How is New Innovative Technology going to affect the Future of Retail - LinkedIn (5)

03/05/2023 © Thought Provoking Consulting 2015 – Confidential 1


HOW IS NEW INNOVATIVE TECHNOLOGY GOING TO AFFECT THE FUTURE OF RETAIL?

An Introduction…

• Consumer lifestyles and technology are changing rapidly• As a result attitudes towards shopping are evolving• Success will require an omni-channel approach• Consumers want convenience

‘I’ve been in retail for 30 years. There has been more changes in the last 5 years than the previous 25’

Andy Clarke, CEO of Asda Walmart



An Introduction…

• Technology needs to create engaging experiences • Retailers are undergoing a complete mobile revolution and

apps need to be sophisticated• Smartphones have already caused large changes in consumer

retail trends• 58% and 45% of people use their tablet or mobile respectively

for shopping activities • 53% use their mobile phone to compare prices out while

shopping


An Introduction…

• There are more technological advances to come• Future is heavily tech-driven with greater customer

expectations• Retailers need to leverage these new technologies if they want

to stay ahead of their competition• There are 12 major technological innovations retailers need to

consider. These are:


12 Key Innovative Technological Advances

• Digital Wallet & Mobile Payment Services

• Bluetooth Low Energy Beacons

• Wearable Technology• Augmented Reality Shopping• Drone Parcel Delivery

Services• Car Boot Delivery Services

• RFID Tagging• The Internet of Things• Smart Appliances• Home 3D Printing • Bitcoin• IT Infrastructure & Software


Digital Wallet & Mobile Payment Services


What is it?


• Using technology already embedded in mobile devices to make contactless payments

• Can be used at fixed or mobile points of sale


Aim?


‘Remove the friction from the payment experience for customers with the hope of generating opportunities for increased sales as a result of reduced waiting times, higher customer satisfaction and higher consumer confidence in the

security of transactions’


Examples


• Apple Pay– 1 million credit cards in registered within 3 days– 220,000 vendors by launch– 50% of US McDonald’s tap-to-pay transactions within 1 month

• Android Pay– 700,000 registered vendors– Over 1000 configured applications


Pros


• More secure than contactless cards as:– Card numbers are not transferred with payments– Customers notified with a payment confirmation as soon as a

purchase is made, – ‘Find my iPhone’ and ‘Android Device Manager’ enable customers

to instantly lock their devices and wipe it clean of personal data. • No transaction limit• Credit charges processed at low card present rates• It’s security ensures retailers using such services are exempt

from fraud liability happening within their stores


Cons


• *It will decrease the use of the checkout zone*• Slow Uptake BUT….• Hard to tell if due to low consumer or retailer adoption rates

Bluetooth Low Energy Beacons

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What is it?


• Small Beacons in stores that emit low energy EM radiation that can detect when other Bluetooth devices are nearby.

• Allows retailers to deliver targeted campaigns to customers’ mobile devices, when entering a store or in store specific locations

• Notifications about item details, prices, store location, links to purchase items on the companies’ websites, and targeted offers based on customer’s online history

• Potential uses in tracking customers around stores, with benefits over GPS


Aim?


‘improve customer experience in-store by providing customers with all the information they need, boosting consumer satisfaction and giving a greater opportunity for increased sales, while at the same time enabling retailers to have a smarter and more targeted approach’


Examples


• Trials at US Apple Stores, Heathrow Airport, 100+ Regent Street Stores

• McDonald’s 4 week pilot– Over 7 % increase in promoted product sales

• House of Fraser Aberdeen piloted a Mannequin beacon scheme providing customers with information on the clothes the mannequins are wearing

• Pilot success has lead to predicted market wide beacon sales, of over 60 million beacon units by 2019


Pros & Cons


• Allows a more targeted approach for customers• Opportunities for greater sales for retailers• Retailers can gain information on customer movement in-store• BUT…

– Customers need to have store applications previously installed– Privacy Concerns over tracking– Need multiple beacons to triangulate locations, raising costs– Wi-Fi is more accurate but needs to be joined directly

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What is it?

Wearable Technology

• Clothing and accessories that incorporate computers and advanced electronics with practical functions or just aesthetic qualities

• 15 million wearable smart devices by December, 2015, set to increase to 70 million by 2017

• 2 major players:– Apple Watch– Google Glass

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What is it?

Apple Watch

• Apple’s first venture into the wearable technology market• A smart watch that syncs applications with your iPhone,

allowing for a variety of different functions• Integration with Apple Pay and iBeacon enables:

– In-Store location specific promotions– Swipe-to-Pay at portable POS


Examples

Apple Watch

• Amazon, Asos and Zara are some of a long list of companies to have launched applications designed for the Apple Watch

• Amazon’s App only has three functions:– Item search using Siri– Save products to your Amazon Wishlist– Check-out using Amazon’s 1-click ordering system

• Predicted Sales of over 10 million in the first year alone• Sales predicted to overtake all previous wearable technology

sales combined in one year despite ‘poor’ sales figures

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Pros

Apple Watch

• For Customers: – Improved information– Reduced waiting times– Greater consumer satisfaction

• For Retailers: – Higher sales– Wealth of data on customers– Ability to observe how digital advertisements directly impacts

physical behaviour

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Cons

Apple Watch

• Limited operating platform capabilities, due to constrictive screen size & operating system require a different marketing approach

• Doubts due to ‘poor’ sales figures, has led to it being labelled as a ‘flop’


What is it?

Google Glass

• Augmented reality glasses with internet access, making use of an optical head mounted display

• Production stopped, but rumours of Google Glass 2


What is it?

Google Glass

• Potential uses for customers: – comparing item prices, reviewing similar products, checking

inventory availability, placing orders for out-of-stock items & suggestions for suitable accessories

• Potential uses for retailers:– hands-free order commissioning in warehouses, decentralized

fulfillment centers and store locations. – Mobile order fulfillment by utilizing barcode scanning using the

glasses, adopting a ‘pick-by-vision’ approach


Example

Google Glass

• Tesco Labs piloted Google Glass application, allows customers to browse goods, view nutrition info and add items to their online basket

“Glass is not a new platform to shopping as it’s functionality is different and more immediate. Instead it compliments other devices and integrates shopping into everyday life”

Pablo Cobely, Tesco Lab’s Innovation Engineer


Pros & Cons

Google Glass

• Quicker access to relevant data for retailers • More personalized customer service with client specific

suggestions and geo-targeted promotions• Facilitated real time virtual sales• Increased foot traffic and sales increases• BUT…

– Intrusive design means low sales volumes anticipated– Needs collaboration with major (sun)glasses brand(s) to boost

sales figures– *May contribute to decrease in importance of the checkout zone*


Augmented Reality Shopping


What is it?


• Objects that enables users to ‘locate, interact with and take photos of GPS-linked virtual objects positioned in the real world’

• Equipped with powerful promotional and social networking tools tailored for the mobile environment.


Aim?


• To drive customers to both physical and online destinations and hence increase product sales and enhance brand engagement.

• To attract customers with visual suggestions & complimentary options, expediting the fitting room process and providing a hassle free experience, enabling a better customer-associate interaction


Examples


• Holiton has conceptualized plans for a ‘smart store’, leveraging facial recognition technology and allowing retailers to pull up shopping histories and recommend products.

• H&M have incorporated AR technology into their mobile app based on AR platform, ‘Goldrun’

• Lego kiosks show a completed model when the box is held up to a camera

• L’Oréal trialled a 3D AR makeup mirror & Macy’s opened a AR clothes-trying-on mirror

• IBM’s ‘Memory Mirror’ captures a clip of a customer trying on multiple outfits & offers the ability to review outfits


Pros & Cons


• Allows for inventory trading and management alongside increased data collection with the ability to expand loyalty programs, sales tracking and social media sharing

• Allows for cheap and easy advertising campaigns• Can be used to gain feedback on up-and-coming product lines• Minimises the risk of losing sales• BUT…

– The technology is costly


Drone Parcel Delivery Services


What is it?


• The use of remotely operated drones to deliver small parcels to local residents


Examples


• Amazon CEO, Jeff Bezos, hopes drone deliveries will be reality by 2020 with pilot schemes in major US cities by 2016

• ‘Amazon Prime Air’ will use Octocopters to deliver small parcels to homes up to 10 miles away, in 30 minutes

• Google trialled fixed wing drones that can deliver faster and over longer distances. They lower goods from 150 feet. Successfully delivered dog treats, medications and cattle vaccines to the Australian Outback

• DHL is using drones to deliver medication to the German island, Juist, 12 km into the North Sea. They fly under 50 m avoiding flight authority regulations


Pros & Cons


• Speedy deliveries • Environmental friendliness• BUT…

– Concerns remain about technology safety– In some countries:

• Unmanned drones are forbidden• Owners have to maintain eye contact• Drones forbidden within 50 m of buildings• Drones can’t at altitude more than 50 m


Car Boot Delivery Service


What is it?

Car Boot Delivery Services

• Retailers deliver parcels to the boot of a parked car• Delivery drivers are issued the approximate location of the car

and a digital key to allow temporary access to the car boot


Examples


• Trialled by Volvo, 86% agreed it saved time & would use it again

• Amazon, DHL and Audi are also trialling it around Munich• Amazon also working on a similar returns system


Pros & Cons


• By providing alternative delivery services that suit customer’s personal needs, retailers may attract increased sales, generate larger revenues and encourage customer loyalty

• BUT…– Concerns remain over the services security


RFID Tagging


What is it?

RFID Tagging

• ID system using radio frequency devices for identification and tracking purposes.

• System includes RFID tags, a read/write device and a host system application for data collection, processing and transmission.

• Originally used for supply chain management by Walmart.• High costs and benefit concerns caused the project to be

scrapped in 2007 • System allows in inventory management


What is it?

RFID Tagging

• Can be used to close sales, on buyers’ terms, in store, on the web, on social media & ensure products advertised on the web are available in store

• Allows associates to check inventories by walking quickly keeping inventory accuracy percentage in the high 90s

• Potential for tracking products around the store and live inventory counts


Examples

RFID Tagging

• You can’t be good at omni-channel, without having high confidence at store level, at size and colour level.’ - Macy’s’ senior VP of logistics and operations

• Macy’s trialled successful pilot, with RFID tags built into item tags resulting in RFID infrastructure rolled out in all US stores

• Zara estimate that 2 associates take a store’s inventory in 30 mins. Previously took 10 associates 5 hours

• Burberry using RFID tags to activate AR mirrors showing video’s of the tagged item, improving customer experience


Pros

RFID Tagging

• Quick, automated, cost efficient and accurate way to track inventory through the supply chain & in the retail environment

• Allows faster optimal reorder cycles, reduced cycle stock, reduced out-of-stocks and a multi-channel capacity that allows for greater sales figures, lower costs and therefore greater sales revenues

• RFID potential helping retailers become more competitive with online sellers through omni-channel sales.

• Especially beneficial for retailers with high number of SKU’s and large sales volumes e.g. apparel/consumer goods


The Internet of Things


What is it?


• A network of physical objects embedded with electronics, software, sensors, & connectivity enabling objects to exchange data with manufacturers, operators and/or other connected devices.

• Allows objects to be sensed and controlled remotely across existing network infrastructure, creating opportunities for more direct integration between the physical world and computer-based systems.

• Sensors provide both consumers and retailers information in order to make decisions.


Consider this Scenario…


Pros & Cons


• Improved efficiency, accuracy and economic benefit.• By using data provided and seamless integration between

various technological innovations both the retailer’s and consumer’s aims are realized.

• BUT… – Still some way off yet


Smart Appliances


What is it?

Smart Appliances

• Smart Appliances are home appliances that have been connected to the Internet (as popularized by the Internet of Things) and often are connected to each other.

• IHS Inc. predict growth with a compound annual growth rate of 134%, with over 700 million connected appliances by 2020.


Examples

Smart Appliances

• Samsung has vowed to ensure that all its new products will be able to be interconnected.

• Functions on Samsung’s RF28HMELB refrigerator include:– Barcode scanner to monitor contents– Adding items to users’ online shopping accounts– Recipe suggestions– Switching the oven to certain temperatures– Setting an oven timer


Pros & Cons

Smart Appliances

• Potential to affect how supermarkets operate with more focus on delivery services and less emphasis on the checkout zone.


3D Printing


What is it?

3D Printing

• The printing of items, such as replacement parts, using a variety of materials.

• Items are built up by layering the ‘ink’ until the blueprinted design has been created

• ‘Inks’, include plastics, ceramics, metal, sand, sugar and chocolate but creations limited by printer size

• Boeing wants to 3D print an entire plane by 2050• Recent patent expiration has caused price drops from

thousands to hundreds• Credit Suisse predicted increases of up to 30% in 3D printer

sales


Examples

3D Printing

• Retailers could offer product ranges without need to consider stocking or replenishment concerns – Amazon’s 3D Printing store

• Customers could bring blueprints into stores for 3D printing - the customer acts as a producer and the retailer as the service provider.

• Likely to see increases in printers in stores and homes due to their ability to provide immediacy and customization.


Potential Effects

3D Printing

• 3D printers in homes:– Render delivery firms pointless, also risks to physical stores– Consumers print out a product at home using a centralised open

source blueprint directory for object design – Retailers move into printer sales and requisite materials and/or

developing 3D printing designs or design platforms to sell


Pros & Cons

3D Printing

• Environmentally friendly technology• Easy & quick to use• BUT…

– Technology and price isn’t there yet– Limited to printer size


Bitcoin


What is it?

Bitcoin

• First decentralized digital currency, created as a reward for payment processing work in which users offer computing power to verify and record payments into the public ledger or in exchange for different currencies, products, and services.


Examples

Bitcoin

• Bitcoin Banks e.g. Coinbase - estimated value of $400 million• Dutch City of Arnhem has over 40 Bitcoin accepting retailers• Overstock.com received over 830 orders, worth over £80,000,

on the first day it started accepting Bitcoin• US stock exchange NASDAQ is experimenting with

incorporating the underlying technology of a bitcoin cryptocurrency into its pre-IPO trading arm and NASDAQ private markets.


Pros & Cons

Bitcoin

• Merchants may accept it because of lower charges• Bitcoin point of sales solutions are readily available for

retailers• BUT…

– Concerns remain over Bitcoin’s security and legality– Scandals such as, ‘The Mt. Gox Arrest’ have hindered its

popularity


IT Infrastructure & Software



• So far…• BUT…for retailers to run technologies, must have relevant IT

infrastructure and software packages able to deal with these new innovations

• IT infrastructure has to:– Ensure an omni-channel approach for retailers– Be able to maintain retailers global presences– Track and analyse customer data– Run relevant promotions.

• Leading IT systems providers are building the capability to do this


What do retailers need?


• Good Customer Relationship Management System• Good Merchandise Management System• Good Order Management System• Good Analytics Software Package


Customer Relationship Management (CRM) System


• A good CRM system must:– Provide cross-channel, consistent customer experiences using

pre-built business processes– Integrate customer relationship management with enterprise

applications, providing connections throughout the buyer's journey and making operations more efficient

– Leverage industry-specific best practices for competitive advantage and lower the total cost of ownership


Merchandise Management System


• A good Merchandise Management System must:– Help retailers efficiently manage their operations through seamless

execution of processes such as purchasing, distribution, order fulfillment & financial close

– Manage key foundation data: hierarchies, suppliers, locations, and items

– Provide proven Commerce Anywhere solutions to supporting the customer journey

– Enable visibility of retail, franchise & wholesale transactions– Be flexible, and include extendable fields for easy process extensions– Support multiple financial books in a single instance– Manage evolving business processes, models and expansion


Order Management System


• A good Order Management system must:– Enable sale agents to have access to accurate and complete

information via a single repository housing all relevant sales transactions

– Empower customers through self-service status tracking functionality, accessible on the Internet, in order to improve customer satisfaction

– Expedite sales cycles, so blanket sales agreements associate customer orders (releases) with pre-negotiated terms and volume commitments


Analytics Software Package


• A good Analytics software package must:

‘Enable retailers to leverage a wide range of information to operate more efficiently, offer new services and discover new ways to strategize, plan, optimise business operations and capture new market opportunities, whether it be promotions or optimum delivery schedules’

• This will allow retailers to gain insight into every aspect of their business, plan ahead, and act with confidence


Example


• Arcadia currently undergoing a complete IT systems overhaul, with the help of TPC Consulting

• Changing from their original Legacy system to Oracle’s Retail Merchandising Warehouse Management System and Global Supply chain system, as part of the Horizon programme.

• The system acts as a backbone to enable Arcadia’s international expansion and omni-channel revolution.

• Arcadia will gain real time supply chain visibility alongside the ability to perform cost modelling for merchandise orders.

This text has been removed due to reasons of confidentiality.


Pros


• Empowers employees with data access, applications and features

• Lowers IT costs, reduces IT complexity, delivers higher quality of service

• Speed, reliability, security and ease of use means suited for all types of database workloads, including enterprise applications, data warehouses and big data analysis,

• Retailers can create hyper-connected enterprise with solutions to deliver seamless communications across fixed and mobile users with high performance, scalability and reliability.


Cons


• Concerns over privacy - retailers should comply with data privacy standards and convey what they are doing and why

• No software firm is yet to integrate all software packages effectively so as to provide a whole IT systems programme for retailers who are looking to embrace the omni-channel revolution to the maximum


IT Infrastructure Technology and Software

• IT infrastructure technology and software systems have crucial role in the future of retail

• Systems must be able to cope and adapt to the demands of new technologies in ‘Big Data’ era

• Infrastructure and IT systems that don’t will ensure retailers fall behind.

• Without an up to date, reliable, simple and secure IT system, retailers will not be able to embrace the next step in the digital revolution


To Conclude…

• The rate of uptake of new technologies will vary• Some technologies still need to be refined; others are more

advanced • Adoption relies on whether retailers are willing to install the

infrastructure needed for such technologies in their stores• Digital Wallet & Mobile Payment Services, Bluetooth Low

Energy Beacons, Apple Watch, and RFID tagging will have the biggest impact in the short term

• Technological advances will quicken as knowledge develops• Until adaptations are achieved, the Internet of Things and

complete integration of all sensors and devices seems to be a distant ideal.


To Conclude…

• Retailers should assess the benefits each innovation bring to their specific environment and be prepared to adapt as technologies evolve over time.

• Consumers will have an increasingly personalized and localized retail experience

• Retailers will have increasing amounts of data which should be used to optimize and personalise customer experience and sales revenues


To Conclude…

• The shopping model of the future is poised to look radically different from the present

• Retailers that fail to take advantage of such innovations and do not keep pace with changing technology will fall behind

How is New Innovative Technology going to affect the Future of Retail - LinkedIn (5)

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