5 biggest retail innovations in the last 5 years
The 5 most important retail innovation in the last five years. What comes to mind?
To be honest, this is quite a challenging post to make because there are so many advances in the last five years, but many of which have actually started long before and only recently take shape. In addition, you have the elephant in the room Amazon taking credit single-handedly for many of the top retail innovations. However, when you look globally it is more competitive with India and China owning their respective global shares of the eRetail market dominated by Flipkart and Alibaba respectively. What’s interesting is when you scale it down into the retail innovation happening at the mom and pop or small chain retail level. There are very interesting possibilities here with respect to payments, check out and inventory. Much of this is made possible by scalable solutions in retail innovation such as Internet of Things (IoT) devices, artificial intelligence, and advertising mediums which can more easily relay information about the customer to the website or check out for a more accurate picture of this customer. Throughout the last 5 years, we have seen a proliferation of in-home devices like the Amazon Alexa or Google Home which make it easy to ask for a recipe, order items, or simply schedule calendar appointments. With all this, however, we must take into account the advances in logistics, point-of-sale and in-store promotions which all have advanced even in the last 5 years.
One — Conversation Commerce Retail Innovation
It may not seem like it’s just barely taken hold, but automated chatbots being enabled within E-retailers websites have really taken hold in the race for retail innovation. In large part, the conversational commerce bot is actually aided via natural language processing, machine learning, and artificial intelligence to help refine how it learns what the user wants. Before long these chatbots might be able to figure out your next Saturday night outfit based on past purchases, searches, images, social profiles and more. Eventually, the “stylebot” might actually be able to pull in the items from your circle so that you have your own unique but fitting style given your friend circle. While this technology has been around for a while, only in the past 2–3 years has it made the kind of impact it is making today. Soon, you will see the chatbot being able to understand style preferences from a person to then provide recommendations and then actually give you the products available in a package to purchase. You can be sure the chat bots have not necessarily gotten here yet, but they are coming.
In an unconventional use of this conversational commerce I was on the Geico app the other day looking at my policy and when I went to the help section a whole “Siri” type bot popped up and asked that I speak into it. It was not super necessary to have, yet still, I did use it just to see how good it was. As it turns out, it did pull up the right results and I was able to use the app, but it was such an unexpected thing that I was actually a bit excited about it. Whether that’s any sort of tell or not as to the success here I don’t know, but I am quite positive we’ll see more chat, video or texting capabilities with some sort of automated functionality behind it.
Two — Magic Mirrors
Can a mirror really deliver the kind of retail innovation you expect? Well, I guess that question is hard to answer since this technology has really not even made it out of the box, but it does have a promising future. The idea behind a smart mirror is that at some point it will actually be able to scan your body to present the right clothes at the right time, among other things. These mirrors also offer the potential for storing the items you’ve tried on within your own web account or mobile app. As you can imagine, this connection from offline to online and vis-a-vis is powerful to cultivate strong customer loyalty and increase purchase frequency, two key performance indicators for any retailer.
One thing you should be aware of with the smart mirror concept is there might actually be quite a bit of overlay with augmented and virtual reality technologies which are making a big push into the retail scene. Before investing tons of money into these, you may want to weigh out the benefits and costs for your given business.
Three — In-store technology and beacons
This one deserves a few different sections to explain whats going on in the stores. This is due in part because of the multitude of sensors now available for tracking many different things such as checkout line length, security, check out, and promotions. This category is perhaps the one which has the most growth potential as more and more stores turn into data collection points and less like retail stores since the value is in the data now. A classic example of this, which we wrote about in another piece is the story of a Target shopper who surprised her father when she started getting maternity coupons in the mail. These coupons were a result of in-store sensors which could detect which products mothers were shopping for to determine which stage of the birth cycle they were in, to then automatically join this shopper into a coupon program specifically design for the mothers based on their birthing stage. Pretty…weird? yeah, the examples of this could probably go further, but it is not at all beyond the capability out there, clearly. So, here are a few of the various in-store technology making things happen:
- Sensing user behavior — much like the example above, using a combination of motion detection, computer vision and close proximity radar/sonar, retailers can tell where shoppers spend the most time, when they are in line too long, and what people want to buy. All these sensors plug into a mountain of data, which retailers use data filters to figure out the trends.
- Beacons — Ok, beacons may have even been around for longer than 5 years, but they have taken an awful long time to reach any sort of mass population in their reach. There is estimated to be around 14,500,000 beacons in deployment as of Q1 2017. These little proximity sensors can do everything from shooting out promotions to guiding customers down the aisle.
- Sensors for footfall — In the same way the Census Bureau uses sensors to count traffic, retailers are using sensors to estimate their footfall outside the stores. They will do this for one of two reasons A) to figure out how many people they might get at a NEW potential location, or B) to figure out how much traffic they are missing who are walking by and not buying.
Four — Artificial Intelligence and Data Mining
There’s a good chance these could be their own categories respectively but I will put them together here. It’s important to remember the artificial intelligence craze (AI) has been around long before 2012 (five years ago at the time of this writing) but it was never at the capacity to become useful. AI has now made a big splash in all the major technology companies. The reason is that now, finally, the computing power is there to make sense of massive data sets so the technology can actually make sense of it. There are so many uses of this within our social media feeds, our phones data, our analytical data (even in Google Analytics with the “insights” tab) and beyond. In the retail sense, we are using our own artificial intelligence to deliver a more personalized customer experience which makes sense of all customer data points to deliver the right product at the right time. Going beyond this, the same Epic Commerce system can send out event based messages based entirely on the event’s taken by the customer either on the page or off page such as on their social profiles or search history. The other token of this, Data Mining, is more or less used to provide the AI algorithm with the information necessary to make decisions on behalf of. So, the data mining algorithm takes all the incoming input (purchase data, search history, social profiles, email history, text, etc) and makes it available for the AI to come in and make sense plus pull out actionable insights which can then be transferred to the user experience in the form of recommendations, messages or in-store suggestions.
For a whole lot more on the topic definitely check out the 10 ways artificial intelligence affects retail.
Five — Logistics and Sorting
Perhaps this is a topic that is beyond the scope of most front end retail marketers and or CXO types, but it is important we address this. Much of the cost savings that customers are experiencing with Amazon have actually come from the remarkable breakthroughs in the technology being used to unpack, place, pick, pack, and sort the products coming in. For most retailers, this process has remained in large part the same for DECADES. It is perhaps this reason equally as much as the changing consumer preferences and buying habits that retailers have struggled. If your cost is simply more to transport one item to the consumer than the competitors for the same item, it makes it quite hard to keep up regardless of the other factors going on. Here are a few things on our radar:
- 3D printing — imagine you just don’t need to buy the product but you could assemble when you needed product and ship it out right then and there instead of holding inventory? This would be quite an advantage. Though we are not there yet, and this could be its own post by itself, it makes sense that soon enough items which are plastic in nature could be printed off within a shorter time frame, for less money, than the injection molds we currently use.
- Robotic sorting — this one is much more popular now, especially after Amazon’s purchase of Kiva systems back in 2012. These little robots are unloading trucks, sorting them into other trucks, or simply parking the goods in their programmed area. This reduces human labor and costs while making the unpacking process far more efficient.
- Bull whip reductions — with advances in machine learning many retailers are able to much more accurately predict the inventory they will need on the stock. The bullwhip effect (when supply outpaces demand or vice-versa in the supply chain) can be reduced by anticipating the demand based on factors and trends happening in real time with sources like purchases, google trends, and proprietary buyer data.
There you have it, some of the top sources of retail innovation making it’s way, slowly, into the struggling sector. I think one of the most important factors, is to never stop innovating. Retailers who say “our business has been around for 40 years and it just works so we don’t need to change” are already dead. Just take a look at Benny’s, the family run chain for over 60 years, which just this week announced they will close all 31 locations by end of year. Retail innovation is a continuous process of adapting to changing consumer preferences using the right technology and product mix to match this. For this reason, we help our 120+ clients to implement and adapt their unique businesses to take the next step in the right direction toward retail innovation. This step may be starting an email capture/email automation system, or it could mean implementing Epic Commerce and really getting their commerce program rolling by introducing recommendations, event-based messages and a customized commerce experience for each customer. If this is you, and you want to increase your business with the right retail innovation, go ahead and reach out to a email@example.com or check out Orkiv.com for a few resources and good stuff to get your started.
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