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    The Valley Group

    Retail marketing group creating powerful in-store solutions, driven by insight, knowledge and creativity

    2: Retail Technology

    Are you investing in technology to evolve retail operations and enhance consumer engagement?

    Arguably the invention of the mechanical till, patented by American store owner James Ritty in 1883, was the first example of Retail Technology. Since then, there have been thousands of significant inventions and developments in retail, with the sole purpose of improving operational management of stores and supply chain or customer service.

    In the last 10 years we have seen significant advancements, enabled by the digital revolution we are all living through. How has technology shaped the way we shop in modern retail and how will it influence and shape our shopping habits in years to come.

    ENGAGEMENT

    In the last 20 years, technology has helped retail from an operational perspective ‘back of house’. Faster EPOS systems, accurate inventory management and logistics productivity. These functions all ensure that retailers can operate their business and meet consumer demands efficiently. However, from an engagement perspective we have seen significant enhancements in store from a point of purchase viewpoint.

    DIGITAL SCREENS

    10-15 Years ago, the majority of brand messaging and product displays, were printed on paper and card substrates. Promotional information, features and benefits were delivered through strut cards and arm ends. We’ve seen the use of tube tv screens used in retail for a few decades, usually the reserve of a HMV or Virgin megastore – allowing them to show film trailers and music videos. It was rare to see screens used in fashion retail, due mainly to the lack of content.

    In recent years, since the advent of YouTube, smart phones and social media platforms – brands have developed engaging content to help them connect with the consumer online. This, along with the development of screen technology, such as LCD video walls and LED panels – have allowed brands and retailers to create further engagement through large format digital screens featuring dynamic seasonal content. Once, due to cost – were the preserve of key city flagship stores. Digital screens are now commonplace in supermarkets and convenience stores.

    Retailers are investing in further digital tools in store and via social channels – and digital screens are a great way to engage and inform the consumer as part of their connected journey. However, they can easily become moving wallpaper if messaging isn’t strong enough, or worse still, if screens are blank or faulty and a less than engaging ‘black square’ will dominate the space.

    One highly effective way of engaging the consumer with digital screens, is for them to be table mounted – recessed into table or display unit, typically utilising touch screen technology to excite and explore content. This type of tech is a great way for the consumer to understand the features and benefits of the products. These screens are often used in car showrooms, as an exploration or sales tool.

    AUGMENTED REALITY

    A modern tech-enabled store needs to act as a media channel, an extension of a brand’s website and social channels. A space to showcase, engage and convert the consumer. Knowing that each customer has a smart phone in their hands – brands can utilise this to offer enhanced interaction and engagement.

    A recent method is to create Augmented Reality features within a store. This level of interaction creates a great way to showcase features and benefits of a product, or create ‘instagramable’ brand moments for the consumer to interact with and share via their own social channels.

    AR can be delivered through a consumer’s mobile device, or with the use of a fixed screen and camera (this is called ‘passive’ AR). This type of AR is effective when used to help a consumer discover and test products virtually. Makeup and hair dye colours are proven examples of how this can be done in retail.

    The best passive AR experiences normally utilise a brand asset, being a popstar or sport star, filmed on a green screen and then superimposed into a live camera feed. The customer can then occupy a position next to the virtual ‘person’ and capture and share a selfie. It sounds simple, but behind the scenes there’s quite a bit of tech going on.

    VIRTUAL REALITY

    Less popular than AR in recent years, due to cost and social distancing. You have to wear a headset, not something that people have wanted, or been allowed to do in the last 18 months. VR creates an immersive experience for a brand to create engagement. The best VR experiences are ones that can transport someone to a new location and create something truly unique – a virtual concert or a gamified discovery experience. As home VR systems build, it’s likely that it’s use will increase in retail.

    GAMIFICATION

    Knowing that consumers have a smart device in their hand, brands and retailers can utilise this to create rewarding interaction through a Gamified experience. This could be as simple as asking a consumer to scan a QR code to take part in prize draw or creating highly playable games with an Instagram games filter. This is something that adidas have used to great effect in their adidas LDN flagship. Partnering with Instagram to create a brand experience that is interactive and instant. Something that that consumers love.

    SERVICE & NAVIGATION

    The retail powerhouse Inditex – have invested heavily in enhanced digital tools to improve service and store navigation in their ZARA stores. By downloading their App and switching it to ‘Store Mode’ it provides a number of functions that allow you to interact with the store and aide your shopping experience. Enabling you to check stock availability, buy and pick-up in store within 30mins via an automated ‘Click & Go’ service area. When in store, the ‘Click & Find’ function helps you navigate to the item in store. Store mode also allows you to reserve a fitting room and avoid the queues – impressive stuff! These enhanced services are only possible with accurate interaction between digital and physical. The store team need to ensure the store is set-up to fulfil the experience.

    SPEED & CONVENIENCE

    This is one area that has seen massive investment in retail technology in recent years. Self-service checkouts in supermarkets have been in place for 10 – 15 years and apple stores have been ‘till free’ for nearly 10 years. In this time, the biggest advancement from an operational perspective has been contactless payments or mobile payments. From a purely convenience perspective it’s hard to look beyond the recent test and roll-out of: ‘just walk out’ checkout free shopping! Amazon have recently opened a number of their ‘fresh’ stores in London, with more to come in the next 12 months. Tesco have also recently opened the first GetGo checkout free store in London. Will we see Tesco roll this tech into more of their small format express stores, as they have in Holborn? They certainly have the potential to do so.

    In recent months a game of cat & mouse has been played in Grocery (specifically convenience) retail. It all started with Amazon’s opening of their first Amazon Fresh store with ‘just walk out’ technology in Ealing, London. This was followed by stores in Wembley and Chalk Farm. There are now seven Amazon Fresh stores in Greater London.

    In October, Tesco entered the field with the opening of their first GetGo store, with a version of their own ‘just walk out’ technology in place, and in the last week, it’s been announced that Sainsbury’s will be opening their first ‘SmartShop – pick&go’ stores on the 29th November, their checkout free technology is supplied by a third party…. Amazon.

    This emerging and competitive new marketplace within convenience retail will be amplified in 2022, as the major grocers aim to scale their proposition. Amazon have recently announced an aggressive roll-out plan for 260 outlets in the UK over the next 3 years, sending a clear message to the ‘big 6’ UK grocers.

    Who stands to benefit from this new technology? The consumer may benefit from a speedier and more efficient shopping experience – saving apx 2/3 minutes per visit?

    But it’s likely that the retailer will benefit the most, both in terms of the throughput of consumer transactions and the added profitability measures of having far fewer staff in store…

    This year, Amazon opened it first ‘full-size’ grocery store with ‘just walk out’ technology in Washington DC, a 25,000 sqft store, significantly bigger than current 2500sqft Amazon Go stores in the UK. Previously, it was expected that Amazon’s ‘smart carts’ were most suitable for full-sized grocery retail, apparently not…

    Will speed and ease of shop be an even bigger factor for Grocers? Will this operational standard drive all business decisions from a store layout and merchandise perspective? What impact will it have on shopper marketing? Promotional FSDU’s and Shipper units? Are these compatible with ‘just walk out’ technology or will they confuse the ceiling mounted scanners?

    Inditex-owned Zara has launched its Store Mode functionality across all UK stores, connecting its bricks and mortar shops with its website and app.

    Store Mode allows UK customers to check into any UK store online.

    This customises their digital experience to only show the products and sizes that are physically available in that specific store, allowing shoppers to check physical store stock in real time through the Zara app and website.

    Shoppers can purchase items via Store Mode and pick up in store on the same day via Store Mode’s Click & Go function. Click & Go items can be collected in store using a QR code after 11.30am and are ready within 30 minutes.

    Store Mode also features a Click & Find function, which uses geolocation to allow shoppers to find specific items in store using. Click & Try allows Store Mode users to book fitting rooms, which are reserved for five minutes and accessed using QR codes.

    Focusing on speed and convenience, Zara have invested heavily in this technology, helping their stores evolve and stay relevant to the consumers needs.

    Technology of this sort doesn’t flow in ‘one direction’ – data and analytics created by Store Mode will go back into the business to help inform more accurate branch merchandise decisions and aide store planning.

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