthatretailerscould
hypotheticallyoffervastproductrangeswithout
needtoconsiderstockingorreplenishment
concerns.Customerscould bringblueprintsor
replacementpartsforexample,intostoresfor
3D printing,inwhichthe customeractsas a
producerand the retailerasthe service provider.
Indeedseveral large retailersare already
experimentingwith3Dprinting.Amazon
recentlylaunchedits3Dprintingstore that
allowsuserstoprintand designproductsfrom
3rd
party sellersfordelivery.But3D printinghas
the abilitytogo evenfurther.If pricescontinue tofall,we couldimagine aworldwhere
there isa 3D printerineveryhome.Thishasthe potential torenderdeliveryfirms
uselessandhave massive risktoretail anddepartmentstores.Consumers wouldbe able
to printout a product at home insteadof buyingfromastore,usinga centralisedopen
source blueprintdirectoryforthe object’sdesignbutwouldbe limitedbyprintersize.In
such a scenario,retailerswouldhave toadaptand altertheir omni-channel approaches,
mostlikelyintosellingprintersandrequisitematerialsand/ordeveloping3Dprinting
designsordesignplatforms.While thissortof scenarioisprobably awayoff,retailers
shouldat leastconsiderwhatimpact3D printingwill have onboththe currentand
future retail markets.
Bitcoin
Bitcoinisa paymentsysteminventedin2008 thatis widelyacceptedasthe first
decentralizeddigital currency.Bitcoinsare createdasa rewardforpaymentprocessing
workin whichusersoffertheircomputingpowertoverifyandrecordpaymentsintothe
publicledgerorcan be obtainedinexchange fordifferentcurrencies,products,and
services.Bitcoinasaform of paymentforproducts andserviceshasgrown,and
merchantshave an incentive toacceptitbecause feesare lowerthanthe 2–3% typically
imposedby creditcard processors.Asa result, BitcoinbankssuchasCoinbase have
grownrapidly,andhave estimatedvaluesof $400 million. Despite notbeingas
3D Printers have the potential to render delivery firms useless
and place huge pressure on retail and department stores
16. innovative assome of today’stechnologies,manyexpertsbelievethatbitcoinora
similarvirtual currencymaybe usedinthe future.Indeed,the USstockexchange
NASDAQisexperimentingwithincorporatingthe underlyingtechnologyof bitcoin
cryptocurrencyintoitspre-IPOtrading
arm and NASDAQprivate markets.
Bitcoinpointof salessolutionsare
readilyavailable forretailersandin
some caseshave beenwidelyadopted
such as inthe Dutch city of Arnhem
where over40 retailersacceptBitcoin
as a form of payment.US online
retailerOverstock.comreceivedover
830 orders,worthover£80,000, on the veryfirstday itstartedacceptingbitcoin.This
raisesthe question of whyhasn’titbeenmore widelyadopted?Concernsremainover
Bitcoin’ssecurityandlegalityandscandalssuchas,‘The Mt. Gox Arrest’have hindered
itspopularity.However,if the currencycanprove itself secure,inthe increasinglydigital
worldwe live,Bitcoinoranequivalentcurrency,maybecome astaple currencyof the
future,andbe acceptedby retailersforonline,mobile andin-store payments.
IT Infrastructure & Software
So far,much of the innovative technologiesmentionedare aimeddirectlyatthe
customerand relyondirectcustomerinteraction.However,inorderforretailerstobe
able to run suchtechnologytoaid both theircustomers andthemselves,theymusthave
the relevantITinfrastructure inplace.Original ITsystems,whichhave hadmodules
addedon to themoverthe yearsinorder to make themcompatible withcurrent
standards,are not suitable andwill notbe able todeal withthe new innovationsand
theirtechnological demandsaswe enterthe eraof ‘BigData’. As a resultnew IT
infrastructure technologyandsoftware will have tobe introducedinordertoensure an
omni-channelapproachforretailers,andtoensure theydonotlose ground to
competitors.
Many of the leadingITsystemsprovidersofferchoice andflexibilitywiththe most
comprehensive,modernandsecure portfoliosof productsandservicestofitbusiness
needs.Byenablingconsolidationontodatabase cloudsandengineeringsystems,these
systemscanbe usedtoempoweremployeeswithaccesstodata,applicationsand
featurestheyneedtodotheirjobseffectively (e.g.runningprice trialstotestprice
psychologyand price architecturesasisbeingdone atShopDirectbyTPC) while
simultaneouslyloweringITcosts anddeliveringhigherqualityof service.The speed,
reliability, securityandease of use of manyof the systemsmeanstheyare suitedforall
Signs, such as the one above, may become increasingly common in
shop windows, if digital currencies can prove their security.
17. typesof database workloads,includingenterprise applications,datawarehousesandbig
data analysis.They canalsoreduce the complexityof ITinfrastructures whilstincreasing
productivityandperformance.Suchsystemsallow retailerstocreate a hyper-connected
solutiondeliveringseamlesscommunicationsacrossfixedandmobile userswithhigh
performance,scalabilityandreliability.Thisenablesretailerstohelpengage customers
withrich multimediainteractionsandautomate businessprocessestoincrease
productivity,efficiencyandratesof
interest.However,there remain
concernsoverthe privacyof what
such technologymayallowand how
retailersshouldensure theycomply
withdata privacystandardsand
clearlycommunicate toshoppers
whattheyare doingand why.Itmay
be that offeringsomethinginreturn
to customers(e.g.avoucherto spend
instore) will helpease anyprivacy
doubts.
There are several areasinwhich
retailersneedkeycomputing
infrastructure inordertomaintaina true omni-channel programme.Retailers should
ensure theyhave customerrelationship managementsystemsthat provide cross-
channel,consistentcustomerexperiencesusingpre-builtbusinessprocesses;integrate
customerrelationshipmanagementwithenterprise applications,providingconnections
throughoutthe buyer'sjourneyandmakingoperationsmore efficient;andleverage
industry-specificbestpracticesforcompetitive advantage andlowerthe total costof
ownership. Thismustrunalongside merchandisingmanagementsystemsthathelp
retailersefficientlymanage theiroperationsthroughseamlessexecutionof processes
such as purchasing,distribution,orderfulfillment&financial close.Merchandise
managementsystemsmust manage keyfoundationdata:hierarchies,suppliers,
locations,anditems;provide provenCommerceAnywhere solutionstosupportingthe
customerjourney;enablevisibilityof retail,franchise &wholesale transactions;be
flexible,andinclude extendable fieldsforeasyprocessextensions;supportmultiple
financial booksinasingle instance;andmanage evolvingbusinessprocesses,models
and expansion. Retailers mustalsoensure theyhave advancedOrderManagement
systemsinplace.These software packagesmust enable sale agentstohave accessto
accurate and complete informationviaasingle repositoryhousingall relevantsales
transactions;empowercustomersthroughself-service statustrackingfunctionality,
accessible onthe Internet,inordertoimprove customersatisfaction;and expedite sales
There will be no point investing in innovative technology,
both as a consumer and a retailer, if companies do not have
the IT capabilities to support such technologies.
18. cycles,so blanketsalesagreementsassociatecustomerorders(releases)withpre-
negotiatedtermsandvolume commitments. Allthese systemswill provide retailerswith
large amountsof data but withoutsoftware toanalyse this data,theyremain pointless.
Therefore retailersneed analytical systems aswell.These must enable themtoleverage
a wide range of informationtooperate more efficiently, offernew servicesanddiscover
newwaysto strategize, plan,optimisebusinessoperationsandcapture new market
opportunities,whetheritbe promotionsoroptimumdeliveryschedules. Thiswill allow
retailers gaininsightintoeveryaspectof theirbusiness,planahead, andactwith
confidence.
Thisis a fairlylengthychecklistforwhatretailer’sITandsoftware packagesneedtobe
able to provide andthere are some areasthat have not been included. Inrealitythough,
no software firmisyettointegrate all software packageseffectivelysoas to provide a
whole ITsystemsprogramme forretailers whoare lookingtoembrace the omni-channel
revolutiontothe maximum.
Despite this,manyretailershave alreadybeguntoupdate theirsystemstocope withthe
demandsof the ‘BigData’ era. Arcadiaiscurrentlyundergoingacomplete ITsystems
overhaul,withthe helpof TPCConsulting,fromtheiroriginalLegacysystemtoOracle’s
Retail MerchandisingWarehouse ManagementSystemandGlobal Supplychainsystem,
as part of the Horizonprogramme.Indoingso,Arcadiawill gainreal time supplychain
visibilityalongside the abilityto performcostmodellingformerchandise orders.The
systemacts as a backbone toenable Arcadia’sinternationalexpansionandomni-
channel revolution.FrenchretailerCarrefourchose Acxiom’sAudienceOperating
System(AOS) toincrease the effectivenessof itsmarketingcampaigns.WithAOS,the
retailercanconnectonline andofflinedatasourcesandthusprovide amore
personalisedbrandexperience instore oronline.Italso enablesmarketerstorun
analyticstosegmentaudiencesandprovidesacomprehensiveview of the audience
across channels,devices andmediasources.Thiscanbe enrichedbydemographic,
contextual,behavioural andsocial profiles. Toaddressprivacyconcerns,Axciomhas
launched aboutthedata.com,awebsite givingconsumersaccesstothe data Acxiomhas
collected,alongwithoptionstooptout or correct it.Macy’s have begunusingGoogle’s
proximitymarketingplatformcalled‘Nearby’totemptcustomersinashoppingmood
intostoreswhenusingtheirsmartphonestosearchforitemsviaGoogle.Browsing
shoppersare informedif theycanfindtheirdesiredproductata nearbyMacy’s, and are
shown outletdirectionsanda directlinktothe itemat macys.comalongside product
images,details,prices,sizesandcolour.
20. To Conclude…
A lotdependsonthe rate of uptake of such technologies.Some technologiesare
relativelynewandneedtobe refined (Google Glass,3Dprintinganddrone-to-door
deliveries).Othersare more advancedhavingbeenaroundforlonger,(RFIDtaggingand
the culminationof wearable wristweartechnology withthe Apple Watch).Asaresult
the timescalesinwhichthese innovativetechnologies are likelytoimpactwill vary.
Innovationssuchas Digital Wallet&Mobile PaymentServices,BluetoothLow Energy
Beacons,Apple Watch, andRFID taggingwill take preference inthe shorttermover
alternative deliveryservices,alternative currencies,smartappliancesand3D printing.
Adoptionalsoreliesonwhetherretailersare willingtoinstall the infrastructure needed
for suchtechnologiesintheirstores.If retailersdonothave the managementsystems
and store hardware inplace thentheywill notreapthe benefitsof suchinnovations.
Until these adaptationsare achieved andthe correctlevel of infrastructureobtained,
the Internetof Thingsandcomplete integrationof all sensorsanddevicesseemstobe a
distantideal.
The rate at whichtechnological advancesprogress,will quickenincomingyearsasour
knowledge continuestogrowand develop.Predictingwhichtechnologieswill playa
large part in the shortand longtermfuture of retail,andhow to implementthemtothe
benefitof boththe consumerandthe retailer,willbe critical forretailerstoachieve
success.Retailersshouldthoroughlyassess whichinnovationswill bringthe most benefit
as thiswill varywitheach retailer.The retail experience forthe consumerwill be
increasinglypersonalizedandlocalizedgivinghighercustomersatisfaction figures.The
retailerwill generate more dataoncustomerswhichcanbe usedto optimize both
consumerexperience andsalesrevenues.
One thingisclear though;the shoppingmodel of the future ispoisedtolookradically
differentfromthatof a decade ago,and eventoday. Retailersthatfail totake advantage
of suchinnovations anddonotkeeppace withchanging technological attitudeswill not
be successful.