Varejo Innovation Report 2014

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Estudo sobre inovação no varejo mundial

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Varejo Innovation Report 2014

  1. 1. IN PARTNERSHIP WITH: INNOVATION REVIEW 2014
  2. 2. in partnership with: 32 Steve Dunbar Windows Embedded Business Group Lead – Northern Europe microsoft Retailers are constantly looking for ways to improve every aspect of their stores, from customerexperiencesandemployeeengagement, to stock control and staff management, while always trying to increase efficiencies and profits. The Retail Week Innovation Review 2013 brings together the top 20 retail innovations you can expect to see in the future. From an innovation standpoint, retail is an ever-changing landscape with new devices and technologies evolving to drive competitive advantage. New innovations and technologies play a key part in any retailer’s business, and whether it be digital signage, POS tills, back-end store systems or mobile/handheld units, devices in the retail sector are playing a key role in shaping the store of tomorrow. It’s these new devices that make the ‘internet of things’ possible. Gartner defines the internet of things as “the network of physical objects that contain embedded technology to communicate and interact with their internal states or the external environment”. With Gartner predicting there will be 30 billion devices in the world by the year 2020, the explosion of devices is moving the internet of things along at quite a pace. Microsoft’s retail strategy is focused on trans- forming those one-off applications, devices and databases into an end-to-end intelligent system. The overarching goal is to help retailers respond to changes in the market, drive greater efficien- cies in their processes, empower more engaged and productive employees and provide custom- ers with a shopping experience that is personal, seamless and differentiates the retailer from its competitors. Intelligent systems powered by Microsoft stack technology enables the flow of data across a company’s infrastructure, from point-of-sale kiosks and industry devices, such as handhelds and tablets where data is generated by employees and customers, to back-end systems and services wheredataisthentranslatedintostrategicinsight and business decisions. With IDC forecasting the market for Intelli- gent Systems to reach 2.3 billion units and $1.7tn (£1.04tn) in spend by 2017, the opportunity is huge and the time to act is now. With the market growing at such a pace, re- tailers must grab hold of new innovation to stay ahead of the game. Microsoft is making a major commitmenttoalloworganisationstounlockthe potentialoftheinternetofthingsinretailthrough intelligent systems. That’s why we are pleased to support this report. New technological innovations might promise to revolutionise retail, but which cutting-edge tech- nologies are genuine game changers? The Retail Week Innovation Review sets out to answer that question by examining the top 20 retail innovations of 2013 and asking a team of technology, IT and multichannel experts to de- liver their verdict on the impact it will have on the retail market. Withtheretailindustrybeingconstantlybom- barded month after month with new innovations, it’s vital that retailers step back and take a long, hard look at each technological development and ask themselves which are worthy of investment. Tohelpthemdothis,RetailWeekhasrecruited leading analysts from Accenture Mobility, Expe- rian Footfall, Gartner, Microsoft, and OC&C StrategyConsultantstoformtheinnovationpanel. Theseexpertshavebeentaskedwithassessingthe prosandconsofeachtechnologicalinnovationand assessing the potential it has to change the retail industry for good. The top 20 retail innovations were chosen in conjunction with the Retail Week team and the innovation panel, and are reflective of the far- reaching innovations sweeping retail – affecting everythingfromthein-storeenvironmentandhow consumersbrowse,interactwithproducts,engage with brands, queue, pay and get rewarded, to mo- bile innovation, forecasting tools, data analytics and supply chain technology. While the innovations in this report have not necessarilyemergedin2013,analysisofthetop20 isverymuchrootedinthehereandnow–howeach technology has developed in the past 12 months andtheimpactit’shadontheretailspacethisyear. It’s important the Innovation Review is not blue-sky thinking – there’s very little value in ana- lysing immature innovations that might never go further than the creator’s drawing board or fizzle outofretailers’consciousnesswhenthenextbigger and better thing comes along. Instead it’s crucial RetailWeekfocusesonemergingtechnologiesthat aregenuinelygettingretailerstalkingandattract- ing investment. The following case studies focus on which retailers have adopted the innovation or embarked on trials in 2013; which sectors it’s af- fecting;andhowit’sprovingtobeagamechanger. The pace of innovation is accelerating, driven both by retailer investment and consumer expec- tation.Beingleftbehindinaworldwhereincreas- inglysophisticatedtechnologyisthenorm,notthe exception, is no longer an option. Businesses that refused to embrace change were left behind years ago. Now the question on every retailer’s lips is whichinnovationsarefundamentallyalteringthe way consumers shop? Hopefully the Retail Week Innovation Review 2013 can answer that. in partnership with: partner forewordFOREWoRD “From an innovation Standpoint, retail is an ever-changing landscape with new Devices and technologies evolving to drive competitive advantage” “With the retail industry bombarded with new innovations, it’s vital that retailers take a long, hard look at each technological development and ask which are worthy of investment” Laura Heywood Supplements editor retail week
  3. 3. 54 AD MEET THE PANEL Anita Balchandani Partner OC&C Strategy Consultants Anita Balchandani is a partner with OC&C Strategy Consultants and the sector lead of the UK retail team. She has worked extensively in a number of categories – in particular, fashion, general merchandise, home and technology – across a range of multichannel models including stores, catalogue and online. Balchandani is also a non-executive director on the board of Space NK. Prior to OC&C, she was the group strategy director and part of the executive team at Shop Direct Group. Balchandani was also at Asda Walmart as head of non-food business development. John Davison Vice-president and research director Gartner John Davison is vice- president in Gartner’s Industry Research Retail vertical, where he is responsible for analysing the business and consumer technology market in the retail sector and identifying potential growth areas and opportunities for clients. Before joining Gartner, Davison worked with IBM as a principal consultant, managing partner solutions in the retail industry, managing implementation teams in merchandising projects and leading projects in supply chain implementation for leading retailers. He gained a broad view of retailing while working for retailers such as Asda, BHS and WHSmith. Davison worked with Gartner analyst Miriam Burt to deliver the innovation verdicts in this report. Mike Lynskey Industry market development manager, retail Microsoft Mike Lynskey is the retail specialist for Microsoft in the UK. After starting his career at IBM, Lynskey moved into a number of industry roles with brands such as Timberland, where he was European commercial director, Clarks where he was international sales director and Merrell where he was European general manager. Lynskey has a passion for retail innovation and orchestrates the extended network of Microsoft partners to provide industry-specific solutions to deliver the future of retail today. Brendan Mislin Global Capability Lead (Windows Platforms) Accenture Mobility Brendan Mislin is a senior software manager in Accenture Mobility in London. He performs two functions – one as the device and platform retail lead and the other as the global capability lead for Windows platforms. Over the past 12 years, he has specialised in mobile and embedded software engineering with a particular focus on leveraging Microsoft technologies. Recently his focus has been on creating new mobile and embedded solutions for the retail industry. Before Accenture he worked at Microsoft for 10 years as a software engineering manager in the US and UK where his projects included a variety of versions of Windows Mobile and Windows Phone. Marty Ramos Chieftechnology officer,retail, consumerproducts andservices WorldwideEnterprise andPartner Group,Microsoft Corporation Marty Ramos is responsible for worldwide strategy and innovation for the retail, hospitality and consumer goods sectors. He started at Microsoft in October 2005 as a solutions specialist in the Retail Industry Group where he spent a third of his year in retail stores. In 2009, Ramos worked with the Microsoft Stores team to get the first two stores up and running. He is also responsible for technology at the Microsoft Retail Experience Center on its Redmond Campus. Prior to joining Microsoft, he was the chief architect for Retalix US. He also worked at IBM for 20 years. Dave Sheppard Head of consultancy services Experian Footfall Dave Sheppard is the global head of consultancy services in Experian FootFall. Responsible for a global network of analysts and consultants, his team provide clients with both insight into their retail performance and the ability to provide targeted action plans for driving instrumental change in their stores and other sales channels. Before joining Experian FootFall, Sheppard worked as a business intelligence strategy specialist, working with many clients including global brands. in partnership with:
  4. 4. top 20 retaIL InnovatIons 2013 6 in partnership with: l augmented reality Moving from a fad to the mainstream, augmented reality as a sales channel and location-based educational tool are just a few of the ways the technology has developed in 2013 l bluetooth beacons Individual beacons that can target specific parts of a store with different areas of content are transforming how retailers communicate with shoppers l cloud-based communications Offering an internal collaboration platform over multiple channels for lower costs, this innovation enables retailers to keep area managers better connected and gives staff and customers access to information regardless of location l connected fitting rooms This developing technology allows retailers to take customer service to the next level by building a more personal, seamless and differentiated shopping experience l Data services New software that scans customer transactional data held by banks allows retailers to better target their marketing and see where spend is heading to competitors l Digital wallets Digital wallets offer the possibility of a more convenient checkout, as smartphones eliminate the physical hassle and psychological hurdle of cash and credit cards l endless aisle interactive walls Replacing physical aisles and products with digital interfaces, this innovation combines the cost efficiencies of etail and the physicality of bricks and mortar l Facial recognition The developing facial recognition computer application enables retailers to identify a customer individually and tailor pricing and service based on in-store behaviour and financial history l Field analytics Sophisticated field analytics systems are being used to measure real-time shopper behaviour, which collects data on consumers and allows retailers to analyse the information and respond accordingly l Fingerprinting Whether it’s the use of fingerprints to authenticate and secure POS terminals, activate cards or improve mobile browse and buy channels, this technology is gaining traction in the retail space l interactive tv TVs that can run applications, have web- browsing capability and social media connectivity create myriad opportunities for retailers to engage with consumers l mobile loyalty schemes Consumers are increasingly willing to receive promotional offers on their mobile devices. Retailers have responded by providing mobile loyalty apps and platforms to enable their loyal customers to receive multiple personalised offers l natural user interfaces Retailers are trying to bring the interaction shoppers have with their phones to the big screen via natural user interfaces, which uses motion, gestures and voice to shop rather than a keyboard and mouse l playcaptcha PlayCaptcha is an innovative way to boost shopper engagement with retailers or brands, as well as putting an end to frustration over online security features l Queue management systems Queue management systems have moved on. Retailers are trialling a variety of innovative ways to ‘control’ queuing and cut waiting times, whatever channel their customers use l rapid scan systems Improving the speed with which shoppers can check out is central to new rapid scan systems that have now reached the UK. Lasers enable hundreds of barcodes to be read every minute l virtual mirrors New generation virtual mirrors have become more widespread in 2013. The developing technology enables customers to try on clothes of different sizes, shapes and colours, which reduces the need for fitting rooms l wearable computers It’s been a big year for wearable computers, from smart badges that allow staff to communicate with one another and access product information for customers to glasses that could offer 24/7 profile tracking data on consumers l 3D printing 3D printers can make a three-dimensional object of almost any shape using a digital model. As prices come down, a growing number of retailers have experimented with the technology in 2013 l 3D shelf planning Software allows retailers and manufacturers to build virtual displays for stores, making the design process faster, more flexible and cheaper for retailers 7
  5. 5. 8 The verdict Elements of augmented-reality applications are becoming social and are increasingly centred on context-aware, location-based services for mobile devices. Hype around theseappshasbeendrivenbythegrowthofthesmartphone market,theproliferationofquickresponsecodesandRFID tags and the increased publicity from technology vendors highlightingadvancesinareassuchasGPS,digitalcamera technology and real-time analytics. Tier One retailers continue to experiment with augmented-reality applications in store, online and on mobiles. The main uses for augmented-reality apps include increased use of geolocation-based services such as discovering things in the vicinity of the user or showing a user where to go or what to do, as well as providing additional information about an object of interest. In retail, this translates to customers finding locations or products with maps and real-time directions, accessing detailedproductinformation,contextualisingproductsand receiving personalised promotions. Examples of implementations include enabling customers to virtually try on clothing online or in a ‘virtual dressing room’ in the store, viewing how furniture looks in their home, seeing what unconstructed models of objects look like in 3D and allowing customers to interact with animated characters. Lego, for example, has leveraged augmented reality to promote global collaboration by allowing employees to see newly created piecesandbuildings.Thecompanyclaimstohaveachieved higher efficiency with its augmented-reality-enabled product development software. However, augmented reality is process-intensive and demanding. Small screens, imprecise GPS locations and inconsistent data mean that the augmented-reality user experiencedoesnotalwaysliveuptotheconcept,anditwill be a while before technology will deliver the refinements needed for a good customer experience. John Davison Gartner Moving from a fad to the mainstream, augmented reality as a sales channel and location-based educational tool are just a few of the ways technology has developed in 2013 l Augmented reality is when an object is not present in the real world but appears to be because of a view showing a modified version of reality. This means everything from smartphones and tablets through to laptops and computers can combine reality (such as photographs and videos) with virtual overlays (a person, street or room) for a more dynamic, user-friendly experience. l The technology holds multiple attractions for retailers, allowing consumers to interact with products, so they feel closer to the ‘real world’ equivalent. It also adds value to the shopper experience and boosts revenue channels. l Firms are designing augmented- reality retail apps, which take computer-generated input such as video, animated graphics or audio, and modify it to include the real-life item. l The most obvious benefit of augmented reality is allowing shoppers to try before they buy. Topshop has used it to let customers try on clothes, and New Look has worked with Blippar to promote a new cosmetics range with customers ‘trying on’ nail varnish virtually. l Tesco has augmented-reality-enabled magazines. In October it updated the free Tesco Discover app, developed by Aurasma, which can be downloaded onto any smartphone device to access how-to videos, learn more about products and buy groceries. l The Blipp to Buy app allows users to purchase directly from various advertising mediums by pointing their smartphone camera at the augmented-reality ads. Tesco and Ann Summers are among those who have trialled it as a sales channel. l Ikea’s 2014 catalogue will feature 90 products with an augmented-reality icon on its pages. Each product can be transposed into shoppers’ homes. l While retailers showcase augmented- realityapps,thereisalackofconsumer awareness around the technology, as well as limitations in augmented- reality enablers – even some of the higher-end smartphone cameras lacked sufficient sensitivity to trigger the augmented-reality experience. But by 2017, 2.5 billion augmented-reality apps will be downloaded, according to Juniper Research in April 2013. The verdict When Apple released iOS 7 in September, few people realised that they’d included a feature called iBeacon. And although a few months later most people still have neverevenheardthefeaturementioned,ithasleftexperts wondering if it’s going to change the way that we shop, order a coffee, or perhaps even more broadly, how we spend money. An iBeacon is a small, relatively cheap, Bluetooth 4.0 device that broadcasts some information over a certain range and has a long-lasting battery. Let’s break that down – small means a bit smaller than a deck of playing cards and cheap means a three-pack costs £65 or so. It can be a standalone device (as described above), but a phone can also act as an iBeacon. The maximum effective range is about 200 ft and manufacturers claim battery life in the one-to-two- yearrange.Eachofthesemetricswillimprovedrastically as the iBeacon market matures over the coming month and years. So, why is iBeacon so interesting for retailers? Its simplest use is for in-store messaging, such as sales, specials, end cap deals and coupons. These could be pushed to a phone rather than requiring the user to take outtheirphone,launchthestoreapp,andwaitforthenew deals to download. Aslightlymorecomplexusecaseisindoorpositioning, whichgetsprettyprecisewhenusinganiBeaconnetwork. This could well be a relatively cheap way to finally help customers get around a store and easily find the items they’re looking for. An interesting but more complex use is contactless payment, which could be made more secure with integration of on-device security features such as fingerprint identification. Combining these three uses together, there are some interestingscenarios:Walkintoyourfavouritecoffeeshop andgetamessagethatsays:‘WelcomebackBrendan.The usual?’. Tapping ‘yes’ then lets the user pay for the drink and go straight to the collection point. The customer likes it because they skipped the long queue while still collecting frequent drinker points on their account. And the retailer likes it because they are saving time, effort and money while still collecting that valuable data about the customer and the transaction. Brendan Mislin Accenture Mobility l A lot has been made of near-field communications, but Apple and PayPal are among the companies to have shunned that technology and backed Bluetooth. l Bluetooth technology has evolved significantly from a few years ago. Gone are the days of powerful transmitters broadcasting to a large area – in their place have come individual beacons that can target specific areas of a store with different offers or content. l It’s an inexpensive way to solve the long-existing problem of accurate indoor mapping, which is a huge boon for large stores. This could be anything from pushing different offers or information to customers based on what department they are in, to how long they have been lingering in one place, with ‘need some assistance?’ messages. l iBeacon, for instance, is a Bluetooth device that uses Bluetooth Low Energy technology – this involves a network of small plastic Bluetooth devices being placed in stores that communicate with smartphones and payment terminals in a similar way to wi-fi. The technology was included in Apple’s latest mobile operating system iOS 7 update in September. It is a significant step, also enabling hands-free payment. l PayPal is also backing Bluetooth with its new Beacon service, due to launch next year. Again, it will use small Bluetooth Low Energy beacons and users will have the option to set which stores they automatically get checked into, which ones will have automatic payments and which will require approval for payments. BLUETOOTH beacons 9 Individual beacons that can target specific parts of a store with different areas of content are transforming how retailers communicate with shoppers Augmented reality
  6. 6. 10 11 The verdict I pulled into a Starbucks drive-thru for a coffee recently. We’ve all done this dozens of times at various restaurants, butwhatmadethisvisituniquewasthatratherthanbeing greeted by a voice from a box, I was greeted by a video of theactualpersonIwastalkingwith.EventhoughIwasstill talking to a box, it just felt more comfortable and personal to see the actual person I was talking to. Communicationtobeeffectivemustbeeasy,informative and relevant but it must also be personal and comfortable. Usingcloudservicesforcommunicationsaccomplishesthis butcanaddcontexttothescenarioandallowforintelligent routing of calls to ensure prompt and more accurate resolution.Integratingtheseservicesacrossmanysystems and locations can be quite challenging. Utilising the cloud eliminates the need for specialised equipment to provide these services and greatly simplifies the implementation. Solution providers offer retailers entire contact centre systemsutilisingcloud-basedcommunications.Callscanbe tracked,recorded,monitoredandroutedtotherightperson tohelpacustomerorassociate.Theirsolutionquicklyfinds an available associate with the right skills for a particular issueandlinksthemtothecaller.Anintelligentdashboard providesusersandsupervisorswithpertinentandreal-time information on usage, responsiveness and satisfaction. Othersoftwaredevelopersprovidevideocallboothsfor service desks in stores. When a service issue becomes too complexortheservicedeskistoobusy,customersarerouted to the booth to work with a remote service representative. With products increasingly sold in channels other than physical stores, it’s important for retailers to provide personal and effective communication tools for their customers to resolve issues and receive personal service. Marty Ramos Microsoft Offering an internal collaboration platform over multiple channels for lower costs, this innovation enables retailers to keep area managers better connected and gives staff and customers access to information regardless of location l Cloud communications are internet- based voice and data communications where telecommunication applications, switching and storage are hosted by a third party outside of the organisation using them (in the cloud), and accessed over the public internet. Retailers benefit from a more cost-effective, reliable and secure communications environment because they only pay for services or applications they use. l Analyst firm IDC’s recent Retail Insights survey predicted that adoption of cloud computing in the retail sector will grow 300% over the next two years. l Research commissioned by communications provider Elite and unified communications manufacturer Swyx earlier this year surveyed Retail Week readers and found that 49.4% plan to adopt unified communications in the next two to three years. 39.3% of those that would consider deploying unified communications would be driven by the need to improve customer service. Other influencers included the need to reduce overheads (19.6%) and increase staff productivity (17.9%). l One advantage of cloud-based communications is the provision of an internal collaboration platform, rather than just an internal repository for documents. This flexibility can improve productivity, from keeping area managers connected while travelling between branches to ensuring customers are put through to someone who can help them regardless of which store they called. l Tesco uses Microsoft Office 365 across its European and Asian operation to serve as a portal for half a million staff. It provides access to information and company experts regardless of location. Lync 201, Microsoft’s server platform for unified communications, comes as part of the package and ties real-time information with instant messaging, video conferencing and voice communication, which can benefit staff training and consumer interactions. l Elitetele.com provides cloud-based communications solutions for retail customers including Gap and New Look. Benefits include the ability to automatically divert all incoming customer or staff requests to the relevant resource dependent on their ‘presence’ status or availability. Calls can also be re-directed to another country if the retailer extends its opening hours or sells overseas. cloud-based communication The verdict Thefittingroom.Thatphrasealoneisenoughtomakeany seasoned shopper feel annoyed. Fitting rooms are small, dark, awkward and always seem to be missing some essential component, such as coat hooks, somewhere to sit, a mirror or a latch on the door. But these cold, forgotten cubicles so often tucked away at the back of the store are actually more important than most people realise. The fitting room is where the brand meets the body.Formanycustomers,it’stheplacetheygotodecide whether it’s time to take out their wallet or time to walk out empty handed. Those precious last few minutes spent in the fitting room are some of the most important minutes of the entire shopping trip – especially to the retailer. Surprisingly,theyarespentinthatsmall,dark,awkward, cold room with no influence from the retailer to help the customer make that decision to take out their wallet. It’s for this reason that the connected virtual fitting room is particularly interesting. Bringing this kind of innovation into the fitting room merges the best of the online shopping experience (recommendations,ratingsandpersonalisedexperience) with the best of the in-store shopping experience (seeing, feeling and actually trying on the clothes in person). It notonlyhelpsmakethepenultimatestageofthein-store shoppingexperiencealotmorefun,butitalsohelpsmake surethatcustomersleavethestorehavingfoundtheitem they were looking for as well as hopefully a few related items as well. In addition, the data and business intelligence collected by the system is a great way for retailers to gain deeper insights to their customers’ in-store shopping habits and preferences. Fittingroomshavebeenignoredfortoolongandhave fallen far behind the technology curve in the rest of the store, so it’s great to see fresh ideas being rolled out. Brendan Mislin Accenture Mobility l Virtual fitting room company Fits.me provides photo-accurate visualisation of clothing fit. Working with retailers including Hugo Boss, Superdry, LK Bennett, Avenue 32, Henri Lloyd, Mexx and Boden, Fits.me’s technology displays a real photograph that shows exactly how the garment the shopper is looking at will fit on any shoppers’ body size and shape. Their Fit Advisor solution provides fit information and recommendations without photography and is aimed at retailers with wide, shallow stock or rapidly changing stock lines. The benefits for retailers are threefold, according to Fits.me – increased sales, reduced garment returns and higher levels of customer loyalty. l Microsoft, Accenture and Avanade have worked together to develop a connected fitting room that combines digital, cloud and analytics capabilities. An RFID reader automatically recognises the items’ tags and they are displayed on a touchscreen monitor built into the wall. If the size doesn’t fit or the customer wants to try different items, this can be selected through the screen, with the request sent to a store assistant’s smartphone. The monitor can also offer recommendations, different colours and matching items, which can be brought by the assistant, creating potential for upselling. l The connected virtual fitting room l collects anonymous data from each visit, which is transformed into insights that the store manager can access through a dashboard via a tablet or laptop. Store managers can also see what suggestions for additional items were presented to customers and which ones customers selected and ultimately bought. The room, which is now ready to be piloted, provides sales intelligence for the retailer, driving better merchandising decisions and allowing managers to assess the responsiveness of sales staff. l The Me-Ality booth also represents this new technologically advanced fitting room. The Canadian invention, which is found in 20 malls across the US, scans shoppers fully clothed using wave technology and produces a profile of their body, which is stored in an online account. US department store Bloomingdale’s is using it to help consumers find perfect- fitting jeans. Connected fitting rooms A long way from cramped, over-heated fitting rooms, this developing technology allows retailers to take customer service to the next level by building a more personal, seamless and differentiated shopping experience
  7. 7. 12 13 The verdict It’s a well-known fact that retailers are always striving to better know and understand their customers. Having more insight will enable retailers to more accurately and competitively vie for people’s attention and custom. Consumers will benefit too as they receive information from retailers that is of interest and relevance. The consumer is far more relaxed when fully aware of the quid pro quo of using retail technology when they knowingly trigger the relationship. Using a loyalty card for purchases is reciprocal – they expect you to get to know them better as a direct consequence of choosing to let you know what they’re doing. The trick for retailers and financial institutions now is to raise awareness of the benefits and outcomes to the consumer, via appropriate channels. Research tells us that consumers are willing to share theirdatawithorganisationsiftheyseeabenefitindoing so. But with consumers increasingly aware that they are critical to an organisation’s livelihood, their expectations are high. This means that the stakes for businesses have increased, with the slightest error serving to irritate and alienate customers. If customers can see a clear and relevant benefit from sharing their data, they will be more inclined to share more of their data more regularly. The benefit must be both relevant and worthwhile to each consumer from their perspective, and consist of a simple exchange to redeem the incentive. Retailers that secure consumers’ trust by showing that they care about their customers’ data will be the winners, improving customer relations and ultimately brand experience. Dave Sheppard Experian footfall New software that scans customer transactional data held by banks allows retailers to better target their marketing and see where spend is heading to competitors l Banks hold vast amounts of transactional data, which can be meshed with retailer data and data from mobile payment apps to create a more complete picture of consumer spending patterns. l In September, US data analytics firm Cardlytics launched the UK’s first service using customers’ banking data to provide targeted retail offers. Cardlytics’ software trawls through millions of daily transactions and uses past purchases to offer marketing material on behalf of retailers, which is based on a shopper’s buying patterns. l The offers will appear on shoppers’ l online and mobile bank statements and redemption is fully automated – after an offer is activated, customers pay with their card in store and see the discount taken from the price on their bank statement. l The service allows retailers to l provide deals based on where people live by using postcode information. It also shows where shoppers are spending and whether the bulk of their spending is at competitors. l Cardlytics has partnered with l Lloyds Banking Group to provide Halifax customers with targeted deals from retailers straight to their online bank statement. The service, called Halifax Cashback Extras, has already attracted the likes of Homebase, New Look, Ocado, The Body Shop and Urban Outfitters. l Data startup ERN has developed a platform called Looop that enables merchants and banks to capture the ‘big data’ created by every card transaction, store it and analyse it in order to create bespoke, targeted offers for individual customers. These offers can be pushed to a customer’s smartphone and is intended to boost loyalty and long- term custom. The platform went live in the first UK stores in November in association with The Retail Data Partnership. Data services The verdict Digital wallets have the potential to solve a number of customer experience problems that retailers grapple with, bothintheofflineandonlineworlds–whetheritisshaving a few seconds off the queue for a customer doing their weekly shop, using a smartphone to pay for the morning lattewithoutbeingburdenedwithsmallchangeorensuring customers’ online checkout journey is both smoother and safer, as the Visa V.me solution aims to deliver. Whilethecustomercaseforthisiscompelling,adoption rates are still in their infancy because there is insufficient clarity on the benefits of a digital wallet, particularly in more developed economies where credit card fraud (in relative terms) is not a big concern, such as in the UK and US.Bycontrast,countriessuchasRussiashowsomeofthe highest levels of digital wallet adoption. This makes the digitalwallettechnologyparticularlyinterestingtoetailers with a growing base of international orders. Recognisingthatthepaymentslandscapewhichplumbs retail transactions could be ready for a change, a number ofplayersareadvancinginthisspacewiththeirsolutions– from the very established payment schemes (Mastercard, Visa), to online payment providers (PayPal), operating systemproviders(GoogleWallet,ApplePassbook),start-ups (Square, Level Up) and even Amazon’s Checkout solution. For some of these players the attraction is not purely access to the payments opportunity, but also access to consumerinformationacrossonlineandofflinepurchases. As the technology evolves, we expect the industry to consolidate and potentially even see some breakthrough partnerships emerge. Despitethenumerousplayersinthelandscape,thequiet winners in all this might be the retailers who obsess about makingtheshoppingjourneyoftheircustomersfrictionless andhaveearnedtheircustomers’trustintheprocess–the Amazon 1-click system, for example, goes a long way in reducing customer friction. As does the Starbucks app that makes coffee runs easier and faster. Applications such as Square will open up new markets and work better for informal peer-to-peer activity at the local craft fair or car boot sale. This could become an all-pervasive technology, but will require solution providers to market themselves with more clarity and vigour if consumers are to see this as the safestwaytoshop.Theindustryisstillatitsnascentstages in terms of customer adoption, with no one clear winner emerging yet. Anita Balchandani OCC Strategy Consultants l An e-wallet is a payment method using any device that connects to the internet. They are designed to help people shop more quickly and securely online and in store. The digital wallet software allows those connected to the internet to transfer money to businesses or other mobile users using near-field communication. l It’s useful to approach the term ‘digital wallet’ in three parts: the system (the electronic infrastructure); the application (the software that operates on top); and the device (the individual portion). l Digital wallets are the norm in places such as Japan and Korea, but the West is catching up with telecoms companies, financial services firms and tech businesses all fighting for space in a growing market. l Data stored on the device can include bank account details, loyalty cards, drivers’ licences. This opens up the possibility for transactions and verification of details, such as proving age when purchasing alcohol. l PayPal recently refreshed its app and introduced PayPal Beacon – a small hardware device that links merchant POS systems to customer PayPal apps via Bluetooth Low Energy. This allows customers to make hands-free purchases in stores and restaurants using their PayPal account. l Mastercard’sMasterPassletsusers uploadpaymentandloyaltycarddetails toacompatibledigitalwallet.Users thenauthenticatethetransactionusing theirregisteredpassword. l Visa’s wallet, V.me, launched across Europe in November, with Dixons Retail and Clarks among the first to offer it. V.me stores customers’ card details without them being passed on to the retailer. It is available in the UK, France, Spain and Poland, and 1,400 merchants are already signed up. Visa expects half of its business in the UK – £383.6bn – to be through digital wallets by 2020. Digital wallets Digital wallets offer the possibility of a more convenient checkout, as smartphones eliminate the physical hassle and psychological hurdle of cash and credit cards
  8. 8. 14 15 The verdict Not only are consumers looking for in-store retail theatre andthe‘wowfactor’,retailersaresearchingforinnovation tomakebetterreturnsfromsmallerformatstoreswithout reducing the choice or range of goods. Endless aisles offer a great opportunity for all retailers because not only do they offer a portal to the entire range andselectionbuttheycanalsobeopenallhoursandconvey farmoreinformationandcontentthanatraditionalshelf. The Adidas wall is a great example of the classic challenge of how to surface the full range in a single wall. With a background in footwear, I know only too well how easy it is to go to market with too many styles and SKUs and one of the hardest decisions to make is how to cut the range to match the store space. With a virtual wall allowingaccesstoafullrangeofstylesandcolouroptions, the consumer has more choice and the retailer has more shelf space. With so many digital assets available today, the added benefit is that more return can be reaped from the investmentalreadymadeincontentandcollateralallowing the line between the digital world and the product line to become blurred. Tracking usage and interest of the wall allows for deeper consumer insights too. Certain products may get a lot of attention but fail to sell – this can be very helpful to merchandisers in their product development cycles. Done well, utilising the right natural user interface, an endless aisle brings impact and choice to the retail environment and adds theatre – a win-win for both the retailerandconsumer.Withsomanyoptionsandformats nowavailable,Ipredicthighgrowthintheuseofdynamic digital displays as sales success from the walls leads to further roll-outs. We will see much more use of these attentiongrabbing,dynamic,cost-effective,versatilewalls in retail. Mike Lynskey Microsoft By replacing physical aisles and products with digital interfaces, virtual retail reduces the costs of storing and replenishing inventory. The innovation combines the cost efficiencies of etail and the physicality of bricks and mortar l In 2013, Adidas had a 500% jump in sales of the football boot cleat available through its endless aisle wall, compared with a similar shoe it launched six months earlier at the same price. The wall stands seven ft tall, is split into sections that can be detached to alter the width and features a touchscreen showcasing digital representations of a product along with information, availability and price, as well as a Twitter feed of customer comments. Using the touchscreen and precision real-time 3D rendered products, shoppers can select products on a virtual shelf, pull products, look onto the product from any angle, rotate it, zoom in, and get further product and technology information. l Macy’s in the US has introduced the Beauty Spot kiosk – a rounded, seven ft tall, four ft wide structure inlaid with interactive touchscreens on both sides that enables shoppers to browse the store’s makeup selection. l In the run-up to last Christmas, Tesco installed an 80-inch interactive touchscreen in its Cheshunt store, giving shoppers interactive access to 11,000 products. It followed trials of virtual grocery stores in a South Korean subway and at Gatwick Airport, where commuters could scan a QR code using a mobile device to have the item delivered directly to their home. l Retailers that create virtual aisles, and accompanying applications, could track customers’ paths and interactions with aisles and products, offer tailored discounts to shoppers, guide shoppers through the store or to desired sections and allow shoppers to check inventory or products on hold. Endless aisle interactive walls The verdict Facial recognition has arrived, and there are now fast and accurate systems available with reliable matching. Facial recognition has distinct advantages over other biometric systems because of its non-contact process – face images can be captured from a distance without touching the person being identified. In retail there are a number of areas where facial recognition can play a part. The most obvious is security where it can be used to track known criminals or undesirables and alert the retailer, and also for staff recognition at point of entry or for secure areas. As the technology becomes more affordable and sophisticated it can be used to track consumers and allow retailers to know their customers better. Shopfloor staff can be alerted to returning customers and have the ability to call up previous purchase history. With some luxury brands, where there is a relatively small number of high- spendingclientele,therewouldbegreatbenefitinknowing exactly when these valued shoppers are in the store. Facial recognition could alert the retailer on entry and allow the assistant to greet by name and quickly access prior purchase history. I believe younger shoppers will be more comfortable with the notion of allowing facial images to be captured and linked to their shopping bag, payments and even personal details if it leads to a speedier service and more personalised shopping experience. A loyal customer could register their details with the retailer and this would be a valuabletooltoconfirmidentitywhenprocessingfinancial transactions, or frequent customer card programmes. It may even be used for a fast-track contactless payment line where the consumer can literally scan and go. Whilefacialrecognitionhasyettobefullyimplemented outsideofthesecurityindustryandbordercontrolagencies, it is surely an area of technology that will soon be more widely adopted in retail. Mike Lynskey Microsoft l For high-end boutiques, facial recognition technology is being used to ensure potentially lucrative sales are not missed by staff. Facial recognition software developed by NEC IT Solutions involves customers preregistering themselves at the time of purchase or online. The software scans customer faces as they enter the boutique. If the software recognises a face in the database, an alert will be sent to the employees via computer, tablet or smartphone. Staff will be able to access the customer’s clothing sizes, favourites and spending history. NEC IT Solutions found that many customers did not mind sharing their private information if it meant a more personalised and quicker shopping experience. l Finnish company Uniqul has launched technology that lets people pay their bills using their face. The user clicks ‘OK’ on the Uniqul tablet, and in the background algorithms are processing the biometrical data to find the user’s account in its database as they approach the cashier. The whole transaction takes less than five seconds. l PayPal launched a similar service in an area of London in August, with users’ names and photos appearing on shop payment systems for those paying by mobile. Once a customer has checked into the PayPal app, their name and photo appears on the shop’s till, and the cashier charges them by clicking on the shopper’s profile picture. The customer gets an alert on their phone to let them know how much they’ve paid, as well as PayPal’s usual email receipt. l Facial recognition technology divides opinion in terms of privacy, as companies are urged to carry out privacy impact assessments. But the technology could receive greater public approval in the future as it becomes more widespread. Facial recognition The developing facial recognition computer application enables retailers to identify a customer individually and tailor pricing and service based on in-store behaviour and financial history
  9. 9. 16 17 The verdict Field analytics is the intelligence behind knowing your customer and their buying habits. Tesco’s recent use of scanners to personalise advertisements screened to consumers is a valuable tool in tailoring content based on the audience. At its simplest level, field analytics can tell the gender of the customer and adapt the linked dynamic digital displays to show relevant content. However, more sophisticated systems are available that can measure real-time behaviour and respond accordingly. With devices attached to the digital displays, the state of the display can be changed to a more immersive one with deeper content to reflect the higher level of engagement. As a person stands in front of the display and shows interest their behaviour can be tracked and logged. Not only is it more engaging for the consumer and more likely to convert interest to a sale for the retailer but it also allows for consumer insights. A number of displays, or windows, can be monitored and analysed to show interest levels from consumers as well as offering age and gender analysis to compare success from location to location. In large format stores where the consumer journey is importanttotrack,thesefieldanalytictoolscanbeuseful in monitoring the flow of people and allow the retailer to adjust layout, signage or product to optimise the sales and time in store. These high-level anonymous demographics are immensely useful to retailers and brands alike to better understand the profile of their customers and as they are more widely deployed will be used throughout the high street and beyond. Mike Lynskey Microsoft Sophisticated field analytics systems are being used to measure real-time shopper behaviour, which collects data on consumers and allows retailers to analyse the information and respond accordingly l EyeSee mannequins, developed by Italian company Almax SpA and costing £3,200, are installed with recognition software to track the age, race and sex of retail customers. The data collected is then analysed against an algorithm, which assessed three million faces. Companies can rebrand and market stores based on the data. l Some stores, which are currently l anonymous, are already seeing the benefits – one retailer identified a peak in customers of an Asian background entering a particular entrance every afternoon and discovered a tourist bus was stopping at the entrance every day at 5pm. Asian sales staff were placed at that entrance and sales were boosted 22%. This technology can be particularly useful for stores with a number of street-facing window displays, such as Harrods, to find out which work best and the number of people showing interest in particular displays or items. l In November, Tesco announced that it will be installing cameras and screens at 450 petrol station forecourts to help it determine the age and gender of customers as they queue at tills. The information will be fed to advertisers so targeted ads can be shown to specific demographic groups in real time. The technology, OptimEyes, is provided by Lord Sugar’s Amscreen. The company insists that the technology is face ‘detection’ software rather than facial ‘recognition’, and data about a customer is immediately anonymised and processed as a string of numeric data. l Google is thought to be developing similar technology. A recent patent from the firm showed software that could detect the emotions of a user as they look at an advertisement, creating a pay- per-gaze ad revenue system. Field analytics The verdict Firstly, while fingerprinting technology delivers a clear functional benefit, the emotional dimension is worth considering when predicting the adoption path that the technology may take. Consumers will be concerned about handing over their unique fingerprint details to a broad universe of players. Fears of privacy, hacking and counterfeits will temper adoption rates. Brands that successfully deploy this technology will need to be those that inspire enormous consumer trust. Secondly,thetypeofscannersusedaretypicallylikely todegradeintimeorstartmakingmistakeswhenafinger issmudgedwithgreaseorsweat.Applemayhavefounda solutiontothisfingerprint-scanningproblemandcreated the Touch ID sensors for the iPhone 5S – whether this is a sustained improvement in mobile authentication or whether the four-digit passcode is resurrected remains to be seen. The technology will be most relevant for retailers whose business models are particularly reliant on the mobile phone as a browse and buy channel, but they will need to be businesses who have garnered sufficient consumertrustinordertoreduceasmallpointoffriction for its customers. Expect this technology to be less of a game-changer than one might originally anticipate. Extendingbeyondtheworldofmobileauthentication, retailers are also testing the use of fingerprints to authenticate POS terminals. However, the technology to make this happen cost effectively is not here and the benefits to the customer in terms of greater speed, ease and security above codes may be outweighed by concerns around privacy and fear of identity thefts. The players in the banking and payments world also have to heavily back this switchover if it is to translate into a universal application. Overall, for the consumer and key industry participants, the benefits of fingerprinting applied to the traditional POS terminal are unlikely to outweigh the investmentandeffortitwouldtaketorollthisout.Itmay howeverfindafocuseduseinauthenticationofterminals by staff as the world of POS evolves from fixed to mobile. Anita Balchandani OCC Strategy Consultants l Fingerprinting imaging can be optical or capacitative (like a touchscreen). In either case, the result is a map of the ridges on the fingertip. Software then looks for features such as direction changes and bifurcations (where one ridge splits into two), the pattern of which is unique in every person. l Recognition software can be attacked with fake images – prints, casts and severages. Many devices incorporate other checks, for example, looking for heat or a pulse, to get around this. l Between October 2012 and March 2013, French supermarket chain Auchan and DIY store Leroy Merlin ran a trial where 900 customers used their fingerprints instead of entering PINs. Almost 5,000 transactions were completed with an average of more than €50 (£42) – 94% of participants would be willing to continue to use fingerprint scanning. A widespread roll-out of such a technology is a substantial undertaking, with POS terminals needing additions or upgrades to include fingerprint scanning. The benefits are a perception of improved security over PIN and faster transactions. There are downsides, however, with public trust of third parties holding their fingerprints a potential problem. l Apple’s high-profile inclusion of a fingerprintreaderasanauthentication device on the iPhone 5 increases consumer awareness of the benefits — and fallability — of fingerprint scanning. Because the scanning takes place on your own device, Apple claims that your fingerprint data is never sent to Apple or stored centrally. l Biometric technology company SmartMetric recently revealed a fingerprint-activated EMV card (Europay, Mastercard and Visa) where a fingerprint reader is built into the card and is used to activate it. This adds a layer of security without needing retailers’ terminals to be upgraded or the user’s fingerprint data to leave the card. SmartMetric is in discussions with banking partners and expecting to do public trials this year and launch in the US, Asia and Europe in 2014. FINGERPRINTING Whether it is the use of fingerprints to authenticate and secure POS terminals, activate cards or improve mobile browse and buy channels, this technology is gaining traction in the retail space
  10. 10. 18 19 The verdict TV shopping has always been a small and growing segmentintheoverallretaillandscape,particularlywell- suited to retailing products that benefit from product guidance,demonstrationsandvisualdetail.Buttheworld ofinteractiveTVmaynowbeexpandingbothinthehome and outside it in stores. In consumers’ homes, the pervasiveness of the multi-screen household make the boundaries between entertainment,learningandshoppingporousasfamilies watch their favourite TV shows while multitasking with a second device. Applications such as Zeebox bring in a more integrated second screen experience, with multiple feeds of information and immediate access to social media channels. These make it a good potential channel for brand owners to engage directly with their customers. Navigating TV through a tablet is also a superior experience that will hopefully put an end to clunky remote controls that remain difficult for even those with the most agile of fingers. Another application of interactive TV is the role that it can start to play in store. Lego’s use of its interactive augmented reality digital boxes, which allow consumers to see what the Lego sets will look like when they have been fully assembled, is a great application in bringing product in a box to life. Children just have to hold Lego boxes up to the digital box to watch a 3D animation of the product – from all angles, in every detail – in their hands. Overall, these developments are particularly interesting for brand owners who may achieve the unattainable goal of delivering content that can be both brand enhancing and commercially effective. It also becomes possible to better measure and demonstrate the return on TV activity. The technology opens up many imaginative ways to engage with consumers, and the technology will only get better. However, it is worth pointing out that in pure commerce terms this is likely to remain a ‘niche’ way to shop–itwillbearoutetogettoyourcustomersbutbyno means the main or the only route. Anita Balchandani OCC Strategy Consultants TVs that can run applications, have web-browsing capability and social media connectivity create myriad opportunities for retailers to engage with consumers in their homes l 46% of smartphone owners and 43% of tablet owners use their devices while watching TV. But these are not just distractions. Consumers are using these second screens to search for things that are directly related to what they are watching – in fact, almost half of tablet owners look up information about what they are watching, according to Nielsen. l Interactive TV could offer people the opportunity to shop directly from their TV. Buying an item shown on a programme, worn by their favourite actor, or featured in an ad could be the next big shopping phenomenon. More than one in four consumers are expected to be using interactive TV by the end of next year, generating sales of almost £750m, according to an eBay study carried out by Conlumino. l Sales of smart TVs have increased by 211% over the past two years, according to Telescope in March 2013. l Most retailers have shied away from this style of innovation so far. Interactive TV is viewed as an emerging space and smart TVs, while growing in numbers, are still yet to become a common feature across most British households. l Marks Spencer has created an app for Samsung’s smart TV platform, which allows viewers to browse product ranges and gather tips on food and fashion – all via the remote. The ecommerce capability consisted mainly of QR codes integrated into the videos. l Earlier this year, etailer Littlewoods launched an interactive TV advert featuring audio-recognition technology. When viewers saw the Shazam prompt during the advert and activated the app on their smartphone or tablet, they were directed to a campaign site. l In the US, eBay has unveiled an iPad app to allow users to shop the etailer for items related to what they are watching on TV. INTERACTIVE TV The verdict When it comes to mobile loyalty applications, retailers should start with understanding how these applications can support the consumer service basics, such as having productsinstock,makingiteasytofinditemsandmaking it easy to find product information. The ability to check stockavailability,checkandcompareprices,readproduct reviews and receive promotions is also high on the list of things that consumers want to do with their mobile. While Gartner consumer research indicates that customers are willing to receive promotional offers on their mobile devices, these need to be easy to redeem across the channels. There are a number of solutions available from mobile marketing vendors whose focus is mainlylocation-basedmarketing,orvendorswhosemobile solutionsallowcustomerstoscanaQRcodeandpayfrom the mobile device to purchase that particular product or service. However, these are not yet generally built into a single platform and thus easy to redeem across retailers’ key trading channels. Increased customer satisfaction will result from the ability to provide loyalty functionality in any channel, particularly mobile as the fastest growing channel and the one that provides the most access to retailer offers to the consumer. Retailers using mobile loyalty systems will have an enhanced ability to segment customers based on improvedcross-channelvisibilityintoconsumeractivityin those channels and consumers will, in turn, benefit from better targeted offers by retailers. Retailersneedtobecautiousofthehypearoundcontext- aware, real-time offers that are delivered to consumers’ mobile devices. Gartner research continues to show that consumers are not readily interested in these types of personalised rewards. Retailers need to invest resources in educating customers on how they could benefit from context-aware offers to improve the overall shopping experience, as well as build loyalty from the small base of customers that may be interested. Many retailers are exploring the possibility of building a multichannel loyalty system that is capable of handling any new channel. However, most investments remain directed at improving the channels that retailers already use to transact and interact with customers. John Davison Gartner l Consumers have more access to loyalty schemes on their phones than in their wallets, according to a survey by e-wallet technology provider CloudZync. The survey found shoppers access an average of six loyalty schemes through their mobile devices, compared with just four traditional loyalty cards in their wallet. l Coffee shop Harris + Hoole has a loyalty app that enables customers to order ‘my usual’ at any branch through their phone. Harris + Hoole partnered with app designer Ribot, which developed a flat user interface style and integrated pull-down gesture that customers use to check in. The design embraces the physicality of a traditional loyalty card. l The Shop Scan Save smartphone app, powered by Mobilize Systems, creates a unique saver ID on the smartphone and the Store Finder feature directs the user to the nearest of 22,500 participating stores with a PayPoint machine including Spar, Co-op, Costcutter, Londis, Nisa, as well as thousandsofindependentconvenience stores. It enables customers to save up to £250 per year on their convenience store shopping. The scheme has more than 70,000 users and the deals are personalised and sent every fortnight to customers’ smartphones. l The emergence of mobile wallets is likely to take digital loyalty to the next level, providing the ability to recognise customers as they enter the store, offer real-time rewards as they search and browse and then deliver bonuses as they swipe the device. l Just how loyalty programmes become integrated into mobile wallets and consumers’ speed of adoption are big questions for the sector. But combined with other technology, such as near-field communication, mobile wallets could make the delivery and redemption of loyalty offers less confusing. Mobile loyalty schemes Consumers are increasingly willing to receive promotional offers on their mobile devices. Retailers have responded by providing mobile loyalty apps and platforms to enable their loyal customers to receive multiple personalised offers
  11. 11. 20 21 The verdict Captchaexploitsthefactthattherearestillsometasksthat humanbrainsdoquiteeasilybutcomputersstrugglewith. Thecaptchamostoftenusedonlinethesedaysissomeform of masking words or letters using visual distractions such as lines, shapes and background gradients or images. In theearlydays,word-basedonlinecaptchawasfairlybasic. Butasprogrammersdevelopedmoreadvancedtechniques for figuring them out, the captchas had to get more and more complex to the point where the words have been replaced with random collections of letters, which most people are finding frustratingly complex. London-based Future Ad Labs have abandoned the word-scramblingapproachinfavourofhavingpeopleplay simplemini-games.Forexample,onePlayCaptchahasthe userdraganddropanimatedeyes,nose,andamouth,but not a salt shaker, onto a blank face. In a stroke of clever salesmanship, the company also realised that should make it easy for host websites to integrate their own brand into these mini-games. For example, a Heinz PlayCaptcha lets users drag and drop chillies into a bottle of Heinz ketchup and then takes a quick second to introduce a new product: Heinz Tomato Ketchup blended with Sweet Chilli. All in all, Future Ad labs has introduced what looks to be a much needed new chapter in captcha tests and, for now, the games are easy and fun. But let’s not forget that we’re in a never-ending race, trying to stay one step ahead of a bunch of young, smart, motivated programmers. Eventually one of them will make a breakthrough, and then even our easy and fun PlayCaptchas will need to start getting more challenging in order to still qualify as a captcha. Interacting with customers online in an engaging way using PlayCaptchas, rather than irritating them with traditional captchas, could be a powerful tool for online retailers to boost engagement. Brendan Mislin Accenture Mobility PlayCaptcha is an innovative way to boost shopper engagement with retailers or brands, as well as putting an end to frustration over online security features l Captcha came out of Carnegie Mellon University and stands for ‘completely automated public turing test to tell computers and humans apart’. The tests, which are usually found when completing a sign up form or at point of purchase, are designed to be hard for robots and easy for humans. But they are a common bugbear for those shopping online. In Australia there’s a campaign to reduce their use. l There are alternatives to captcha including honeypots, which involve creating a field that needs to be left blank in order for the form to be successfully submitted, simple maths questions, time limits (setting longer times for human entry as opposed to instantaneous computer-led entry) and games. lDesigned by advertising agency Future Ad Labs, PlayCaptcha is an interactive advertising format that allows retailers and brands to carry out security checks through entertaining rather than frustrating customers. Heinz and Reckitt Benckiser have already installed it. For Heinz, PlayCaptcha invites users to pour a virtual bottle of salad cream onto a sandwich. For Reckitt, it asks users to clean a virtual dirty penny by dragging it into a bowl of Cillit Bang. It is fully cross-platform and solvable on touch-enabled devices. l Early research between June and July 2013, conducted by Vizeum in collaboration with Future Ad Labs and Heinz, shows that 91% of respondents found PlayCaptcha to be a better user experience than standard word- based captchas. 90% recall the Heinz product following the completion of the task. l There are 300 million captchas completed every day. The concept of games as captchas, which add another layer for brands to engage with customers online rather than irritate them, is potentially very powerful, especially for online retailers. PLAYCAPTCHA The verdict Natural user interfaces (NUI) technology, in its various forms, has the potential to rebase how humans interact with technology and, as a consequence, transform elements of the shopping experience as well. One could argue that the early stages of this technologyhavealreadyplayedout–forthegenerations who now take Kinect and even iPads for granted, there will be no going back to devices such as the remote control, keyboard and mouse. The next wave in growth will come through developmentsinwearabletechnologies.Infact,thewrist watchmayarguablyhavebeenthefirststeptowardsthis journey, which devices from the Jawbone to Google Glasses will only continue to materially advance. In time, it is safe to assume that the interaction between man and computer will become much more integrated. The retail applications are also manifold, particularly in categories such as fashion where pain points in the customer journey such as the trial room can be made moreinteractiveandlesscumbersomeatthesametime. Imagine being able to stand in front of a mirror that can then suggest the jeans that would best fit your body shape rather than the painful experience of trying on a shortlist one after the other, with limited success. Also imaginebeingabletotryondressesthatareoutofstock or only available to order online. NUI could democratise personal shopping for all and bring the virtual endless aisle to life for customers, improving sales conversion, attach rates and order values. Anita Balchandani OCC Strategy Consultants l Natural user interfaces (NUIs) are the next step for graphical user interfaces (GUIs). GUIs were groundbreaking in the 1980s because they allowed users to manipulate objects through a control device, such as mouse and keyboard. l NUIs take the control device away and replace it with the users’ natural communication language, such as gestures, body movements, speech and vision. Users manipulate digital objects as they do with physical objects. Touchscreen interfaces let users interact with controls and applications more intuitively than a cursor-based interface because it is more direct. Gesture recognition systems track user motions and translate those movements to instructions. l Retailers and consumer goods manufacturers are among those creating applications that allow customers to interact with computers by gesturing and speaking. Coca Cola has installed a vending machine in South Korea that combines Microsoft’s Kinect motion controller and a dancing game involving a popular band. Stand and match the band’s moves and you get a free Coke. Bloomingdale’s has also used the technology for an interactive virtual dressing room experience, which has the ability to see, hear and understand gesture. l US-based NUI developer Zugara has created the Webcam Social Shopper software, which turns a user’s webcam into a mirror, enabling them to use hand gestures and motion to shop while standing in front of their laptop or PC. Etailers including US- based K-Bee Leotards, Australian Life-Styler and Malaysian Zawara are all utilising the webcam software online, and Mahindra Retail in India is rolling out the NUI technology in its Mom Me stores as well as online. In addition, the software has recently been optimised for kiosk use – at the South African Fashion Week in April, Zugara showcased units that featured a camera for gestural control and an additional display screen for video advertisements. l NUIs can draw customers into the business—making it possible for retailers to share offerings, cross-sell and upsell merchandise, and bring the endless aisle concept to life. Natural user interfaces Retailers are trying to bring the interaction shoppers have with their phones to the big screen via natural user interfaces, which uses motion, gestures and voice to shop rather than a keyboard and mouse
  12. 12. 22 23 The verdict Rapid Scan is a retail technology that massively improves the speed with which items can be scanned on a retail conveyor belt. Cashiers are not required to manually handle and scan items – therefore there is a time saving. However, how many times do consumers stand looking at their watches, waiting for the cashier to catch up? Unfortunately, it is normally the other way around. Part of Wincor Nixdorf’s Rapid Scan proposition is the inclusion of a partitioned two-lane bagging area – a necessity to cope with the fact that the items can be transportedandscannedquickerthanpeoplecantypically load and then bag them. This allows a cashier to process two sets of transactions in a phased/near simultaneous approach – as opposed to sequentially. This two-lane approach represents a significant process improvement, which any retailer with a main bank of cashier-style tills can implement. The Rapid Scan solution also has a couple of limitations, in that the preferred payment process is cashless, and non-standard items, such as loose vegetables that require weighing, still require manual intervention. Of the entire end-to-end process of paying for a large trolley of grocery items, the time to load, bag and pay for items remains unchanged. Therefore, the actual scope of the benefit of this technology needs to be understood beforeassumingitisthesilverbullettocurelongcustomer queues. Setting up a Rapid Scan till point with just one bagging area would unfortunately prove this. Effectivequeuemanagementthroughcorrectstaffing and availability of POS cashier locations is still arguably more important than having an insufficient number of Rapid Scan POS locations that are under-staffed. Also, speed isn’t everything. The provision of customer service and engagement between cashier and consumer is also seen as a key ingredient – even if it does take valuable seconds. Having said this, Rapid Scan is an impressive technology that will contribute to queue management efficiencies including the perception of speed and improvement by the end consumer, and therefore should beembracedasanenablerforqueue/paymentefficiencies in busy cashier environments. Dave Sheppard Experian footfall Improving the speed with which shoppers can check out is central to new rapid scan systems that have now reached the UK. Lasers enable hundreds of barcodes to be read every minute l It’s been a decade since self-scan tills were introduced in UK stores, but they are still dividing opinion. Get the service and technology wrong and shoppers walk away – one in three has done so. Recent research shows more than half of consumers think it takes longer to self-scan (Tensator, October 2013). But get it right and it can enhance the shopping experience. l Asda has introduced a new scanning system that allows customers to scan whole weekly shops in seconds. The Rapid Scan Till, available in its York store, uses laser scanning technology that picks up barcodes from every angle and a conveyor belt to move groceries on to the bagging area. Scanning speed is increased and it also has a split final section, meaning two people can bag shopping simultaneously. l Asda says Rapid Scan could cut queue times in half. Customers place items on the belt and the 360° scanner portal registers their purchases automatically, scanning the item barcodes at speeds of up to 60 items per minute (the norm is 30). Items without a readable barcode are photographed and then scanned manually, as are bulky goods. The technology is designed by German tech firm Wincor Nixdorf. Grocers Rewe in Germany, Dia in France and ICA Gruppen in Sweden piloted the system two years ago. l Motorola has the MP6000 multi- plane bioptic scanner, which facilitates mobile-based customer loyalty schemes. New capabilities can also be added, such as a scale, handheld scanner or a customer-side scanner to allow customers to scan barcodes on their mobile phones and loyalty cards. Rapid scan systems The verdict We’ve all walked into a shop, found the item we came to buy, taken one look at the massive queue and decided to place the item back on the shelf and walk out empty- handed. Customers don’t like queuing and retailers don’t like being the bottleneck, and it’s exactly for those reasons thatretailershavebeenexploringwaystoreducewaittimes. There are dozens of effective automatic queue management systems on the market today based on a variety of technologies such as standard and infrared cameras, self-scan and checkout, click-and-collect and mPoS. Most provide useful metrics such as ‘average customer wait time’ or ‘till idle time’, each of which can enable an automated system to signal the opening/closing of tills at the checkout. One such deployment that made headlines several years ago was the Irisys SMARTLANE solution deployed in Tesco. This solution was based on ceiling-mounted infrared cameras that detected the heat signatures given offbypeopleandcalculatedkeymetricstohelpthemmake basicdecisionssuchas‘Shouldweopenanothertillornot?’. Whenthesystemlaunched,Tescoestimatedthatithelped 250,000 customers per week avoid queuing. A more recent solution to a slightly different problem can be seen in House of Fraser’s virtual queuing system. Customers who opt for their buy-and-collect service have the ability to check-in upon arrival at a self-service kiosk, afterwhichthey’llbesentatextmessageinformingthemof theestimatedwaittime.Customersthenhavetheoptionto browsethestorewhiletheircollectionisprepared.Allinall, it’s a more pleasant experience for the customer and it has several potential benefits for the retailer as well. Another technology successfully busting queues is the technology of self-scan/self-checkout. When first introduced, several stores relied on handheld devices specifically purchased for the pilot. However, more recent pilotshaveshowntheabilitytoenablethesametasksfrom the comfort of the user’s very own smartphone. Whether we realise it or not, automatic queue management systems are deployed all around and are alreadyhelpingtoreduceourin-storewaittimes.Thatsaid, there’smoreworktobedoneinthisfield–afactmanyofus are reminded of daily when we go to grab a sandwich for lunchandendupwaitinginaqueueforfiveminutestopay. Recent innovations in queue management systems are changing the ways retailers control queuing, but the industryneedstocontinuetoupitsgameinthisvitalarea. Brendan Mislin Accenture Mobility l 56% of Brits are less likely to return to a store if they’ve had to queue for too long, with the tipping point set at just less than six minutes, according to research by Omnico. A Tensator survey found that 26% of shoppers spend the time standing in the queue thinking about how the shopping experience could be improved. l Tesco, Asda and Waitrose have introduced drive-thru click-and- collect services in their car parks so customers don’t have to go in store. l Sainsbury’s is testing scan-and-go technology so customers can scan products on their phones before checking out at the till. Not only does this reduce queue times, but there’s no investment in devices for retailers because the mobile scanning apps rely on shoppers’ own technology. l Paperchase has trialled an Omnico mobile point of sale in Glasgow. Loaded to an iPod Touch, it comprises a Verifone VX600 payment device and a Zebra MZ320 mobile printer. It has cut queue times in stores and means staff can capture loyalty programme data and encourage link sales. l Miura Systems launched the M007 mobile point of sale in November, which allows retailers to take card payments using smartphones or tablets using Bluetooth. l House of Fraser started trialling a virtual queuing system in September for customers using its buy-and-collect service. Consumers check-in at self- service kiosks and browse until they receive a text to say their order is ready. l Some developers have built their own ticketed queueing system mobile app that shows shoppers how long the queue in a store is for the changing rooms and allows them to take a place in it. When it’s their turn in the changing room, their mobile will act as a buzzer. Queue management systems Queue management systems have moved on. Retailers are trialling a variety of innovative ways to ‘control’ queuing and cut waiting times, whatever channel their customers use
  13. 13. 24 25 The verdict The ability to manipulate your own image with a wide range of transformation and animation capabilities enables consumers to try on and try out various products and services. These systems provide user specific, highly targeted promotion of products on user images for unprecedented levels of personalisation. The technology allows you to have a complete cosmetic makeover – go from being a blonde to a redhead, visualise yourself a different size, see your home in a new colour, purchaseaccessoriesforyourfriendsorsimplytryonanew look with just a simple click or gesture. By uploading your image you can try on products without leaving home in a photo realistic manner that is the next best thing to going to the shop. Thesesystemscaneitherbeusedinstoretoenhanceor replace the changing room or used to allow consumers to virtually try on outfits from home. Like the endless aisles, these mirrors will enable retailerstosavespacebyreducingtheneedforfittingrooms and full ranges, as the outfits can be digitally viewed and, of course, they make the process of selection and trying on far quicker and more fun. Of course they cannot replace the fitting room experiencebuttheycanhelpnarrowtheselectionandoffer suggestions,aswellasenableconsumerstoeasilycompare lookssidebysideandshareimagesthroughsocialnetworks to seek valued opinions. But most importantly they will bring fun to the shopping experience. Wheretherearesmallerformatstoreswantingtoshow fullerlineofferings,orwheretherearefasterfashionranges where retailers want to grab attention and offer a quick makeover suggestion, these mirrors could be ideal. As the technologyhasnowimprovedandtheimageshavebecome more lifelike, virtual mirrors are bound to become more commonplaceandpartoftheretaillandscapebothinstore and at home. Mike Lynskey Microsoft New generation virtual mirrors have become more widespread in 2013. The developing technology enables customers to try on clothes of different sizes, shapes and colours, which reduces the need for fitting rooms l In the past few years a number of retailers have tried to use augmented reality and mirrors to allow retail customers to try on virtual clothes – and the technology is finally becoming more realistic. l Uniqlo’s Magic Mirror, developed by Holition, allows customers to choose what they want to buy without trying on several different colours – they just try one item on and the mirror can switch the colour to help them determine their preference. l Tesco has trialled the mirrors in three stores this year. Its technology overlays a digital signage screen on top of a ‘normal’ mirror so shoppers can try on, for example, ‘digital trousers’ with the shirt they are wearing. The innovation means shoppers can test which products suit clothes they are already wearing. l Manchester’s Trafford Centre installed a magic mirror designed by Apache Solutions, which allowed shoppers to try on outfits from multiple retailers in one place. The consumer’s size and distance from the camera is judged by movement sensors and technology similar to that used on a games console. Shoppers can change the size or the outfit using the mirror until they find the best match. l It’s easy to see why retailers are persevering with the technology. It opens up the stock available online and in store to the customer, and also means less stock needs to be carried. This could also have a knock-on effect to enhance customer experience and means shoppers could avoid fitting rooms entirely. Retailers could free up extra shelf space by reducing the need for dressing rooms. The other big advantage is that the mirror can also be a shopping adviser, recommending other items. virtual mirrors The verdict Wearable technology is entering the mainstream, and therefore the retail stratosphere. However, it is important to understand the net benefit of technology we can wear, aboveandbeyondthesupercomputerswecarryaroundin our pockets – our smartphones. In retail, the implications and options for consumers and retailers are different. Consumers are increasingly going to be influenced by technology such as Google Glass and smart watches. Whilesomeoftheseareliterallyinyourface,theirinterface is not. They are asynchronous interactions in response to a data-driven prompt or a limited range of user- invoked commands that equate to a weaker interface with a fraction of your phone’s functionality. But forthcoming apps and content will no doubt improve on this, as well as other mass consumer adoption factors such as prescription lenses. For now at least, wearable technology will primarily act as a trigger to begin a dialogue with a consumer, though probably still being dependent on secondary reliable tech such as their mobile phone to deliver the full message. For retailers, there is a separate opportunity for workforce management. Wearable technologies such as Motorola’s Smartbadge enable staff to be more actively informed, both in terms of tasks they are responsible for andtheirinteractionwithcustomers.Partbarcodereader, part task manager and part ‘hi, my name is…’ name badge,thistechnologymeansthatstaffcanprovidebetter customer service through being more informed, and also be more effective generally on the shopfloor by being told what tasks they should be fulfilling now. The key to wearable technology in retail is data – its accuracy, immediacy, delivery and relevance to the recipient,bothintermsofrespondingtorequestsandalso anticipatory insight. Wearable technology is merely an accessorywithoutthis.Getthisrightanditcanbeexploited for both sides of retail engagement. Dave Sheppard Experian footfall l A companion smartwatch requires the wearer to be carrying their mobile – it is connected only to the smartphone – whereas a connected smartwatch is a standalone, connected device that frees the wearer from having their phone on them. l Sony says 41 million smartwatches will be sold by 2016. The Sony Smartwatch 2, which arrived in the UK in September, acts as a second screen for an Android phone and can take calls, play music, take photos, display emails and more. l It’s rumoured that Apple is producing its own iWatch for 2014, which can communicate with other iOS devices. l Awareness of products including Google Glass, Sony Smartwatch, Samsung Galaxy Gear, Nike Fuelband, Pebble and Fitbit is relatively high, ranging from 18% to 50%, particularly among men and the under 45s (GfK, October 2013). l Benefits for retailers could lie in advertising – users taking photos of advertising or products will be able to use the image to trigger information or promotions from the relevant brands. Wearable technology could also allow customers entering stores to compare items in a similar way they can online, with special offers appearing before their eyes. The potential for consumer profiling is also huge, with the ability to track consumers wherever they go and whatever they do, including what they look at, where they shop and where they don’t. There could also be internal uses, as different content is pushed out to different members of the team during presentations and training. l Motorola is touting its smart badge as the wearable computer every shop assistant needs. The device is worn around the neck or on the wrist and allows access to wireless networks. It provides omni-directional scanning, communication between users and supports HTML5 thin client applications where the data resides on servers instead of the device, eliminating the risk of data theft if the device is lost or stolen. Wearable computers It’s been a big year for wearable computers, from smart badges that allow staff to communicate with one another and access product information for customers to glasses that could offer 24/7 profile tracking data on consumers
  14. 14. 26 27 The verdict Advances in 3D scanners and design tools, as well as the commercial and open-source development of additional design software tools have made 3D printing technology available for a modest investment. There has been a noticeable increase in interest in this technology from retailers this year. 3D printing technology has the potential to transform retail. As printer costs continue to come down and as they become more readily available, consumers will use these 3D printers to ‘manufacture’ their own custom-designed products. In the near-term retailers need to draw consumers to their offerings and educate consumers on the 3D printer ecosystem of software, supplies and service. Consumer interest in 3D printing is at the height of hype, where the technology is featured in numerous stories in the online and offline general media. These press stories capture the excitement around the technology and reinforce the need to become a part of it or be left behind. Until they physically see and handle 3D prints, most consumers are confused about how the technology actually works, what they can use it for and, importantly, how much it costs not only for the printer, but also for the supplies and necessary software. Feasibility studies should include finding out the most appropriate materials, printing methods and 3D model formats that will best support the ways in which youwanttouse3Dprintinginyourbusinessmodel.Very importantly,retailersshouldensurethattheyadequately manage the risk of violating or infringing copyright and patentinglaws,withregardtothecreationof‘knock-offs’. Retailers need to think carefully about how they will support this technology to improve customer service basics–theessentialthingsthatacustomerexpectswhen shoppingwiththeretailer,suchasstockavailability,could be significantly improved in some sectors such as DIY, home improvement and office supplies. Printer prices continue to decrease, while ease of use and material range increase. This means successful consumer use of 3D printers requires an ecosystem – software, materials and printer – that is more complex than associated with 2D printing on paper. Gartner predicts that by 2015, seven of the 50 largest multinationalretailerswillsell3Dprintersthroughtheir physical and online stores. John Davison Gartner 3D printers can make a three-dimensional object of almost any shape using a digital model. As prices come down, a growing number of retailers have experimented with the technology in 2013 l 3D printing technology was developed in the 1980s. But with more retailers taking an interest the price is coming down, which has created further buzz about its potential. l While some UK retailers including Maplin and Selfridges sell the printers, others are making it part of the shopping experience. In October, Asda launched a 3D printing service to customers – for £40 shoppers could print everything from miniature figurines of themselves to pets or cars, available to pick up the following week. The grocer wants to be the first retailer to offer a 3D printing service nationwide. l Selfridges has opened a 3D printing pop-up shop in its Oxford Street store this Christmas. It enables shoppers to use a full-body scanner to print a miniature figurine of themselves. l Tesco is exploring how 3D printers could change the way its stores work, such as offering gifts and personalised items, shopper-designed goods and producing spare or broken parts. l Jewellers in the US have started to use the technology to personalise items, while the US fashion sector is using 3D scanners to tailor perfect- fitting clothes. Nike and Adidas are also among those printing soles in 3D, which they say can reduce production times from six weeks to 48 hours. l 3D printers will increase the availability of stock on shelves, and could mean some products are produced on demand. 3d printing The verdict Shelf planning has two phases – design and execution. In the design phase, myriad data is used to construct the design. Some of this is aesthetic, some is sales and some is incentive based, but the net result is a design that can be executed by every store. The value here is that once rendered, a person can virtually rotate a shelf, a gondola, a rack of clothes and even an entire store to see and feel what it will actually look like from a 360° view. Rather than settingaphysicalshelfandthenbuildingtheplanogram, you can just build the virtual shelf. This also greatly reduces errors not normally found until the shelf is set, such as product overlaps, insufficient shelf stock or overstock. But, most importantly, is that the aesthetic of the shelf is enhanced along with saving set-up time at execution. 3D shelf planning tools start at the individual item level. They take a simple product image along with the metadata (such as shape and dimensions) to automatically create a realistic view of each item. Many already have a healthy product repository that can be used to create a shelf layout. These layouts are created in 3D, similar to stacking items on an actual shelf, which provides a more realistic and accurate view of the shelf. These tools can then be provided to store set-up staff to ensure a compliant shelf set. The good news is that 3D shelf planning tools don’t stop there. One solution, Dassault Systémes 3DVia, enables a retailer to assemble multiple shelves into a gondola,andthenmultiplegondolasintoanactualstore, allowing a 3D view at each step of the way. One can perform a virtual walk through of the completed store to get a real-time feel for the new layout, which is valuable for focus groups. Options to overlay sales,profitmargin,turnsandinventorydatarightatthe shelf allows a visual view of projected shelf performance. Marty Ramos Microsoft lProduct shelving quality is a critical factor tied to consumers’ shopping experience. This technology uses 3D modelling and visualisation to provide realistic views of retail aisles including shelves, fixtures, products, lighting and promotional materials. This allows the design process to take place significantly faster, with greater flexibility and at lower cost. By modelling virtual shelves and stocking them with realistic 3D product representations built from 2D pictures, brands and retailers can efficiently design shelf layouts, experience them with the eyes of consumers, and augment shelves with real-time business indicators to make informed decisions. l This means no physical product specimens. Using this technology, the merchandising process from production to shop shelf is significantly shortened. l Last year 3D design software company Dassault Systèmes launched Perfect Shelf. In February the company introduced Perfect Package, which the likes of Nestle have used to redesign packaging formats. l Tesco uses technology from virtual reality company Red Dot Square, which connects with industry standard, shelf planning software to create a 3D environment with ‘photo realistic’ products on shelf with an aisle or a full store. Users can easily assess the effectiveness of their arrangements by visually incorporating key information, including commercial data and shopper and customer insights to allow for instant and collaborative decision-making. l JDA 3D enables individuals to move around virtual environments in the first person, similar to a computer game. Eye-tracking technology, accurate to a quarter of an inch and one fiftieth of a second, can then follow shoppers’ movements as they wander the store and select goods. As a result, retailers can better understand how changes in the layout of stores, from shape and size to branding and product location, can affect shopper behaviour. It also makes introducing new product lines and promotions a less risky proposition. 3D shelf planning Software allows retailers and manufacturers to build virtual displays for stores, making the design process faster, more flexible and cheaper for retailers
  15. 15. 28 IN PARTNERSHIP WITH: INNOVATION REVIEW 2014

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