Forrester Predicts The Future Of Retail Store Technology

Lily Varon

What lies ahead for the retail store? Yesterday, Forrester published a report that predicts the answers to key questions about the future of the retail store: Which digital technologies currently on the periphery of the store environment will make the leap to the sales floor? How will retailers know which technologies have potential and which will remain gimmicks?

In the report, we outline the utility and predicted chronology of several technologies, including:

  • Proximity technologies. Retailers will know when and where an associate is needed, by whom, and for what purpose.
  • Wearable technologies. Associates will access the relevant data to provide optimum customer service with minimum intrusion.
  • Facial scanning technologies. Retailers will know their in-store customers’ histories, preferences, intentions, and needs and will cater the store experience to them.
  • Smart countertops. Retailers will embrace consumers’ propensity to do product research while shopping in-store and enhance the utility and experience at the same time.
  • 3D printing. Retailers will make the inventory they need on-site or once it’s been purchased.

For more on Forrester’s take on the usefulness of these and other technologies, and to see our predictions of when we’ll see them enter the retail store, see the report (client access required).

Which technologies do you think will realistically make it into retail stores of the future?

I look forward to your thoughts. 

Lily

Bits and "Bites" - Technology Enters The Restaurant

Adam Silverman

My dad came over today for a visit today. He’s an avid reader and consumes The New York Times from front to back. I guess you could say he’s part of my research team as he frequently cuts out articles for me related to digital business. This past weekend he brought over the front page of the business section, profiling the use of tablets in the quick serve restaurant category. Although many digital technologies in physical spaces have yet to transform shopping behavior, the restaurant industry has one of the stronger use-cases to employ digital, including:

  • Improving service by eliminating waiting in line. At Panera, customers go straight to their table and order via their smartphones. No more waiting in line to order, and standing around for your order to be ready.
  • Increasing average order size and margins with contextual meal recommendations. Chili’s employs tablets that drive up order size by providing meal recommendations that may have a higher price point, higher margin, or is highly rated.  In their tests they indicate a 20% lift in dessert sales! Yum.
  • Expediting service and improving accuracy.  Restaurant staff has a lot to gain by employing digital technology. They can reallocate cashiers to kitchen or service roles, and having customers order at the table improves order accuracy.
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How Digital Technologies Have Changed The Retail Store

Lily Varon

One of my first jobs was as a sales associate at a clothing store, after which mall shopping lost any of the leisurely appeal it once held. I still find myself folding clothes I didn't unfurl and fixing hanger hooks to all face the same direction. Chalk it up to knowing how the sausage is made, or perhaps a logical side effect of working in eCommerce research, but I do most of my shopping online these days.

The store shopping experience hasn’t changed much since my time as a sales associate. But that’s all about to change. We’re at the beginning of a retail transformation: The growing percentage of retail revenues driven by eCommerce and the influence of digital technologies on consumer behavior and expectations alike means that retailers are being forced to reevaluate the value proposition of the store. The result? A digitally enhanced retail store.

Today, a mix of technologies are coming together to marry the online and offline experiences to revolutionize in-store shopping and the role of the physical store. However, we’re still in early stages. Many of these initiatives remain in experimental phases, and glaring success stories are few and far between. Despite the rarity of iron-clad business cases for these initiatives, eBusiness professionals and their colleagues in store operations are forging ahead.

Together with eCommerce technology analyst Adam Silverman, I recently published a report laying out the current state of digital store initiatives and the promising opportunities a digital store overhaul represents for retail. Some of the ways retailers are transforming retail stores include:

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Retailers Have Beacon Fever

Adam Silverman

There is no hotter topic in retail today than beacons. These small objects which transmit location information to smartphones based on Bluetooth Low Energy have transformed our retail imagination, conjuring up visions of continuous offers being showered onto customers as they walk the aisles of their favorite grocery store.  The reality is more subdued.  We are still very early in the development of location strategies that leverage beacons and the iBeacon protocol, and retailers need to solve for a variety of challenges such as customer privacy, beacon maintenance, connectivity, and campaign management.

In a recent report titled “The Emergence of Beacons In Retail”, my team digs into this emerging location technology and tackles important topics, including:

  • Beacons require the right combination of hardware and software.  BLE is required as beacons leverage the Bluetooth hardware found on most new smartphones. A mobile app is also required to interface with the beacons, transmitting the location information provided by the beacon to a server, and then receiving the appropriate content back from the server to display on the customer’s mobile device.
  • Beacons enable rich experiences beyond offers.  We all enjoy saving money, and pushing offers to us via beacons will be a popular use case. However it is possible to offer a deeper level of engagement. Based on location, retailers can allow the ability to unlock dressing rooms, authenticate a mobile payment, or provide enhanced service such as preparing your favorite latte as you enter your local coffee shop.
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Shoppers Avoid Eye Contact With Digital Storefronts

Adam Silverman

Looking back at 2013, it’s easy to see all of the great innovation occurring within the digital store. Most retailers focused on omnichannel fulfillment, whether it was click-and-collect or ship-from-store.  Some retailers like B&Q in the U.K. began to experiment with dynamic pricing in-store. If 2013 was about launching new services, 2014 will be about shedding light on the actual performance of these initiatives.

One example of new digital store technology is eBay’s digital storefronts. Last year in June, eBay made a splash by deploying a digital storefront for Kate Spade, allowing customers to browse and buy products from a giant digital screen strategically placed over a vacant physical storefront. This digital storefront replaces the static posters that mall operators use to cover up vacant stores.  This past holiday season, eBay expanded the pilot and deployed a series of digital storefronts in a popular San Francisco mall.  These new digital storefronts are a few blocks from the Forrester offices, and I capitalized on the close proximity to conduct some research on how the technology was being used and received. eBay launched three digital storefronts: a small format Rebecca Minkoff storefront, a small format TOMS storefront, and a large Sony storefront in front of an escalator exit.

In mid December, I spent two hours observing customer interactions with the digital storefronts (some might even call it lurking). After an informal assessment of almost 500 shoppers who passed by these digital storefronts, I came to the following conclusions:

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A New Generation of Clienteling

Adam Silverman

As we ramp up our coverage of the digital store, we recently researched the role of retail sales associates to understand their impact in the age of the customer. There’s no doubt that technology has dramatically impacted the way in which consumers discover, explore, buy, and engage with brands, products, and services. However, the impact of technology on sales associates is unclear, as is the degree to which the role of the sales associate needs to evolve to leverage these new capabilities.

In the new report A New Generation Of Clienteling, we tackle the role of sales associates and their use of technology in the digital store. In the report, we note a number of trends, including the following:

  • The role of the associate will change from an information provider to a facilitator of engagement. The sales associate is no longer the sole provider of information in stores: Customers can now find product information via their mobile device without the help of an associate. This scenario provides an opportunity for the sales associate to pivot and drive increased engagement with the customer.
  • Digitally connected sales associates are trusted. Less than a quarter of US online adult today state that sales associates are the best source for product information. However, when armed with mobile devices, the associate is seen as a trusted advisor. The breadth of information available to sales associates via mobile devices allows them to consider a broader array of information when making product recommendations to customers in the store. 
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A Bumpy Ride For Retailers At Shop.Org

Adam Silverman

Last week I was thrilled to attend and present at the annual Shop.org event in the great city of Chicago.  I attended many great presentations, talked at length with the vendor community, and broke bread with some of my old eComm friends.  One observation that was more apparent to me this year is the massive transformation happening in retail.  It feels more dynamic than it did at the peak of the dot com boom of the late 90’s. For me there were clear trends emerging:

  • There is a palpable divide between forward looking retailers and those stuck in second gear.   Going after incremental improvements such as checkout funnel analysis and improving page load speeds are still important functions, but these are now table stakes that most digital businesses employ. Forward looking retailers go beyond site optimization and look at advanced analytics, leverage social graph data to better understand their customers, and employ mobile strategies that add contextual relevance rather than simply emulate the website.
  • Omnichannel is the hottest topic, but it means different things to different people.  The reality is most retailers fail to understand the complexity around creating a seamless experience for customers, and often fall back on defining their omnichannel initiatives as simply creating a singular presentation across all touch points. For organizations to truly support the needs of the customer, they need to focus on aligning supply chain, fulfillment, customer service, and operations around the specific needs of the customer. For instance, enabling the store associate to engage digitally-savvy customers requires new training, new technologies that facilitate assisted selling,  and new compensation paradigms that reward the associate for driving sales in any touch point.
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How To Select The Right Mobile Point Of Service Partner

Adam Silverman

Last week Forrester published a report highlighting the benefits and challenges of rolling out a mobile point of service (mPOS) solution. Increasingly, retail professionals are turning to mPOS technology to help bolster customer engagement, lower store expenses, and improve the efficiency of sales-related functions. It’s clear that retailers are eager to implement this capability, but realizing a solid return on investment is not guaranteed.

The report, titled Market Overview: Mobile Point of Service Solutions For Retail, gives an overview of the challenges and opportunities as well as an overview of the enterprise-class mPOS vendors. Before jumping headfirst into mPOS initiatives, eBusiness leaders will need to do the following:

  • Ensure your mPOS solution meets core needs. Tailor your mPOS integration to the needs of your customers and associates while leveraging the strengths of your business model. One-size mPOS does not fit all, and strategically creating a solution that exceeds your customers’ needs while bolstering your existing business model will yield the best results.
  • Expose your data in a scalable way. mPOS will improve customer engagement by combining the benefits of a physical interaction with the robust data of the digital experience if data is exposed correctly.
  • Focus on simplifying tasks first. Deploy initiatives that create efficiencies in store operations first, and then focus on developing strategies and solutions that bolster the customer experience. Today, measurable ROI is easier to define through store efficiencies than through improvements in customer experience.
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Omnichannel Execution Missteps Can Cause More Harm Than Good

Adam Silverman

A few weeks ago I visited a new prototype store from a major U.S. retailer in order to learn more about their omnichannel strategy. Expecting a customer-centric experience that seamlessly connects the digital and physical stores, I was disappointed to see what appeared to be a misguided omnichannel deployment, with an experience that was actually inferior to one without enhanced technology. Here’s why:

  • New layout but broken technology.  Upon entering the store, I noticed a different layout with a lounge area on the right and an inoperable digital kiosk staring right at me. While the layout did appear to be more welcoming, the dark interactive display indicated a lack of commitment to execution
  • No in-store inventory or location-based awareness.  I found a smaller kiosk near the front of the store and searched for an item online.  I chose the 'pick up in store' feature, expecting the kiosk to recognize I'm already in the store and show what's in stock. Instead, this retailer decided to fulfill the order from their distribution center rather than direct me a few feet away to their colorful display showcasing the item. There was no in-store inventory information or any type of store mapping application within the kiosk.
  • Kiosks do not provide utility.  Another department also had a kiosk, but only provided the ability to find and buy the product online. Again I was expecting the retailer to recommend the appropriate product based upon my specific needs, and show me that the product I need is just a few aisles away.
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