More screens, more connectivity. The idea of extending ecommerce technologies into high-street stores is becoming a reality, but there are huge technology and development challenges here, advises Marcus Austin
There’s no disputing the recent problems on the high street. The recent highprofile failures of HMV, Republic, and Jessops, allied to the continuing growth in ecommerce, have created a bleak outlook for bricks-and-clicks retailers. However, a combination of both mobile and contactless technologies could help bricks-and-clicks retailers to fight back.
However, there are problems to overcome before this fightback can begin.
As Andy Lloyd, general manager of ecommerce products at NetSuite says, the back-end systems and the EPOS systems in place in the high street weren’t designed to work with internet-savvy consumers.
“POS devices were built with a pretty clear role in mind, which was to allow people to buy stuff in store. Supporting things like being able to look up inventory in another store is not something that frequently works very well, and additionally retailers just don’t do a very robust job of keeping track of inventory.”
The solution to the problem is to take the business out to the consumer with pop-up shops and other mobile solutions, and to bring in more of what works on the internet into the high-street store, from interactive screens through to data about what the customer bought last. However, getting the infrastructure into stores can be problematic, according to Graham Tricker, head of operations at Proxama. “Anything that requires any infrastructure modification within retail is inherently difficult to achieve,” he says.
“You not only have to sell into the marketing people but you also have to sell into the IT people and the operations people, and there are just more barriers.“
However, when the intersection between the digital and the real world works, it often works brilliantly. An example of a good integration can be found in Inditex Group’s Berksha stores. Described as a “meeting point for street fashion, music and art”, the stores allow customers to shop while watching videos, listening to CDs or reading magazines. The design is intended to extend dwell time in the store. In the shop windows of the Oxford Street store, screens run YouTube videos for the brand, with the number of views each video has had proudly displayed.
It’s the kind of scenario that we will see more often, according to Bjørn Pieper, international marketing and sales manager at NDS. “The shop will be an entertainment area where you can have a drink and you will be influenced by anybody who is working there, with more staff telling you about what’s possible and demonstrating on 3-D screens,” he says. However, the digital chill-out store future doesn’t fit every retailer. An alternative approach is to turn the problem on its head and, instead of looking at attracting more people into the store, look to use technology to move the high street to the customer, with the use of contactless wireless solutions and pop-up shops.
As Lloyd, notes, “With mobile technologies such as 4G you can have customers able to shop somewhere where there isn’t even a store, and choose the products that are of interest to them at a time and in a place that’s more fitting with their life. For example, we are seeing retailers creating pop-up stores in subway stations that consist of a simple display of food. The customer scans a QR code and their order will be ready for them when they get to that store.”
Alternatively, use wireless technologies to take the business to the customer. “You can extend the retail reach of your existing business,” suggests Wagner. “For example, you may be a florist and have a single outlet with one till, and when it’s Valentine’s Day you have a queue going round the corner. Instead, you could employ 15 or 20 students with mobile devices and bunches of roses going round selling roses in the local community.”
While many retailers are embracing mobile, others are instead trying to ignore digital in-store and are looking to clickand-collect types of services and promoting the ability to return internetbought goods to the store. However, Lloyd thinks this isn’t necessarily going to be the right solution: “Retailers should be embracing digital in-store as a means to get customers across the finishing line, because they’ll find it works a lot better than being defensive about it. From my perspective, there are very few products where it’s worth it for me to drive to a store to investigate a product and decide that I want to buy it, and then go home to buy it on the computer and wait two days for it.”THE CONTACTLESS ALTERNATIVE
Truly to bring the internet to the high street, a retailer will need to replace current point-of-sale systems, and instead either invest in new internet-ready EPOS systems or use tablet devices, which is both expensive and time consuming – particularly for the back-end integration. Another approach for these retailers is to use a less high-tech solution via contactless near-field communication (NFC) technology devices.
A key advantage for retailers is that the NFC solution uses the customer’s own advanced technology and connectivity, in the form of the smartphone, as part of the selling process. NFC solutions don’t need a mains supply and nor do they require to be plugged into the stores network. The tags are read by simply placing an NFC-enabled device such as a phone or tablet near to the tag, and the connection to the internet is supplied by the conusmer’s mobile
Additionally, NFC technology is easily configured by retailers, and to prove this Proxama is currently NFC-enabling 80,000 pubs and bars across the UK. It’s a solution that can be installed without needing permission from the IT manager and can be configured by the marketing manager. “You can then configure everything from the server, but it is driven through the mobile phone activity, rather than having to put in all of the infrastructure within the retail environment,” explains Tricker.
While the tags are simple to install, the functionality offers a wealth of options. By logging into the Proxama server, retailers can set up different services for different locations or times. For example, the mobile application could offer vouchers for half-price croissants in the morning, give a free packet of crisps with a sandwich in the afternoon, or a free drink on the way home. “You can control the offer through the online system, rather than changing the data that is on the device itself, which provides huge operational benefits because all you have to do is deploy the NFC infrastructure and install a small NFC label that costs less than 10p,” says Tricker.
Tags are also central to a recent retail experiment produced by NDS for a German supermarket chain, explains Pieter. “We did a recent pilot test where we equipped shopping carts with NFC tags, and built into the floor were RFID receivers,” he says. “When the shopping carts came into the vicinity of one of the sensors, the screen three-four metres in front of the cart started to play a commercial for a product on sale in the aisles next to it.” However, it wasn’t just the ability to trigger the right videos in the right places, NDS was also able to get valuable feedback to the supermarket on the effectiveness of the in-store videos.
“When the customers went to the cash register it was possible to see who had seen which commercial and if that had any effect on what they had put in their trolley, and what that showed was that although the videos weren’t able to drive more sales, they were however able to sell products with higher margins,” says Pieter.ANDROID DEVICES
The advances in technology that have driven the prices down for display screens are also driving a new market in large Android-based tablet devices, that can either be wall mounted or built into kiosk units. The Viewsonic VSD220 Smart Display, for instance, is effectively a 22-inch Android tablet. When connected to the internet and loaded with the right applications, it can make a real difference to the retail experience.
However, in order for retailers to get the most out of such devices, companies will need to be able to create compelling applications. This is proving to be a real sticking point for many retailers as much of the work needs to be done in house. As Mark Slater, regional director with Serena Software, explains: “Many retailers are now looking at developing their own apps again rather than buying off-the-shelf products or outsourcing. The reason behind this is so they can be different to other retailers. However, the sheer amount of time that it can take to specify and launch each project means that it can take too long to capitalise on opportunities.”
Slater warns that while mobile applications are to be welcomed, the new technology can put some additional strains on a business: “Speed of delivery for mobile and in-store campaigns is important. If a good idea comes up on Monday, then the service has to be fully tested and live by Friday that week.” It’s this requirement to be speedy in development that has recently driven Marks & Spencer to build a ‘digital lab’ that’s intended to use agile development methodologies where solutions to problems are delivered a bit at a time, with a ‘build, test and refine, and refine again’ iterative process rather than the traditional ‘build, test, deliver’ waterfall methodology solution.
Lastly, retailers need to be aware that any new technologies – be these mobile applications, NFC systems, mobile payment devices, or intelligent EPOS systems that allow customers to order online while in-store – have to be firmly backed up with an IT infrastructure that supports cross-channel retailing. As Lloyd points out, “The integration is a huge piece of the puzzle. Integrating these systems and getting them working together is a huge step in the right direction. The reality though is it that most retailers are running systems that were designed before ecommerce was a consideration.” He adds: “The wrong question to be asking is, ‘What can help me do mobile in-store?’ The right question to be asking is, ‘How do I find a platform that enables digital commerce both now and in the future for things that I haven’t even thought of yet?’”
Looking further ahead, the future for screen technology is some sort of mixture of 3-D and identification systems, where signage alters according to our needs and desires. As Mark Nicholls, technical director of Key Systems Out Of Home Software, notes, “Apple knows where you are – you can click on the app and see where you are with find my iPhone. Tesco know what you buy, down to whether you like red or white wine. We can sense where you are on digital panels. Next time you are at an airport, see if you think any advert is following you round the building.”
However, there are many hurdles that retailers need to get over before we all are subjected to a Minority Report future, but none of the predictions in the film, aside from the idea of a cop investigating murders yet to occur, are far fetched.
Indeed, many of them are either in a lab or about to be launched in the near future. What the Experts Say
JOIN THE DOTS
“The in-store experience is vital to retailers, but it has to be seen as part of an overall approach to serving and supporting customers. Not all channels will be applicable to every retailer, but many will see a greater opportunity to improve their sales through greater interaction and linkage between their in-store marketing, digital and applications strategies, and the wider approach to interacting with customers.”Mark Slater, regional director, Serena Software
“One of the biggest challenges for the physical retailer is the ‘showroom-ing effect’, where consumers are coming in the looking at the products and comparing them, then going home, finding the heapest price on the internet and ordering online.”Graham Tricker, head of operations, Proxama
ONLY PROMOTE WHAT YOU HAVE
“If you are promoting product within the shop, make sure that you are hooking up to your other business systems. By applying simple business rules to your in-store solutions, you can filter out products that are no longer in stock, and actively promote products that are approaching their sell-by date.”Bjørn Pieper, international marketing and sales manager, NDS
LOCATION NON-SPECIFIC WHAT THE EXPERTS SAY
“There has been this decoupling of needing to be in the same location as the product, and we are in the very early stages of people realising just how powerful that is. People can choose the product that they want regardless of where that product is located, and that will be a revolution in retail.”Andy Lloyd, general manager, ecommerce products, NetSuite