Amazon to Decathlon, Modiface and Moby Mart … how the high street is being reinvented with digital technologies

October 1, 2018

Is the high street dead? Of course not. It’s just being reinvented. Whilst everyone talks about the rise of online shopping, it’s easy to forget that 75% of goods are still bought in physical stores.

Shops will not die out any time soon, but they must evolve with consumer habits if they are to stay relevant.

Physical retail needs to reinvent itself, with the help of technology, to play to its strengths – to be a real space, local and human, to enable participation and collaboration.

  • Physical stores become places to spend time, to socialise, to play, to create, and share
  • They become community hubs, places for local people to meet and host events
  • Human, intuitive, emotional personalisation is only possible when people meet people
  • Enjoy the trying before the buying, and when you do buy, its instant gratification
  • Local stores understand local conditions, from specific needs to festivals and the weather

Innovative physical retailers are trialling experience-led formats where customers can lose themselves in virtual reality (VR) experiences, watch content on ultra-high-definition digital displays, or receive tailored advice from expert staff.

This is reflective of a growing trend towards using a brand’s physical footprint to entertain, inform and visually impress customers, rather than to purely sell a product.

Enabling this transition to experiential retail is in-store technology.

From digital, interactive signage in a shop window to virtually trying on clothes with a magic mirror, technology is driving innovation in physical stores and allowing retailers to create unique brand experiences.

The digitalisation of the retail store

By 2030, it is estimated that 90% of the global developed population will own smartphones that are running on increasingly ubiquitous internet access, according to Deloitte.

Although challenging to retailers, online interaction can also act as a hook to bring customers into a store, whether to pick up click-and-collect orders, experience personalised customer service or in response to a location-based notification.

The increasing use of artificial intelligence (AI) processing such as virtual assistants within smart devices will challenge retailers to improve their performance to deliver a seamless online and offline experience.

New technologies including VR and augmented reality (AR) will enable retailers to meet consumers’ growing expectations of experiences that are more intimate and interactive, worthy of sharing on social media.

And retailers will benefit from the estimated 1 trillion internet of things (IoT) sensors by 2025, providing a real-time view of how their stores are running, and how customers are interacting with in-store technology and products.

Retail Week and Samsung recently got together to explore the best in-store technology innovations that will contribute to customer experience – how consumers will behave, what will drive footfall and sales in store, and how retailers can prepare their teams for this changing retail landscape.

  • The “me age” will have a big impact on retail
  • Gen Z like anonymity in store, preferring self-service over human interactions
  • By 2030, the over-50s will contribute £220bn to the UK high street

Shifts in global demographic trends, as well as consumer behaviour in the next two to three decades, present new opportunities and challenges to how retailers operate.

Brands will be selling to a bigger, richer global middle class, who by 2030 will be spending three times the £5.4trn per year they do now, according to consultancy firm McKinsey.

And according to the UN, by 2025 there will be an estimated 68% of the world’s population living in urban areas compared with 55% now – increasing the need and interest in retail and leisure facilities.

Retail futurologists predict that the customer of the future will want to be actively involved in the in-store experience, whether they are interacting with a touchscreen or participating in an event in store.

Lowering the cost of particular types of in-store technology will also allow retailers to create physical stores that are more experiential.

The shift in digital signage to all-in-one smart displays, for example, means fewer hardware costs for the retailer. The displays prompt customers to make a purchase based on curated content that changes in response to real-time data.

Meanwhile, low-cost sensors embedded within products such as radio frequency identification tag (RFID) systems can enhance the in-store experience by offering real-time stock information for both customers and staff.

Retailers that ignore the grey pound do so at their peril. By 2030, it is estimated that the over-50s in the UK will account for nearly half of all consumer spending at £368bn, according to a study by UK consultancy firm Centre for Future Studies.

Technology advances in mobility will help to overcome the physical restrictions on senior customers accessing stores.

Driver-assistance systems – which have features such as collision-avoidance sensors, automatic lane centring and driverless vehicles – will come to the fore as governments look for more ways to improve road safety.

Shopping in store also offers this age group the social interactions that Gen Z want to avoid, as staff become less transactional and more focused on offering high levels of customer service.

Retailers can also develop applications that deploy the types of technologies that will be increasingly aimed at seniors – from robotic and voice-activated helpers in the home to VR headsets that will become more commonplace and be used to stay connected to family and friends.

  • Sports stores allocate more floor space to experience and less for product
  • In-store AR in the beauty sector from L’Oreal, Mac and Sephora
  • Technologies that show the benefit of in-store automation

There will be a shift in a store’s function from a “distributor of products” to a “distributor of experience”, according to US retail futurologist Doug Stephens.

Instigating these in-store experiences are high-definition display screens alongside the emerging applications of VR, AR, AI-enabled voice and facial-recognition technology.

Leading retailers and brands are trialling these types of technologies in stores to see which applications will maximise customer engagement and brand loyalty.

Smarter ways to try before you buy

Few retailers and brands currently have the in-house expertise to create amazing tech-driven experiences, so L’Oreal decided to acquire this knowledge by buying beauty technology firm ModiFace this year for an undisclosed amount.

he buyout will allow the owner of Kiehl’s, Maybelline and Lancôme to develop AI- and AR-enabled apps and in-store services.

Customers interact with a digital display to virtually try on make-up, visualise hair colours or have skin issues diagnosed.

MAC Cosmetics has the technology to hint at what L’Oreal could do next. In 2017, MAC Cosmetics partnered with ModiFace to create a mirror in store that uses facial tracking and 3D video makeup-rendering technology to enable shoppers to try on a curated set of MAC shades.

Sephora is another beauty giant that is experimenting with AR using an interplay of mobile and in-store interaction.

The Sephora to Go app allows brands such as Laura Mercier to launch digital storytelling. In this case, customers can hover their smartphones over images of the brand founders displayed in store or in shop windows, which gives access to multimedia content on that brand – including products that can be added to their basket within the app.

The retailer is also offering a personalised makeup service with Pocket Contour Class, where customers upload a selfie and receive product recommendations.

Innovators of in-store technology have been using AR magic mirrors for a few years now in fitting rooms to provide a service that is more customised, as well as to reduce queues.

The mirrors typically work by using built-in cameras to track the customer’s body and reflect it on a digital display. The choice of clothes is then superimposed onto the customer’s reflection using AR.

Topshop and Timberland have both trialled magic mirrors using Kinect motion sensing technology.

Topshop tested it in its Moscow store to show customers how they could try on many different styles virtually, without actually getting undressed.

Timberland tested the power of a large interactive display in a shop window to drive footfall in a trial in Poland.

By positioning a magic mirror at the front of the store, shoppers became part of the retail theatre, showcasing the retailer’s product range to passersby as they tried on different styles ‘virtually’.

Uniqlo’s magic mirror, which featured in its Tokyo and San Francisco stores, is another example of customers virtually trying on a garment in different colours without having to take a large number of items into a changing room.

The end to end digitalised experience

Sports retailers are a sector to watch when it comes to experimenting with using in-store technology. Nike’s flagship in New York City is a five-story, 55,000 sq ft space with a strong emphasis on experience.

With minimal space allocated to actual products, the store instead offers a range of services, from personal shopping with a Nike expert to testing basketball shoes in a trial zone.

In an area that measures nearly half a basketball court, shoppers can try out products by shooting hoops and follow custom exercise drills guided by certified athletes in store.

As part of the retail theatre, high-definition digital displays play what can be seen and heard on basketball courts to ensure the experience becomes more immersive.

The retailer is due to open a second flagship store in New York City within the next year which, alongside a similar suite of services, will feature the Nike Live concept that was launched in Los Angeles this year.

The idea behind Nike Live is to create a small format retail space that reflects the local area’s favourite products. Nike uses data from local online purchases to guide which products appear in store.

Other sports retailers are also investing in experiential retail. Foot Locker opened a new flagship on London’s Oxford Street in July 2018 designed to mix premium products with novelty and community-led interactions.

Set over two storeys near Marble Arch, the store deploys a mix of large LED digital displays featuring slogans such as ‘London – We’ve Got You Covered’ and a culture wall featuring local photography.

For a three-month period, the store will also feature an Xbox Experience Zone where customers can test their skills or create a personalised controller through the Xbox design lab.

Digital displays

Samsung’s network of flagship stores is an example of how in-store tech helps a retail space shift to selling experience over product.

Transferring a concept developed in New York City with Samsung 837, the tech company opened a two-storey flagship on Avenue des Champs-Elysées in Paris this summer.

The Samsung Paris store reflects the brand’s product strengths – from ultra-definition digital display screens for messaging, content and interaction to VR headsets and smart-home devices.

The soft-sell environment is focused on entertainment and information.

The store is split into different zones. A customer visit could involve wearing a VR headset to try out 4D alpine skiing, finding out how Samsung’s connected devices work in a smart home or going to the Customer Service Zone, which offers one-hour phone repairs.

Samsung plans to open a London counterpart store following an agreement in June 2018 to lease a 20,000 sq ft showcase space at Coal Drops Yard, King’s Cross.

Automated stores

Retail is a sector that will be turned on its head by automation and robotics, but what does automation offer the customer in terms of in-store experience?

Amazon is banking on the convenience of checkout-less shopping in its Amazon Go store concept. The world’s largest retailer by market capitalisation has again shown its knack for customer-centric services.

The proprietary technology behind the cashier-less shop is called Just Walk Out, which works by a customer scanning a QR code at the entrance to the store, which is read by the Amazon Go app.

As the customer adds items to their basket, a network of cameras in store detects each item and determines what it is based on AI’s deep learning ability to draw conclusions from large data sets.

Amazon executives have indicated that its inaugural Amazon Go store in Seattle is serving repeat shoppers, and the giant plans to open a further Seattle site and two other Amazon Go stores in Chicago and San Francisco.

Interestingly, sales data analysts have revealed that the Seattle store’s most popular item is chicken sandwiches, which Amazon has deduced is due to office workers in the local area buying their lunch.

The retailer now knows to stock more of that product to meet local demand, demonstrating the value of real-time customer data.

Grocery retailers in the UK are trialling scan, pay and go smartphone apps which allow customers to pay while shopping in the aisles.

While Tesco and Co-op are experimenting internally with the technology, Sainsbury’s has launched a pilot for checkout-free shopping in its convenience store in Clapham, London.

Next tech

Tech start-up DeepMagic is working on its own mixture of robotics and is implementing AI to use in unattended physical stores.

The Qick Kiosk is billed as an unmanned robotic pop-up store for use in apartment buildings, airports or hotel lobbies, the company says.

In a similar surveillance method to Amazon, AI is harnessed to recognise stock on shelves and tracks a customer’s moves with cameras. If the customer leaves the store with a product, then their credit card is automatically billed.

Walmart is also utilising in-store automation by trialling 50 shelf-scanning robots to track inventory as well as replenish stock.

Moby Mart is using technology that could transform the business model of a bricks-and-mortar retailer by launching mobile stores on wheels that are all unmanned.

The brainchild of Swedish start-up Wheelys and China’s Hefei University of Technology, the so-called “robogrocery” offers fresh products for immediate consumption such as milk or ready-prepared lunches.

Customers using the Moby Mart vehicle scan items using their smartphone, which is connected to a bank account. The creator’s vision for Moby Mart is to bring “world-class retail to a million tiny villages around the world”.

  • The retail sector will create new job functions to meet demand for new skillsets
  • Staff move from transactional expertise to product knowledge and one-to-one service
  • Retailers should upskill teams to understand value and the application of new technology

In-store teams will be central to the digital transformation efforts of retailers as they reshape their shops to become more efficient and focused on customer experience.

This isn’t a far-flung future trend – it is already evidenced on our high streets through consumer technology and sports brands offering a service-oriented approach and non-transactional environment where the staff aren’t stuck behind a till point.

In fact, it might not just be the till points that are removed in future stores, but the majority of products too, putting a greater focus on service and experience.

Look no further than Nordstrom Local, an offshoot of the Seattle-based department store group. The second of its two LA-based stores opened this year, and with the exception of a limited amount of fashion stock – none of which can be taken away – the space is focused on value-added services such as shoe repairs, a dry cleaner and a café.

Essentially, it is a customer experience-led click-and-collect destination where online orders can be picked up.

Meanwhile, Decathlon has released a video of its future customer journey in 2026 and provides insight into how the sports retailer views the role of the store and staff within it.

Vision 2026 is a corporate roadmap for the company, which involves adopting advanced technologies to make the in-store experience a seamless extension of online transactions.

Decathlon envisages that customers would research and pay online for products such as bicycles.

However, when a customer goes inside a store to collect their items, sales assistants are still central to delivering quality customer service, which will be reassuring to consumers who fear a human connection, along with sales assistants who are valued, will be lost.

Although Gen Z would prefer not to encounter store staff, other consumer segments consider attentive, informative customer service just as integral as tech-related in-store experiences.

Experiential stores are looking for staff who will bring energy and personality.

Samsung noted that associates at its New York City 837 store were hired not for their ability to push products, but to get shoppers excited about the Samsung experience.

At the high street level, the role of sales assistants will be less transactional. In-store teams will need to shift their focus to help customers either navigate the purchase process or to explore the options available to customise products.

This could be done by VR, AR, or through a physical 3D printed model.

As a result, store staff will need to be well trained to get the most out of the in-store technology available and via a customer’s personal mobile technology.

This is an area where technology will play an important role in the future, in the form of remote learning and development.

Despite many headlines to the contrary, the store isn’t going anywhere, it is simply evolving.

Store teams are already evolving in tandem, and the future of the store will be about recruiting the right individuals and supporting them with the best training to succeed.

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