The next great innovation in retail - the personalized physical store

August 2018

The next great innovation in retail - the personalized physical store

Despite ecommerce being on the rise all over the world, recent innovation has shown that in-store shopping is far from dead. In fact, some of retail’s most interesting experiments are happening in physical locations.

Innovative retailers turn to disruptive technologies such as AI, VR, machine learnings, mobile applications, and use of data analytics to ensure that brick and mortar shopping convey the same feeling of convenience and personalisation that the in-store shopping experience offers. 

Moreover, cloud commerce, mobile applications and location analytics, when fused together, give retailers an unprecedented level of data capture within the retail value chain. For example, AR enables individuals to seamlessly project virtual images/objects through their smart devices onto the physical world. With such capabilities, AR is set to redefine the ways in which consumers intend to interact with brands.

Another example stands in the mobile apps which help customers go through browsing, researching and purchasing a product in an engaging, fun and easy way. Mobile apps have features such as geo-fencing which enable the retailer to create exclusive experiences, combining online and offline activities. Merchants can send location-specific deals, invitations, and promotions via GPS tracking in iOS and Android via this feature. Another useful functionality of mobile apps are push notifications– text-message styled pop-ups that are shown to the app users. Once customers download the retailer’s app, it is installed on the home screen of the user. Every time they are planning to make a purchase, that specific brand will be the first that comes to mind. 

This July, Nike created Nike Live, a new concept store in Los Angeles that operates like “an experimental digital-meets-physical retail pilot”. The first one, Nike by Melrose, leverages digital data from the surrounding user community (8552 Melrose Avenue in West Los Angeles) to tailor in-store omni-channel experiences to their needs. 

The concept is informed and controlled by the NikePlus app. However, the aim of the app is to put the customer in control. Shoppers need to access the store via NikePlus, which in turn generates new data, which is then fed back into Nike by Melrose. For example, users can reserve an item they like on NikePlus, and pick it up in store at a smart locker, or by using Swoosh Text, collect at the curb.

Moreover, they can also scan any code on any product in store to request a specific size, or check additional colours or real-time stock availability. NikePlus members are given an extra incentive to come back regularly; by scanning a code on their app at the NikePlus Unlock Box (vending machine) every two weeks, they receive an instant product or rewards.

The store layout is also experimental: Nike’s latest products, carefully selected from what the company believes could be popular, sit at the entrance, while at the rear are the products that customers in this section of West Hollywood have already named their favourites. Nike says the product assortment in the store will even rotate every two weeks.

Another innovation that has emerged over the last month was the FashionAI concept. In July 2018, Alibaba together with Guess, the American clothing brand and retailer, debuted the FashionAI concept store in Hong Kong. The temporary store only offered clothing from US fashion brand Guess and was open for three days, July 5th-7th.

The store has smart mirrors that display product information about the clothes shoppers are touching or picking up cued by RFID technology in the clothing racks. These devices make personalized mix-and-match suggestions and show where the items are in the store. Moreover, the smart mirrors enable shoppers to add items to a virtual shopping cart and store staff brings those items to a fitting room. 

The concept is integrated with Alibaba’s Taobao ecommerce platform, and upon entering, shoppers check in with a mobile Taobao ID code. Moreover, customers can choose a face scan for a more personalized experience, and real-time analytics allow staff to move faster, and track inventory more accurately. 

Guess plans to use FashionAI technology in its stores in the near future, focusing first on mainland China and Hong Kong.

Overall, while traditional retail has definitely been rocked by online, sales continue to take place in brick and mortar stores, and as traditional commerce is being disrupted by new technologies, the main drivers for all these changes are the ever-shifting customer behaviour and boosting customer experience.