IoT: Smart Connected Planet

Digital Retail Experiences Help Brick-and-Mortar Stores Stay Relevant

shoppers with digital devices
by Deb Miller Landau
iQ Managing Editor

The new retail frontier is all about seamless physical and digital experiences that are personalized, so shoppers find what they want, when and where they want it.

In a world where consumers can purchase anything from shoes to stereos online, have drone-delivered packages, buy bananas at 7-Eleven and asparagus at Walmart, retailers of all stripes have to get creative to stay relevant.

Younger generations growing up with the buy-now immediacy of Amazon Prime, have high expectations. To serve them, retailers are turning to technology to woo savvy shoppers, create easier access to goods and services, manage inventory and create shopping experiences that keep shoppers coming back for more.

“We’re at the dawn of a new economic narrative,” said Rachel Mushahwar, general manager of Intel’s sales for retail, hospitality and consumer packaged goods in the Americas.

shopping mobile device

Mushahwar said retailers are experiencing unprecedented disruption as consumers now have so many different ways to shop. The ubiquity of smartphones and computers, combined with a revolution in communications, is influencing what, when and where the world buys.

“Foot traffic inside of retail is down by at least 7 percent year-over-year,” she said, adding that more than 20 percent of the top 100 retailers in 2008 do not exist today. “Retailers really have to figure out how to remain relevant.”

Luckily, for brick-and-mortar retailers worried about the decline of foot traffic and the explosion of anytime, anywhere, smartphone-enabled shopping, Mushahwar has a reassuring motto: “Never underestimate the power of instant gratification.”

Mushahwar said today’s instant gratification goes beyond well placed earrings at the cashier or the sightline candy bars at the checkout.

People are still going into retail stores to shop, she said, they just demand a different shopping experience – one that more closely matches what they’ve come to expect in the rest of their digital lives, where it’s all about immediacy, personalization and efficiency.

“Online sales only account for about 7 percent of global retail sales,” she said, adding that there are plenty of ways retailers can merge digital and physical – what Mushahwar calls “phygital” – worlds.

using mobile device while shopping

Building In not Out

Mushahwar sees many big-box retailers shifting from building new stores to investing in digital services that make online shopping easier, in-store pickup faster and enable real-time inventory management.

The Home Depot, typically a vast cavern tailored for in-person shopping, has reportedly made huge strides in staying relevant in the face of digital.

“We spend on technology that drives the interconnected retail experience,” Carol Tomé, chief financial officer said in a Wall Street Journal interview. Rather than opening new stores, she said The Home Depot is revamping its website (coming in 2017), overhauling its supply chain to refill online orders faster and leveraging existing transportation networks to ensure productivity.

By enhancing brick-and-mortar stores with “phygital” (physical + digital) capabilities, Mushahwar said, retailers open up new ways of engaging with consumers.

In France, for example, home appliance and electronics retailer Boulanger needed to find a way to bring its inventory to customers virtually – so its Paris store wouldn’t require the massive square footage required to house, say, an army of refrigerators. It also wanted a way to engage with a youthful tech-savvy clientele already accustomed to shopping online.

Capgemini, a global tech consultancy firm, partnered with Intel to equip Boulanger’s Paris Opera store with two dozen shopping kiosks where customers can browse, read reviews and compare models. The immersive kiosk experience, powered by Intel, lets shoppers see how much fruit will fit in the refrigerator drawers, how much space on the door shelves and whether or not there’s enough room in the freezer.

Salespeople armed with tablets on the shop floor can call up detailed product information, orchestrate delivery options and make sales on the spot.

Another collaboration between Capgemini and Intel uses Intel RealSense cameras to create a 3D virtual representation of someone’s living room. It allows customers to move furniture around to see how it works in different configurations. Imagine a child’s dollhouse linked to a screen; when a customer rearranges the toy pieces, the screen instantly shows how they would look in a room.

Levi Strauss store sign

Several Levi’s stores in the U.S. are using a new inventory management system based on the Intel Retail Sensor Platform where a sales associate can not only see a pair of jeans in stock, but sensors attached to every pair of jeans in the store tell them exactly where they are inside the store.

“Worldwide retail is about a $4.4 trillion industry, but inventory overstock and out-of-stock costs the industry about $1.1 trillion annually,” said Mushahwar.

“Inventory visibility in store sits at about 65 percent accuracy for only about 40 percent of the items,” Mushahwar said. Customer experiences are key to get customers in the door, but solutions that keep the customer returning improve the in-store customer experience.

“Shoppers are more likely to return to a store when they have a positive experience,” said Mushahwar.   “One of the most frustrating retail experiences for a customer is to be told, ‘Sorry, out of stock,’ when they intend to make a purchase within a store.

Out-of-stock situations effectively invite shoppers to find and purchase their items elsewhere, she said.

“If you can improve accuracy and inventory in store by 3 percent, it equals about a 1 percent increase in sales,” said Mushahwar.

Grab Shoppers Where They Are

Physical capabilities go beyond giant retailers and offer a whole new potential for small businesses looking to meet consumers wherever they are.

popup store
ByReveal is a 6 x 6 popup shop that can be set up in 30 minutes.

Popup shops are one way. ByReveal and XRC Labs showcased brands at New York Fashion Week 2017, in a 6 x 6 foot popup store that brings retail to the consumer. ByReveal was created by Megan Berry as part of her thesis at Harvard Graduate School of Design. If someone could set up a website and business overnight with the ability to nimbly measure and iterate as needed, she thought, why couldn’t she do that in the physical world?

“This is a microboutique we can set up in 30 minutes,” she said.

The shop, made out of wood and aluminum, can be disassembled into 10 pieces and shipped anywhere.

Digital Retail shopping
RFID sensors on the clothing let shoppers find detailed information on a screen in the dressing room.

“We can set up on sidewalks, hotel lobbies, music festivals – anywhere,” said Berry.

It has two full fitting rooms and can showcase up-and-coming brands and is powered by Intel. It gives retailers instant feedback from sensors that track where consumer’s eyes are glancing. Retailers can tell how much time a customer stands in front of a particular item.

When shoppers bring sensor-tagged items into one of the two fitting rooms, a screen displays a description of the garment, available colors and sizes, and matching accessories. Shoppers can buy on the spot and have the product shipped to their home the next day.

“It’s an advantage for the retail industry because you can control the customer experience and you don’t have to control inventory, so we’re optimizing the footprint of retail,” Berry said. “It’s a fully immersive opportunity for customers and a way to buy in a very personalized way.”

Personalization Equals Profit

Even food shopping has changed, now that shoppers can buy produce at convenience stores and purchase groceries online.

The Wall Street Journal recently reported that, unlike their parents who plot out long grocery lists, millennial grocery shoppers purchase food items less frequently.  They use online services and make quick trips to the convenience store instead of buying food in one place.

“Ultimately, people want what they want,” said Mushahwar, “and don’t care much where they get it.”

Mushahwar remembers working at her father’s grocery store where her dad knew the customers’ names, preferences, and knew exactly what inventory was on hand and en route. Mushahwar’s dad would personally call Mrs. Skaff, for example, when her favorite kind of squash came in. He’d even give ideas on how to use it in a recipe.

“This personalized service drove customer loyalty and repeat business,” she said. “Customer service was king.”

But as businesses began consolidating and large chains replaced mom-and-pop shops, price and mass efficiency began to trump in store experiences, personalization, and a seamless, frictionless shopping experience.”

“The advent of online shopping just exacerbated this,” Mushahwar said.

While price remains important, successful retailers are shifting back to more personalized and seamless experience.

“It’s back to future and by marrying today’s efficient distribution systems with modern data-gathering, you can once again offer a customer experience that’s frictionless and tailored to individual shoppers,” she said.

She see an increase in brands using text messaging to send personalized notifications and an uptake in machine learning that will help computers learn to better understand and serve individual preferences.

As they evolve, retailers will introduce new services and unlock new value through the use of internet-connected experiences – things like offering more than traditional SKUs in store and adding services such as one-hour delivery.

“Twenty-five years ago, my family’s retail stores would have never thought that technology would be this pervasive,” she said. “But the consumer today is hungry for experience and hooked on ultra-convenience.”

Retailers are on the cusp of a transformation, one that hasn’t been seen since the advent of the modern suburban mall. Retail, Mushahwar said, is not dying; in fact, it is being reborn to solidify brick-and-mortar longevity while meeting the needs of a digital-first population.

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