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Can tech save bricks-and-mortar stores?
● Smart mirrors that display virtual makeup on customers, baskets that automatically ring up their contents, tablets for kids to design and customise their toys on the spot.
Technology has ravaged malls across the US by allowing customers to shop online, but retailers now hope it is also the answer to luring them back in store.
“Complacency will lead to extinction,” said Pravin Pillai, global head of retail industry solutions at Google Cloud.
Tech was the talk of the National Retail Federation’s annual Big Show conference in New York last week, attended by 37,000 delegates. Silicon Valley companies and startups lined up to pitch ways to help retail.
For tech, the potential to digitise physical stores presents an opportunity: despite the e-commerce revolution, an estimated 85% of shopping in the US is done in person.
Stacey Shulman, chief innovation officer at Intel’s retail division, said technology was redefining the basics of the sector. “It’s not about pushing product any more. It’s about experience — not boring your customer.”
Increasingly, retailers agree. Recent initiatives from Walmart, the world’s biggest retailer, include smartphone apps to help shoppers navigate its big-box stores. More advanced developments are in the pipeline: the company is hiring 2,000 technology specialists this year. Machine learning experts, software engineers and data scientists will focus on how to improve the shopping experience both in person and online.
Meanwhile, supermarket company Kroger is building a digital headquarters in Cincinnati to house 1,000 workers. The group unveiled a partnership with Microsoft for “connected stores”, featuring digital shelves that display animated pricing deals, advertising and product information.
The technology investments are part of traditional retailers’ push into “omni-channel” shopping, which aims to combine e-commerce with a physical presence.
Target’s chairman and CEO Brian Cornell argued at the conference last week that its big-box stores were “one of our most important competitive advantages”. “We’re exploring everything from artificial intelligence to virtual reality,” he said. “But there’s no substitute for true human connections.”
Retailers are examining ways to personalise store visits the way websites tailor their offerings. “Customer recognition” systems, including one pushed by Quebec company C2RO, can identify the age and height of shoppers — and spot regulars.
Other gadgets aim to make shopping less time-consuming. Smart trolleys fitted with image recognition, such as that developed by Brooklyn start-up Caper, allow consumers to
Complacency will lead to extinction Pravin Pillai
Global head of retail industry solutions at Google Cloud
grab what they need from the supermarket and leave without scanning bar codes.
Some retailers are incorporating tablets and other every-day devices to create experiences that would be impossible online.
Toy shop FAO Schwarz allows children to customise remote-control cars on iPads before in-store mechanics assemble them in front of them. Red Rodriguez, director of operations, said the company was trying to bring an element of “theatre” to the shops. But while many retailers have been slow to embrace technology, a pitfall was relying on gimmicks. “It’s about balance,” he said.
Whether a hi-tech reinvention of shopping is enough to drag consumers away from their laptops and back to the shops is an open question, however. Cutting-edge gadgets are of no use if customers play around with them only to order the items online.
Edward Park, head of North America at clothing brand Guess?, said: “There’s all kinds of technology that can be thrown at you. You have to understand what really works to make sure you get the return on investment and to remain customer-centric.”
Yet as the list of corporate casualties in retail continues to grow, executives are increasingly willing to experiment — and spend investor cash — to stay relevant.
Robust consumer spending is helping other chains do better: across the sector, instore sales rose 3.3% over the holiday season, according to Mastercard. However, online sales surged almost six times faster, and Wall Street is jittery about how physical stores will cope with the next economic downturn.
Amazon’s assault on physical retail is putting its bricks-and-mortar rivals under further pressure to innovate. The company, which bought grocer Whole Foods in 2017, is opening more checkout-less stores.
Some of the gizmos being developed, such as smart shelves for supermarkets, were downright annoying, said Saunders.
“I’ve never known anyone to want such a thing,” he said. “It bombards the consumer with messages they’re not really receptive to receiving in stores.”
More important than gadgets to retail bottom lines were tech-driven efficiency improvements largely unseen by customers, such as warehouse automation, said Saunders. “A lot of the back-end tech is genuinely helpful. The in-store things can be flights of fancy.”