Retail Reinvention – Part 2: Technology & experience to the rescue

In part one of our blog series, we looked at how traditional retailing is being disrupted and how the key to survival is reliant on reinvention. Now, we will discuss the technologies that are becoming increasingly prevalent in consumers’ lives as the retail journey is transformed – painted by some real-life examples of innovations retailers at the forefront of this reinvention are exploring.

Touchless technologies

An incredible amount of innovation was born from the need to reduce the frequency of touch – a trend that has been accelerated as a result of the pandemic. Digital shopping has spiked, and contactless payments have quickly become the norm. With 77% of consumers expecting to increase usage of touchless technologies to avoid interactions that require physical contact, it is about time retailers integrate touchless experiences at relevant touchpoints across the consumer journey.

Remember when the most challenging thing about stores was the fluorescent lighting? Well known for improving shopper confidence towards purchase, most have remained closed in the past year due to COVID-19 concerns. If only there were ways to infuse the same level of confidence towards a digital purchase? As it turns out, there is.

Augmented and Virtual Reality is used in visual configuration tools enabling customers to see 3D representations of products, without having to visit a physical store. Hoping to transform how people shop, Sephora launched its reality mirror by ModiFace, simulating cosmetics on a user’s face photo-realistically in real-time. Others are following suit: MAC Cosmetics has expanded AR try-on for its e-commerce, while Shiseido is using hands-free technology (along with AR, AI and algorithms) to remotely analyse skin and offer personalised suggestions.

In fashion, ASOS and Gap launched Augmented Reality (AR) apps which allow users to shop by styles and select from five body types, helping consumers understand how clothes would actually fit them. The benefits do not stop at the enhanced shopping experience; in fact, using AR to facilitate virtual try-ons is proving to reduce return rates.

As shoppers continue to look for alternatives to trying on clothing, 3D-AI apparel solutions such as biometric fittings are becoming more widespread. Late last year, Zalando announced the acquisition of software company Fision that has developed a body scanning app to help customers easily see how garments would fit them. Fit:Match also uses this type of technology to present items that will fit the shopper to 90% or more, while Volumental has a similar solution for footwear.

Facial recognition is another type of biometric technology gaining ground. While many use it to unlock their phones, it can also help retailers to recognise frequent shoppers, offer a customised experience, improve service and even reduce shoplifting. Amazon has taken a new approach to it: Amazon One lets shoppers pay for their groceries by scanning the palm of their hands at Amazon Go stores.

With 41% of consumers preferring retailers who offer touchless self-checkout options, there is no shortage of innovative examples here either. A Japanese company called Dydo recently launched the first-ever foot-operated vending machine, while McDonald’s is now testing AI-voice recognition at 10 of their Chicago drive thru restaurants (so far, with a reported accuracy of 85%).

This new wave of technologies does not only benefit consumers but retailers too – it provides the potential to transform supply chains. Research predicts that by 2024, 80% of ordering and replenishment will be touchless for most organisations, with the increasing adoption of robotics, Artificial Intelligence (AI), and computer vision to assist with store-level merchandising, pricing, and pick-and-pack at warehouses. For example, L’Oréal has developed a demand sensing programme that uses machine-driven planning across its distribution network to automatically ensure the right stock is in the right place, at the right time.

Beacons

Beacons are nothing new, but notably growing in popularity. Small, battery-operated wireless devices that transmit Bluetooth signals to nearby smartphones, they can help direct shoppers to the products they are looking for, track customer’s in-store movements and be used for push-marketing purposes.

Macy’s has been using beacons to target information to customers depending on where they are in the store, and Finnish chain K-supermarket to allow shoppers to create digital shopping lists and receive smart promotions, with a 25% advertising conversion rate.

Beacons can also enable retailers to streamline the shopping experience and understand customer behaviour by identifying high-traffic areas based on the number of mobile devices in each location. In-store hot spots can be mapped to disperse popular merchandise or one-way traffic flows. A deeper customer understanding also provides the opportunity for a hyperlocal approach to optimising the available offers, thus creating more relevancy.

Experiential destinations

Shopping will be intrinsically linked to how customers discover it. With more intelligent spaces that also provide value beyond buying, stores can become a hub for loyal members to connect with the brand, their friends, and the community.

Some retailers are already embracing new holistic shopping experiences and lifestyle concepts. Designed as a space to embody the art of soulful living while escaping from the hectic city life, Rituals’ largest store in hometown Amsterdam (‘House of Rituals’) features several firsts for the brand, including exclusive co-created products, and various opportunities to personalise items; while Zhongshuge’s bookshops in China are place of wonder, surprise, and delight, where design and creativity are vital tools – featuring community spaces, cafés, and many reading nooks, with a strong focus on special spaces for children.

Others are betting on transforming their spaces into experiential destinations, where customers can make intimate and sensory connections with brands. Harajuku, Japan, is home to the first (and very Instagrammable) Lush store that uses the #LushLabs app as the primary source of in-store interactivity. Shoppers are invited to select bath bombs by scent, visual appeal, or both, and scan products to reveal more information including ingredients, properties, and benefits, as well as visuals showing how they will dissolve in their bathtub. KitKat’s Chocolatorys works as innovation incubator and new flavours’ product testing facility, with its concept centred around craftsmanship and, by including hospitality dining, it makes the experience longer and richer – customers can design their own chocolate bar including up to 30,000 possible flavour combinations or dine in-store using the sushi-style dessert train.

With 85% of shoppers saying they are more likely to purchase after attending an event, it is no surprise that some brands are shaping their propositions to offer something other than products. Canadian yoga-inspired brand Lululemon, successfully built their community via exercising events. One such example is the Swetlife Festival in Germany 2019 where 1,500 people participated in a single day.

Stay tuned for part three, where we will explore how purposeful consumption and new retail formats are shaping the future of the industry in addition to what it takes to win the ‘reinvention’ race.

Our ambition is to partner with clients to reimagine the business of shopping, while always engaging and retaining loyal customers, helping them every step of the way on your transformation journey. In this new digital world, Inventive Shopping becomes a powerful engine for growth. To find out more, get in touch.