November 26, 2018
Tech. The four-letter word sashaying its way through the lexicon and strategies of today’s retail brands. It’s no longer a question of if new technologies such as predictive analytics, AI and robotics will be adopted to drive competitive advantage and consumer value, but rather how they can best be utilized, and to what extent they will come to define this era of commerce.Whether born a digital business or reinvented as one, all brands and retailers are facing pressures to adapt their business models to keep pace with a rapidly evolving technology landscape and ever-changing consumer demands. As shoppers become more informed and decisive, businesses will come to rely on new applications and tools to capture consumer attention and meet their commerce needs. Winning brands will be ones that best identify customer pain points, such as convenience or an undifferentiated shopping experience, and leverage technology to help provide the answer.
In truth, technology has long been a staple of retail organizations, from early barcode scanning and more modern RFID tags to point of sale hardware and product lifecycle management software. What defined the value and adoption of this legacy tech stack was specific functionality and organizational scalability. It provided an essential unlock for businesses to expand their footprints, diversify their offerings and manage greater complexity and has become table stakes.While supporting organizational growth and economies of scale remain core to retail tech, the capability to augment a consumer’s experience or streamline their purchase journey is quickly becoming the new competitive advantage. Driven by an empowered consumer with elevated expectations as well as shifting industry dynamics, a new retail tech stack has emerged. Made up of emerging technologies including artificial intelligence (AI), 3-D design software, predictive analytics and augmented and virtual reality (AR/VR), this new stack directly addresses consumer obstacles surrounding shopping experience and convenience.
Forward-thinking companies like Nike, Sephora and Rebecca Minkoff have recognized the importance new technologies can play in this new consumer-first world. These companies are investing thoughtfully (and ambitiously) in tech-led strategies to delight shoppers and amplify their retail experiences, in an effort to set themselves apart from the competition and the more traditional paradigm of transactional commerce.Earlier this year at the Jumpman NBA All-Star after party, Nike’s Jordan Brand partnered with Snap to pre-release its Air Jordan III “Tinker” shoes on Snapchat. Thousands in attendance were able to scan exclusive Snap codes by activating an AR feature in Snapchat where they could purchase the sneakers. Attendees were promised to receive the shoes within two hours — the entire collection sold out in 23 minutes.
The Sephora Virtual Artist application lets users try on thousands of different Sephora products and shades virtually using AR. Consumers scan their faces on their phones, and then can seamlessly experiment with a myriad of different looks and colors. Users can even match their skin tones to the perfect foundation using AI built-in to the app. As of last year, the company had seen almost 10 million visits to the feature from users, with over 200 million looks created.
On the apparel side, Rebecca Minkoff is an example of a company using new tech to amplify its consumer vision and experience. It recently introduced smart mirrors in the dressing rooms of their flagships. These mirrors allow shoppers to do things such as browse sizes or save their shopping activity for the future. Not only do applications like these increase conversion and average order value, they provide a wow moment and a reason for customers to return in the future. With the rise of digital here to stay, winning brands are finding ways to turn connectivity into an advantage, using it to attract and engage consumers and to re-create that “pull factor” retail possessed in decades past.
The new tech stack is also proving instrumental in bringing higher levels of efficiency and convenience to the retail life-cycle. In the name of consumer convenience, Amazon — with its deep technical chops — has catered its entire e-commerce platform to maniacally live up to its internal mantra to “be customer obsessive.” Delivering on this promise, the company now offers a 360-degree shopping experience through online, brick-and-mortar, and integrated online/offline experiences with Amazon Go, Whole Foods, AmazonFresh and Amazon Prime, and uses predictive analytics extensively to provide shoppers with suggestions for future purchases. Similarly, Walmart has invested assertively in technology and infrastructure to allow its shoppers to order their groceries online and pick them up in-store. While this initiative required an extensive shift in its supply chain given Walmart’s scale and complexity, the results have been well worth it, with the grocery division enjoying its best growth in nine years following the program launch.
Today, retail businesses have more choices than ever for supplementing their legacy enterprise stack with new, soon-to-be gold standard technologies and the revamped processes they empower. The new tech stack can play a vital role in helping brands navigate changing industry dynamics and deliver against the ever-growing tide of consumer expectations, particularly regarding convenience and experience. Before you give your retail tech stack a makeover, consider the following:
Be thoughtful and deliberate. Since new technology investments can impact the day-to-day processes of an army of employees — from store associates to merchants, and designers to manufacturers — implementation must be intentional and orchestrated. For any new technology that is introduced, there should be a clear path to not only technical integration but also organizational adoption.
Explore your options. Evaluate what operational needs your existing technology stack isn’t addressing, particularly when it comes to engaging consumers and streamlining their commerce journey. As in the examples above, exciting success stories happen when you pinpoint a major internal or external problem and implement emerging, best-of-breed technology to solve it.
Get buy-in and develop a plan. Most importantly, be vigilant in generating internal buy-in from relevant stakeholders. Any new technology will only be as good as its execution, and having champions across the organization — from everyday user to senior executive — committed to the identification, experimentation and evolution of your new retail toolkit is the best way to achieve its value-add.
One team’s success doesn’t have to come at the other’s expense. In fact, it’s proven that brands perform better when these two groups work together.
In this time of of fluctuating costs and economic uncertainty, brands should consider re-evaluating pricing strategies and architecture, balancing the need to protect margins and brand integrity while driving sales.
Attempting to create products and assortments without a clear understanding of target consumers and what they like is a recipe for wasted resources, unnecessary production costs, and excess inventory.