EiraCube is a start-up promising to address the global retail industry challenges with a mixture of smarts in both retail and technology. It may well have the answer to some of the major trends in retail today.
WHAT ARE THE CHALLENGES AND TRENDS IN RETAIL?
- Balancing online and offline in retail
Which is best to reach your customer — online or in a retail store? Some will say that the traditional retail route is obviously better, as it currently represents 90%+ of all retail spend. Others will point to the exponential growth of e-commerce, with $1,3 trillion in 2014 predicted to reach over $4 trillion in 2020. However, in 2017, e-commerce represents just 10% of global retail sales: $2,6 trillion to $26.8 trillion. So, does it really matter?
It is probably the trends, rather than the numbers, that give the answers:
· Online shopping and e-Commerce worldwide is predicted to move from 5,9% of total retail sales in 2014, to about 10% in 2017 and 15,5% in 2021. That is eating into the traditional retail market.
· The figures are much higher for the Asia Pacific region, where the e-Commerce share was over 12% already by 2016, compared to about 8% for North America and Western Europe.
· The growth of mobile devices is driving online sales — 57% of global retail visits in 2017 were via smartphone.
Significantly, where traditional retailers have added an e-commerce presence, their online sales have shown 4 to 5 times the growth of their traditional operations. This has led to a rethink on the role of bricks and mortar, with retailers reducing both the number and size of their stores.
Retail locations are changing their purpose. According to Deloitte,
“Retail locations play an increasingly important part in omni-channel strategies, serving as cross-channel fulfillment centers, pickup stations for online orders, and a convenient place for returns and exchanges. They also serve as a product showroom as well as a brand-building and customer acquisition channel.”
The knock-on implication for property companies is that they face vacancies and reduced foot traffic to their centers.
2. Meeting changing customer demands
Customer trends add another dimension to the changing landscape. According to a Deloitte report titled, “Global Powers of Retailing 2017: The art and science of customers”,
“We are living in an era where customers are in the driver’s seat more than ever before and they are craving authenticity, newness, convenience, and creativity. We are living in the customer-driven economy.”
According to this report, customers are looking for “experiences”, not just goods. What they buy should be “bespoke” rather than mass-produced, and products should reflect their own personal brands or the brands of those they follow on social media. In addition, customers have an “on demand” mind-set — they want exactly what they want, when they want it.
This has led to the growth of non-traditional retailers and alternative business models, and to traditional retailers trying to reinvent themselves. A good example is the partnership of Sprouts Farmers Market partnering with Amazon, and the Amazon “Prime Delivery” service, to deliver fresh produce in the Dallas area. In effect, the grocer has become a vendor for the technology company.
Traditional retail shops just don’t meet many of the customer demands. In addition, most of them lack the rich data and digital analytics about their customers that have become the hallmark of online retail. Companies like Amazon have demonstrated that “data is king” — and this has given rise to a whole new industry of companies whose only role is data collection.
Interestingly, many online retailers don’t meet the demands either! The main gap is their inability to provide customers with a “touch and feel” experience.
3. Online merchants lack “touch and feel” experience
There are two sides to the customer requirement for an “experience”. One has a “wow” connotation. Customers want something special and memorable. The second is the more mundane preference to touch and try gadgets, fit new garments or shoes, and explore new devices’ functionalities. This second requirement has become one of the biggest barriers to the e-commerce economy, and applies especially to unique products that people have never seen before, as opposed to books or pet food.
The response from major online merchants has been counter-intuitive! They are opening bricks and mortar shops! So, for example, online mattress-magnate Casper used to say that “buying a mattress in a mattress store ranks as one of the worst consumer experiences still in existence”. Now, they are opening 15 pop-up showrooms, and the message is that this will allow them to “seamlessly traverse online and offline, which is paramount to an exceptional customer journey”.
Amazon has also moved into physical retail, albeit that this is a very small part of their enterprise. They have bookstores that double as gadget emporium, especially for their Kindle product, college bookstores that don’t sell books (they are pick-up points for online orders), and convenience stores where you check in with your Amazon registration, browse through the stock, talk to other readers, and walk out with whatever you want. There are no staff members, cashiers or pay points. Sensors (and robots) know what you have taken and debit your account.
While this is a great solution for those who can afford to set it up, it is not really available to smaller online merchants, entrepreneurs and start-ups.
4. Pop-ups as a solution
Smaller players, providers of innovative products and ideas, and start-ups are finding it increasingly difficult to be noticed online. And where they are noticed, it is difficult to translate contact into sales, or to provide the touch and feel experience that customers want.
Getting innovative products listed into existing retail stores can be extremely time consuming and expensive for online merchants. Even if they achieve this, their product is likely to be in the unmemorable “white space” of the store. They are also forced into individual negotiations with stores, and this limits their capacity for the “global” promise of the internet.
Pop-ups have emerged as a partial answer to this problem. A pop-up is a short-term, temporary retail event, that is “here today, gone tomorrow”. It is usually set up to be an exciting immersive experience for customers. Somebody described it like this:
“Advertising and marketing preach at people. Pop-ups involve people in an experience. It’s like walking into a logo, it’s a very immersive experience.”
It can be used to test new products, engage with customers offline, create a sense of urgency about products only available for a short time, educate customers, create brand awareness, or generate income around a holiday or special event. It can move from place to place to meet customers where they are.
Even this is only a partial solution, given the requirements to find and negotiate space, the logistics and staffing. It is usually also a “local” solution, missing global potential.
5. The emergence of exponential technologies
So-called “exponential technologies” like artificial intelligence, robotics, sensors and virtual reality, are no longer futuristic concepts. They are being applied by retailers wanting to enhance interactions with customers and change the way work gets done. So, for example, Lowes is using OSHbot retail service robots in its hardware stores, to greet customers, scan for product availability and help them navigate through the store. eBay has created the world’s first virtual reality department store, together with the Australian retailer Myer. Consumers can explore over 12,500 products from Myer, access real-time price and product information, and select items for their basket.
Walmart has gone way beyond online shopping, to patent a “store built right in your home”. This is a real “storeroom” attached to your house. Part of it may be refrigerated, and it is stocked and restocked by a retail establishment (probably making use of a drone to do it). Stocking is based on your usage patterns, even if you have bought elsewhere. You can step in to select which items you want, from your storage space or from the “unsold product display”, much as you might do in a typical store. Sensors will detect which items have been removed and charge for them. You can also return unused items onto the shelves.
This system allows for several approaches. The consumer can provide information about what is needed. Or the system can note all purchases from whatever source, and use AI to analyze and predict future purchases, and then pair this with smart home/IoT technologies. This type of technology would obviously also have a use case in apartment buildings, office blocks and the like.
Again, this is wonderful use of technology, but probably available only to big players.
EIRACUBE AS A SOLUTION FOR SMALL ONLINE MERCHANTS, LANDLORDS AND CONSUMERS
EiraCube has tapped into the trends in quite an uncanny way. It has provided solutions for all of the following:
· An offline solution for online merchants
· An immersive customer “experience”
· A touch and feel opportunity for innovative or new products
· A pop-up solution for any-sized business — even if you can afford only one shelf per month
· A logistics solution, as it negotiates the space with shopping complex landlords
· A technology solution to provide multiple data points about customers and product feedback
· A tenancy and foot-traffic solution for shopping center owners
· A global solution, allowing for simultaneous launch of products across international sites.
How does the EiraCube work?
EiraCube is the world’s first robo-powered pop-up-retail chain. It provides a glass “Cube” of retail space within a high-end shopping complex, where small online merchants or start-ups can display, sell and get feedback on their products.
In essence, it is a vending machine, displaying a variety of products at a very affordable price for merchants ($30 — $60 per month per shelf). Customers can order products online and pick them up at the Cube. Alternatively, they can buy them right there, using fiat or cryptocurrencies like Bitcoin.
They can also examine them, test them or try them on, satisfying their need for “touch and feel”.
However, the EiraCube goes far beyond being a vending machine. It provides a triple-win for online merchants, shopping center owners or landlords and consumers.
Wins for online merchants
This solution has been designed by retailers for retailers, and it addresses the “pain-points” of the industry.
Firstly, it dramatically cuts the time needed to get new products to market to get customer feedback. Rather than months of negotiations with retail stores to get shelf space, there is a simple contract with EiraCube, and a quick evaluation of the product by an AI-based algorithm. The algorithm assesses whether a product will generate real hype and draw a lot of consumer attention. It is not based on the merchant’s ability to pay, as this would reduce the Cube to a space for bigger merchants. Products can be displayed within a week, or as soon as shipping agents can deliver them to the Cube site.
Secondly, the display makes the product memorable, with space for branding, interactive ads or consumer experience videos.
Thirdly, innovation and technology are there from the start. Each cube has over 60 sensors to provide data and digital analytics about their customers and their products. For example, this includes 3-D vision-powered cameras capturing age, sex and emotions of visitors to the Cube. A heat map shows the density of the crowd, length of time they stayed, conversion rates to sales. Real-time data allows for the immediate analysis, price adjustments and adaptations to products that are usually only available in online settings.
Fourthly, where a customer has paid for a product online and comes to collect it at the Cube, he can change his mind after examining it, and simply not pick it up. This removes the usual hassle of product returns.
Finally, and perhaps most exciting for a small merchant, the product can be launched simultaneously in all Cubes across multiple sites and countries. And the size of the launch depends on what the merchant can afford.
Wins for landlords
Wins for landlords are primarily the increased foot traffic that the novelty and usefulness of the Cube will bring to the mall. New items every week will encourage repeat traffic. The Cube will also attract customers who buy online but want to try out or touch a product before they order it. For the landlord, higher foot traffic means higher rental charges for shop space in the mall.
Having a Cube will be a differentiator that will attract customers from competing malls, as well as PR and media attention.
Finally, because the Cubes will be placed in the alleys or aisles of malls, landlords will be able to charge for previously unutilized space.
Wins for consumers
The Cube matches all the trends noted about today’s consumers. It provides an “experience”. It is a novelty. This is an entirely digital shop with no people, and no pressure to buy, with state of the art technology they have not seen before. An engaging little robot, (the Eirabot), picks up and carries product around. Products themselves are likely to be new, innovative and quirky — worth a “selfie” to be shared on social media. In selected locations, there will be a dedicated showroom, where a customer can really engage with the product, helped by a robotized shopping assistant.
The Cube also retains its pop-up interest and sense of urgency, as products remain available for a short time only, to be replaced by new ones in two-weekly cycles. As the data-set about a particular location grows, products displayed in that Cube will become more and more targeted to the consumers there.
Wins for EiraCube
EiraCube benefits from three immediate revenue streams: shelf space rental, a percentage of sales for products that reach certain revenue targets (so sharing in the success of products), and advertising on the Cube to increase product visibility.
A fourth revenue stream is derived from its use of blockchain, Ethereum technology and smart contracts to share revenue with those who invest in its tokens called RETT — but this is for a future article.
So, in retail there are challenges, trends and winning strategies — and EiraCube seems to have hit the nail firmly on the head with its Cube concept.
Stay tuned!
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