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November 16th, 2020

Design 4Retail

Insight article

Technology and the return to physical retail environments

Report contents

1.0 Foreword
2.0 New technology applications
fitting rooms, checking out, the new immersion, no-touch tech, virtual trialling, IoT
3.0 Our perspective

1.0 Foreword

TECHNOLOGY AND THE RETURN TO PHYSICAL RETAIL ENVIRONMENTS

It’s estimated that 17.2 million UK consumers, nearly a quarter of the population, permanently changed the way they shop during the first quarantine period by redirecting their spending online (Alvarez & Marshal). Retailers are finding that customers, having become habituated to the convenience of e-commerce, are now more apprehensive about visiting physical stores. In the UK, retail is currently down 16% but there’s a trend that looks like shopping will emerge to normal levels by the Christmas peak period (McKinsey), however this was forecast before Lockdown 2.

We recently reported on how various retailers have handled an initial return to recovering revenues, so now we look forward to the longer-term future of physical retail. By re-thinking how retail works for customers in a post-pandemic landscape we look to remove the compromise and constraints that have typified physical retial this year, elevating the shopping experience above the simply functional for our new way of living.

In our previous whitepaper we explored how brands can adapt their existing systems to provide a moment of human connection, utilising knowledge of consumer behaviours and psychology to improve their customers’ well-being. The Covid-19 pandemic has radically altered the way technology is used in the everyday lives of consumers, with digital channels dominating current retail purchasing. Therefore, in this report we identify emerging technology trends, and make some predictions as to how changed consumer attitudes can be reflected in new retail spaces that partner technology with a clear understanding of customers’ lifestyles.

2.0 Technologies

2.1 FITTING ROOMS
2.2 CHECK OUT AND PAY
2.3 IMMERSION
2.4 NO-TOUCH TECHNOLOGY
2.5 VIRTUAL TRIALLING
2.6 IoT OPTIMISATION

2.1 Fitting rooms

UNDERSTANDING FIT IN A NO-TOUCH RETAIL ENVIRONMENT

For traditional retail, providing meaningful interaction and getting shoppers to return to physical environments is a challenge. Fitting rooms are a pivotal part of the fashion retail experience, but retail stores the world over were not designed to support socially distanced, sterile shopping. In a post-pandemic landscape this part of the customer journey may need to be omitted totally where some brands do not have the functional capacity to deliver a sanitised and safe fitting experience. In some other cases it may be possible to offer fitting rooms, but with additional measures in place. Brands will need to provide an elevated experience that mitigates the functional constraints of these new processes. Some brands around the world are already utilising models that can be more widely adopted, showing how reduced interaction can be delivered without negating customer experience.

AUGUMENTED IRL FITTING ROOM SERVICES

For consumers who are keen to return to a retail store, some brands are in an unique position whereby they can treat all consumers like VIPs due to the limited number of people allowed in the store; leveraging technology to give the ultimate in personalised service. Fitting rooms in this scenario also present a key opportunity when considered as protective, personal spaces connected with the rest of the store and brand landscape.

Sustainable fashion retailer Reformation’s NY store is operated as a showroom of samples. Customers shop via touchscreens that only list what is in stock, and they can also create personalised dressing rooms, which are carefully stocked with selections as they browse.
Luxury fashion e-commerce business Matchesfashion’s Carlos Place flagship is a space designed for engagement and discovery. The core service offer is personal shopping appointments where customers can request the pieces they would like to try on be curated in the fitting rooms ahead of arrival and whilst they browse, as well as choosing from collections based on their previous shopping habits, online and offline. The success here is that technology plays a part but is mostly invisible.

NEW FULLY DIGITAL FIT EXPERIENCES

Covid-19 has presented shoppers with concerns around safety and distancing in a traditional high street environment, and this may be the drive many more brands needed to take the leap into AR augmented fitting services. Historically, one of the biggest blocks to wide adoption of AR was the need for customers to enter their body data or take time to create a virtual avatar. But in May this year, ASOS rolled out See My Fit, an online tool that uses 16 virtual models of different shapes, ages and ethnicities to allow customers to visualise outfits virtually. To use it customers can simply upload a selfie, input their height and weight and See My Fit transposes their face on to the closest matching avatar.

Customers can see both static images and moving video of the virtual result. It is a function that could allow brands to show customers wearing an outfit in different virtual environments. In this way the dressing room can be not just a browsing experience or for tactile checking, but as part of a brand’s personalised, bespoke content for
customers- a really interesting perspective on the future of fashion retail, and how technology can help provide a safer and yet still satisfying experience.

2.2 Checking out

MORE FRICTIONLESS PATHWAYS TO PAYMENT

In a post-pandemic world cashless and smart transactions will become even more prevalent, partly due to habits built during lock-down whereby contactless payments, and low contact shopping methods have become the only accepted way to make a purchase.
Upon re-opening stores, accepting additional and new payment methods will enable customers to buy products more easily through existing technologies and financial offerings, options such as Paypal, Klarna, Clearpay and even widely used cryptocurrencies can improve the path to purchase for customers.
Next-gen self-service solutions that streamline clunky checkout processes have already been seeing success in fashion and grocery stores. The concepts deliver on the value modern consumers place on automation; 73% of US shoppers prefer self-service retail technologies over engaging with associates, an 11% increase from 2018 (Soti). The value of transactions processed in retail by smart checkout technologies, where the fixed checkout process is replaced by a frictionless model, will total $2 billion in 2020 (Juniper research).

INCREASED FLEXIBILITY

Offering more ways to pay and finish transactions is key. Flexibility for customers creates more pathways through a purchase journey, removing pinchpoints and giving customers a feeling of agency and control when back in physical stores. ‘Lab 101’, a denim brand operates an un-staffed store in Seoul, S.Korea which opens 24hrs and has no physical staff presence, instead allowing customers to browse freely and pay via touch screen within the changing room.
In recent years Zara have used queue-skipping self-service checkouts that feature an RFID-scanner which identifies products held in front of it and adds them to a virtual basket. Concentrating the entire transactional process in the digital tag allows consumers to check out on the spot, using technologies such as Rapitag which keeps products secure until a consumer pays for them with a mobile phone scan, upon which they unlock.
Expanding on this idea, the newest Amazon Fresh store will feature smart Dash shopping carts, equipped with sensors and image recognition to see which products are placed in the cart and to immediately add them to the digital basket negating the need to check out at all. Assistance by Alexa will be integrated as well, both with in-store kiosks and at home to help customers fulfil their shopping lists more easily.

RE-IMAGINED CLICK & COLLECT

Click-and-collect, drive -thru and roadside concepts will become more important touchpoints in a customer’s omnichannel retail journey in future, as these can be defined in the consumer psyche as ‘safe spaces’ with which to liaise with brands comfortably. Brands should look to redevelop old functionally-led BPOIS formats as connected, engaging, brand-elevating portals to the rest of their commerce landscape. An example of how this can be successful is the luxurious fully connected, concierge-style click & collect for American footwear brand UGG’s Ginza flagship.

2.3 The new immersion

LAYERING INFORMATION AND EXPERIENCE

Advancements in technology are redefining what is possible with regards to product presentation. For brands to really connect with customers, they need deeper engagement which can only help build repeat custom. Immersive technologies have been part of the vernacular of retail for some time, but recent increases in mobile media and e-commerce, heightened by lockdown, means they are essential for future retail environments where being zero-touch may define brand success. Brands across all sectors can embrace VR, AR, gestural, voice and haptic concepts to seduce sensorially in a new retail normal. But it’s vital that we remember that the purpose of technology is to advance the human experience. The real impact of digital innovation is measured by the human experience it offers or uplifts.

Sports equipment manufacturer Shimano’s centre in Holland now offers customers the chance to digitally experience fishing in-store to give better understanding of the product in context. A more basic execution of immersion is fashion brand Hunter’s London flagship where digital technology shifts the ambience of the interior to match real-time changes in the weather, while birdsong plays in the fitting rooms evoking the great outdoors for customers of the great British brand.

Looking to the future, a new digital immersion interface has been developed by ILMxLab- the immersive entertainment division of Disney’s Lucasfilm. The brand is creating mind-steering technology where learning to control your heart rate will unlock experiences within a VR scenario- a concept that could potentially be applicable to sports brands flagships for activations where consumers want to test their edge.

IMMERSION AT DISTANCE

Livestreaming is well established in APAC markets, and a growing concern elsewhere. Brands can deliver on this, and connect with customers at distance with IRL zones where shoppers can film their own transmissions, turning in-person customers into brand advocates with the potential to tap into their own community. Similarly, opening up stores to customers at distance invites connection with consumers still isolating, or reticent to return to stores. Recently launched by NY department store Showfields, a“Go Live” feature allows the store to directly connect shoppers browsing its featured brands’ own websites with on-the-floor staff.

Combinations of the dynamic experiences above acknowledge and serve all of the facets of the human experience. The opportunity for retailers to appeal to the five senses is clear, but the success is in the detail and brands should look to translate critical brand characteristics into sensory experiences, ones which connect on a much deeper level than the transactional, that appeal to more than just ‘the shopper’.

2.4 No-touch tech

REMOVING TOUCHSCREEN INTERFACES FROM IN-STORE TECHNOLOGIES

81% of UK consumers now think that public touchscreens are unhygienic with only 50% likely to interact with public touchscreens in the future (Ultraleap, 2020). This trend will require stores to be embedded with biometric technologies able to sense, identify and respond to visitors if they want to succeed in satisfying discerning modern consumers.

3D hand-tracking and mid-air haptics are being further developed to provide the fundamental gesture controls that will shape our post-Covid reality. LiDAR- which is typically used in autonomous vehicles to detect obstacles- can be used to turn any screen into an interactive, touchless touchscreen that allows users to control interfaces by moving their hands through the air.

Facial recognition technology has come a long way and is now commonplace in China, where it significantly boosts in-store spending by delivering friction-free payments. The technology is slowing being adopted more in Western markets where emerging concepts include smart shelving capable of tracking consumers’ expressions to gauge the most relevant content to display for their emotional state.
A best-in-class example of how facial recognition can support an entire touch-free customer journey is Japanese beauty brand SK-II’s ‘Future X’ pop-up where advanced facial recognition technologies unlock personalised content and product recommendations for customers at different in-store zones as cameras instantly access their analysis and profile details.
At mass-market level Coty beauty group are developing technology where mirror-like screens suitable for even narrow store aisles support instant face-scanning, displaying make-up looks as AR overlays with a call-to-action inviting users to transfer the app onto their phone enabling them to explore and purchase the looks at leisure. Use of in-store branded apps and linking to customer devices in this way can keep the browsing bubble intact.

It’s worth remembering that more than half of UK Gen-Zers are excited about products that are ‘fun to use’ – (Mintel, 2018).Smart brands should be investing in screens with enhanced, real-time interactivity to appeal. Instantly shoppable video content and voice-activated mirrors and interfaces are just two ways brands can deliver a synthesis of content, bespoke and personalised service, and commerce.

Swedish technology company Ombori and Microsoft unveiled a motion-sensitive, voice-activated mirror in H&M’s New York flagship last year. The Magic Mirror, which ‘wakes’ when looked at, offers shoppable fashion inspiration (via QR code) and overlays to encourage selfie snapping. The voice companion will be able to provide directions to instore departments, and using the ‘hand-off’ tool, transfer onto customer’s devices, so the guide will travel with you until you reach your shopping goal.

2.5 Virtual trialling

HELPING CUSTOMERS CONNECT MORE DEEPLY WITH PRODUCTS

Now more than ever, customers will want to make use of services that mitigate the need to have close quarters interaction, or physically handle products. Already appearing in some cosmetic stores as ‘magic mirror’ technology, The ever-improving technologies behind artificial intelligence (AI) are allowing for upgraded virtual trialling tools across many different touchpoints, limiting the impact on in-store operations in a post-pandemic landscape. In late 2019, London pop-up ‘store’ A Hot Second encouraged visitors to bring in an unloved garment, rather than throwing it out, then offering the chance to try on a digital fashion garment from leading brands like The Fabricant​ and​ Carlings​; also offering access to pieces unattainable in real-life such as historically famous garments worn by superstars and icons.
Additional sensorial cues can be layered onto virtual ‘trialling’ for a truly immersive experience. In July 2019 virtual reality pop-up Otherworld utilised 14 ‘sense-hacking immersion rooms’ where visitors wore VR headsets to scale Everest and fight zombies, whilst also experiencing additional heat and wind-emulating sensations. From sports to automotive, embrace VR, AR, gestural, voice and haptic concepts to seduce sensorially.

PERSONALISING RECOMMENDATIONS

These kind of virtual trial and test tools, when underpinned by consumer devices or profiles can yield hyper-personalised recommendations. According to retail experts the future of virtual trialling technology lies in this aggregating data to refine real-time recommendations. US beauty brand Estée Lauder are developing an IoT enabled mirror that recommends products suited to the day ahead. This includes practical details on weather and sunscreen needs, but could also feature data from consumers’ personal schedules, or social feeds to inform the mirror’s suggestions. Modern consumers see browsing and shopping as intertwined, with 64% of a recent surveyed group reporting they would prefer retailer that provides additional information that is entertaining or informative when they are shopping online or in a store (pfsk). Layering additional detail and connectivity onto interactive trialling experiences will likely increase conversion.

VIRTUAL INSTRUCTION

Virtual immersion can also be used to guide customers without need for staff interaction. Seeking to close the gap between fans and their sporting ambassadors, Puma’s Skills Cube in its NYC flagship uses a suite of motion, gesture, and location sensors to enable visitors to be coached by virtual versions of their sports stars in a transformable virtual environment.
For more directly practical purposes Dutch designers have developed the Smart Distancing System (SDS) to help people safely navigate busy public spaces such as stations, airports, museums, and malls. The system combines motion-tracking technology and computer-directed projections. Circular patterns can create safe ‘bubbles’ around people, while lines indicate precise distances. Sergio Rossi’s Milanese May 2020 WonderMachine pop-up included similar technology, including infrared ceiling sensors that unobtrusively tests consumers’ body temperatures on entry, discreetly projecting results onto the floor via laser. The system also projected lines of light onto the floor as a reminder of social distancing spaces, when necessary.

2.6 IoT optimisation

CONNECTING OPERATIONS, SERVICE, AND CONSUMER ENGAGEMENT IN REAL-TIME

The Internet of Things is an exponentially growing world of digitally enabled and constantly communicating products and connected devices. It has the ability to deliver a service-driven, cross-sector retail future as demanded by consumers who expect more holistic and bespoke personal service across their faceted phygital lives. 70% expect a retailer to offer them the same level of personal service whether they are shopping in a physical store, online or on their mobile device (pfsk). From cosmetics and apparel to food and beverage retail, ‘end-to-end ecosystems’ supported by a network of connected devices will increase in prevalence. An emerging connected age of retail will be defined by AI and IoT technology carving new communication pathways between store spaces, products, and service systems. By linking behind-the-scenes and customer-facing functions, use of IoT can use data intelligence to help both brands and customers make better decisions.

Some examples of how this mass of technology and data can be successfully leveraged include Walmart opening its first Intelligent Retail Lab in New York this year. Seven hundred IoT-enabled cameras work alongside hundreds more sensors to track data, such as queueing times, how often each product is sold, and freshness information. This real-time communication allows the store to operate in the most effective manner for efficient customer and product flow- keeping things moving and capacity under control with minimal staff interaction.

Accelerated by the changed consumer behaviours of the pandemic, Showfields NY launched an in-store mobile based customer journey that marries the joy of real-world discovery with the convenient, contactless nature of e-commerce. The app invites customers to explore the store with their phone, scanning tags to learn from the multitude of stocked independent DTC brands and artists and make purchases. In addition, the ground-breaking store is holding shoppable weekly livestreams, where artists and influencers host digital curations to connect brands with expert advisors during unprecedented times, bringing the store to customers.

Whether client facing, or back-of-house focussed, defining contextual relevance is the key to successful application of IoT technology. Brands can use the IoT to deliver more seamless experiences, such as removing the need to queue for coffee by enabling in-car pre-order for local pick-up, or adding auto-replenishment functions to cosmetics packaging that tracks the user’s location. Defining consumer need in any specific situation should drive the use of IoT, such as increasing speed of progress through store by ensuring relevant products are always stocked, or layering additional product detail on command, and allowing for in-store purchases to migrate to online. Seamless holistic services should be fit for purpose in each case, and fill logical gaps in consumers’ lives.

3.0 Our perspective

HOW EMERGING TECHNOLOGY CAN SUPPORT CONSUMERS’ POST-PANDEMIC BEHAVIOURS

Whilst there is an undeniable awareness- and excitement- that a return to physical retail as ‘normal’ will occur, there is an unanimous concern around safety among shoppers, and many statistics demonstrate a clear call for technology to be augmenting the physical retail environment to allow consumers to interact with brands safely in store. Recreating physical interactions, evoking sensorial experiences, and layering product understanding can all be achieved in a new retail normal with emerging technology.

Application of new digital and tech tools needs to be purposeful though, as modern consumer expectation on brands and their appearance across all channels is high. Digitally native consumers can easily see through disingenuous efforts by brands to create connection, they want to experience brands and to have authenticity and honesty. Along the road to re-opening stores, we must prioritise an emotional connection by returning to basic principles and rethink how experiences can be augmented by technology to serve customer’s new needs to deliver more authentic and useful brand activity. Consumers are looking to brands to deliver engagements that are honest and uncontrived. To meet this expectation brands must deliver an experience which not only leverages the best technology for the job but, most importantly, influences emotion.

At Design4Retail our insight team help brands across multiple sectors craft strategies that navigate the evolving retail landscape as we begin to discern what comprises our new ‘normal’. Let’s carry on the conversation- contact us today to talk about the future of retail.

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