Global Retail Executive Council

The iPad in Retail: All Bark and No Bite?

A few weeks ago, I explained some ways in which the iPad could be used to revolutionize the retail industry, specifically in the way it can be used to boost sales associates' knowledge and overall usefulness. However, as we've seen in recent weeks with the iPhone 4, Apple is not infallible, and its products do contain their faults, which could prevent it from becoming a player in the retail business space. So this post will be somewhere between a reality check for Apple fanboys (yes, we know a few work in retail) and the right side of a SWOT chart.

First of all, a major problem is simply a security matter: Having a $700 piece of technology laying around your store with access to much of your business intelligence isn't a very safe system. After all, it's much easier to slip an iPad in your shirt than trying to, for example, fit a kiosk in your purse. Plus, as a hot consumer device (with waitlists to even get one), they're more likely to walk out the door than, say, an IBM 4690 would be.

But beyond the logistics of keeping track of loose iPads, the devices still have many problems that brings their usefulness in retail into question. A major barrier is Apple's app store, which doesn't allow third-party applications. Retailers could "jailbreak" the device (or some less criminally named process since it's now an "enterprise activity") to allow them to deploy in-house developed "apps," but this would likely void the warranty and render the device bricked with the slightest code errors.

There are also a slew of hardware problems that make the iPad hard to use.

• reports of WiFi connectivity issues
• no multitasking, which means 100% application integration on the back end 
• no camera, which means it can't be used to scan barcodes (unless you want to buy an external camera or barcode scanner, which pretty much defeats the purpose of such a sleek and sexy device). This is a huge disadvantage for the iPad, since many customers will be walking into stores with barcode-scanning abilities in their own pockets via smartphone.

Similarly, the iPad very publicly and explicitly does not support Flash. Many retailers such as Nike, Converse, Arctic Cat, and IKEA use Flash elements on their websites, which would make accessing those sites impossible via the iPad. The iPad also doesn't support GPS, and with geolocation becoming a hot new thing in retail, not having GPS ability will greatly impair the iPad's retail impact. For example, it makes it much harder for the sales associate to help a customer find a nearby location where they can find the item they're looking for if the store they're currently in doesn't have it in stock.

Another problem with the iPad is that you need adaptors like CRAZY to hook anything up to the tablet. You even need an adaptor for a USB plug! This would make it very inconvenient to attach the iPad to any of your in-store devices. One last problem is simply a matter of typing ability: The touch-screen keyboard makes it rather inconvenient to type with one hand while holding the iPad with your other hand, which would be the typical position sales associates would be in when using the tablet to help customers.

With all these downfalls, it seems unlikely that the iPad will catch on as a major tool for retailers to employ. Like so many "next great things" at the consumer level, the enterprise implications are just a little too challenging to make adoption easy.

However, this isn't to suggest that tablets aren't useful in retail; in fact, their potential is enormous. Cisco's recently released Cius tablet is specifically aimed at businesses, and it explicitly fixes many of the aforementioned problems with the iPad: It is compatible with a company's current Cisco business applications, it has a camera and can be integrated with existing Cisco telephone and conferencing products, it offers both USB and bluetooth connectivity, and it even will support 4G. Plus, to Steve Job's chagrin, it runs on the Android platform which offers far greater adaptability and configuration options.

It remains to be seen who what tablet maker will come out on top in the retail space, but with Cisco specifically targeting businesses rather than consumers, the battle has already begun.

The iPad in Retail: A Sales Associate's New BFF

Since the launch of the iPad by Apple, the tech industry has become even more tablet-crazed than usual, and by the end of the year we should expect to see a whole variety of tablet computers flying off the shelves during the Christmas season. But besides (hopefully) propping up holiday sales numbers, what can these thin, ultra-portable computers do for the retail industry?

A lot of attention has been focused on the utility of the iPad for point-of-sale systems. Although no retailer has yet completed a chain-wide iPad-to-POS system integration, retailers and restaurants have begun experimenting with the iPad and attempting to integrate it into their existing systems.

Unfortunately for retailers, the lack of multitasking is a handicap. While apps like Square allow the iPad to do the transactional elements of point-of-sale, most chain retailers have either custom functionality in their point-of-sale system (such as processing gift cards) or access multiple applications using their register hardware (such as capturing email for CRM). The "app" model works fine for smaller retailers, such as this example found at a coffee shop in San Francisco, but deploying the iPad into chain retail would require at best a custom app, and most likely a whole new array of integration to make the device a true extension of the store systems.

The majority of iPad-as-POS examples currently come from the restaurant industry. For example, the Rydges Hotel in Sydney, Australia, has implemented ten iPads in their restaurant so customers can place their orders directly to the kitchen, as well as allowing for easier menu changes from the chef. The restaurant iPad POS system has begun to see some competition already, such as the competing systems from Lecere and 4ASoft. While both those videos show systems that appear to be clunky, over-complicated, and not very time-efficient, it is a tantalizing glimpse at what the restaurant of the future could possibly be like.

However, where the iPad really has a chance to shine in retail is in adding to the abilities of store associates. With the increasing adoption of smartphones, more and more customers are entering stores with more information available at a moment's notice about the items sold in that store than the associates actually have. If you walk into Best Buy and ask a random associate how much cheaper the DVD you're looking at is if you buy it online, chances are he or she will have absolutely no idea. However, the customer can easily whip out his or her cell phone and find the answer in a matter of seconds. The iPad, however, can level the playing field, and bring retailers' e-commerce strategies into their stores in a more controlled manner.

Not only will sales floor associates have as much information as the customers (or even more, since presumably their iPads would be able to virtually check the store's stock levels and other metrics), but the possibilities are almost endless as to how the iPad could revolutionize the shopping experience. A sales associate could easily find computer-generated recommendations for the customers in real-time, as well as doing nifty things like showing a shopper what the shirt they're currently holding will look like in a different color, or even offering demonstration videos of tools or toys in use! Or when shopping at the Home Depot, a sales associate could help you virtually break down your DIY project so you don't forget a piece of pipe or buy the wrong size screws. As you can see, the possibilities are legion.

While less portable than mobile phones, the iPad is a radical improvement over existing fixed-point registers and kiosks in allowing information to be shared with the customer to fully bring the online experience onto the sales floor. This will allow sales associates to be more knowledgeable, more helpful, and much more efficient salespeople, to keep customers engaged in the in-store experience and feeling as if they achieved truly the best possible deal and service from their shopping trip.

It's not hard to see why retailers should be excited about the iPad and other tablet devices. Whether or not these computers can successfully be worked into POS or other IT systems in-store, it is absolutely in a retailer's best interest to implement the iPad or a similar device into their customer experience strategies. With sales associates armed with these powerful, efficient tools, your customers will be guaranteed a shopping experience like no other, one which will keep them coming back for more.

Lessons in Mobile Retail Fail: Part One - The FMI 2010 "App"

The sign made it sound deceptively easy.

At the recent Food Marketing Institute 2010 conference and expo in Las Vegas, prominent signage on the show floor promised those of us with smartphones the ability to navigate the conference schedule and expo show floor more easily. "Works on any smartphone!!!" and pictures not just of the ubiquitous iPhone, but also an Android and Blackberry. Sounds good to me... I'd love to replace flipping through the bulky expo guide searching for exhibitors with a cool next-generation smartphone app.

Could it truly be that a conference ostensibly about food retailing had embraced one of the most important principles of mobile retail: don't alienate 80% of your customers?

You see, for all it's vaunted prowess (and ease of "app" distribution), the Apple iPhone isn't the only game in town. Though statistics vary, and depending on which geography, demographic segment, and cycle of the moon, the market share ebbs and flows... it is a relatively safe bet to say that the major smartphone players all enjoy some rough parity in market share:

• Apple iPhone
• Google Android
• RIM Blackberry
• Microsoft Windows Mobile
• Nokia Symbian

If we imagine each of these roughly equal, the average retailer would alienate 80% of their shoppers by embracing a single handset platform. So, needless to say, I was excited by the prospect that my new HTC Hero phone (sorry Apple, I just sunsetted my iPhone... so long AT&T, hello Sprint...) would be my guide to a show I was attending for the first time, and I eagerly followed the instructions on the sign:

"Download at supermarketnews.com or your App store (FMI 2010)"

So, you can imagine my disappointment when a search of the Android Market for "FMI 2010" yielded... nothing. Not a jot, not a tittle. Nothing. Apparently "works on any smartphone" and "your App store" have different meanings to some people.

This is serious fail, not because FMI failed to provide an app that ran on my Android phone, but because they literally promised it to me and failed to deliver on the promise. Had the signage promised only an iPhone app, I would have accepted that leaving my uncharged iPhone in my suitcase was MY failing, and simply considered bringing it the next day. But, to promise a consumer that their phone will, in fact, work with your application, then leave them high and dry does more than keep the consumer from the information. It causes frustration that borders on rage, and more often than not, leads to disproportionate consequences. For me, it's writing this blog. If you're a retail brand that does this, prepare for Facebook statuses and constant retweets griping about how you don't care about your shoppers that use smartphone "X."

The moral of the story: make sure shoppers know what to expect from your brand when it comes to a mobile experience. Don't mislead them and make them fail on their own if you aren't supporting the technology they've already bought.

MILLENNIAL MUSINGS: Social Causes And The Retail Effect

On a recent trip to San Francisco, I accompanied a few of my friends as they spent the day shopping. We stopped in a shoe store because the girls wanted to look at the different types of shoes offered by TOMS. I had heard of TOMS before, but had never really paid much attention. However, what I saw in the store definitely caught my eye: As I sat there waiting, I saw girl after girl after girl grab pairs of TOMS from the shelves and try them on, and the store associates were almost constantly running back to see what was in stock. (Clearly they could have used the prototype shoe shopping application debuted by the GREC Mobile Retail Experience at CTIA last October...)And, invariably, the answer was always, "Sorry, we're out of that size." Unfortunately, the store could not keep up with the demand, and my friends were forced to resort to the internet to find the shoes they desired.

So what's the big deal about these shoes? Well, TOMS was founded in 2006 by Blake Mycoskie, with a simple idea: For every pair of shoes you purchase, another pair will be donated to a child in need somewhere in the world. To date, TOMS reports they have donated over 600,000 pairs of shoes (which means they have also sold over 600,000 pairs). And the company is only getting hotter. They've partnered with some huge retailers, such as Ralph Lauren, which offers specially branded Polo Rugby TOMS, or Element Skateboards, which offers limited edition TOMS + Element shoes as well as matching skateboards.

But why are these shoes so successful, particularly with Millennials? Quite simply, they offer the ability to not only show off your unique style (TOMS come in a wide variety of patterns and colors), but most importantly they allow the shopper to feel good about her purchase and the effect it has on the world. According to the 2006 Cone Millennial Cause Study, a staggering 83% of Millennials say they will trust a company more if it is socially or environmentally responsible, and 89% are "likely or very likely" to switch from one brand to another if the second brand is associated with a good cause! Keep in mind, Millennials represent $350 billion in retail buying power in the US... that's more than baby boomers! Without a doubt, retailers should realize that it is of the utmost importance to tie their brands to social causes, unless they're prepared to watch their sales go to the competition.

For retailers that do make the changes, the results are almost always positive. Gap, Inc. is one of the best recent examples. Suffering from reports of human-rights abuse related to their use of sweatshops, Gap finally stopped using sweatshops in 2004, and in 2006 partnered with Product Red, a brand focused on raising money for the Global Fund to Fight AIDS, Tuberculosis and Malaria. Gap has remained committed to many additional causes; Recently, they offered a 30% discount on a new pair of jeans to anyone who brought in an old pair. With the 270,000 pairs of old jeans Gap received, they plan on creating insulation for homes in "underserved communities." For practices such as this, Gap has been the top-rated retailer in The Corporate Responsibility Magazine's list of the 100 Best Corporate Citizens for the past two years in a row. And Gap's profit margins are also benefitting from this renewed brand image: In March 2010, sales were 12% higher than sales in March 2009, and all of Gap's brands (Banana Republic, Gap, and Old Navy) have similarly grown.

Tying your brand to social causes will not only create loyalty with Millennial shoppers, but it will also create loyalty with your Millennial employees. Here's a question: Do you know which employer received applications from 11% of all graduating Ivy League seniors of the class of 2009? (Hint: It wasn't anywhere on Wall Street.) It was Teach For America. According to a new survey by the Pew Research Center, 21% of Millennials say "helping others in need," is one of the most important things in their lives - more important than owning a home, having lots of free time, or having a high-paying career. What this means is that if a company is not socially conscious, not only will we not shop there, but we won't work there either (56% of Millennials say they would refuse to work for an irresponsible corporation). And don't think you can fool us with "greenwashing" or a faux-sense of social responsibility: we're cynical and connected too, and if it turns out your "living wage" garments are actually made in sweatshops, that news will spread through Facebook and the blogosphere faster than you can imagine.

Clearly, Millennials like to feel like they are making a difference, and this matters to retailers to keep both their customers AND employees happy. With such a staggeringly high percentage of Millennials saying they would switch to another brand that is more socially conscious -- and with our ability and willingness to easily compare similar products via our computers or mobile devices -- retailers can't afford to be selfish. The fact that products like TOMS shoes continued to fly off the shelves even in a recession shows that if a retailer is willing to open up to the world, we're more than happy to open up our wallets.

Four Surprising Insights about Indian Retail

After the recent launch of SPAR International's 8000m² flagship hypermarket in Bangalore, India on 13 March, I had the chance to interview David Moore, International Retail Development - Country Manager India, Portugal, Global Retail Store Operations SPAR International, and the man who oversaw SPAR's strategy and development in India. While the launch in and of itself was impressive enough, David revealed some surprising insights into retailing in India, many of which cut against the "conventional wisdom" on that emerging retail powerhouse nation.

1. Unorganized retail... is pretty well organized. Over 90% of the retail market in India is labeled as "unorganized" because it isn't in conducted in Western chains or large store formats, but rather in 10m² "kirana" stores. But the moniker "unorganized" doesn't really apply. In one city alone, Delhi, every Monday 120,000 vehicles arrive delivering products to the kirana stores, and are unloaded in only three hours. While kirana stores don't have the cache of Western retail formats, the supply chain is incredibly sophisticated.
2. India is a very young market. 70% of the population in India is under 30 years old... putting this in perspective of the world population, this means that one in every six "Millennials" is in India, representing a massive proportion of next generation of shoppers. The formats in India reflect this youth-oriented market: over 50% of the shopping space in hypermarkets is non-food, including large areas focused on children's toys, books, and video games; electronics, and fashion brands. SPAR has been successful leveraging the demographics of this youth market to help its store launches, using SMS messages, Facebook, and Twitter to connect with young shoppers.
3. But demographics don't tell the whole story. Social dynamics in India mean that many times, the "head of household" isn't the actual shopper. In cities like Bangalore and Mumbai, the affluent men and women counted in surveys send their maids and drivers to do the household's shopping, meaning that retailers who rely solely on demographics to determine their offer will end up missing the mark with the actual shopper in their stores.
4. All retailers in India have to be world class. India is the proving ground for new ideas, offering both a fertile green field for new formats, technology systems, supply chains, and service offerings... set against the backdrop of an amazingly diverse shopper base, a challenging supply chain infrastructure, and a complex regulatory environment. To succeed in India, whether a global retailer like SPAR or an emerging native powerhouse like Reliance, requires best in class strategy and execution combined.

MILLENNIAL MUSINGS: Getting To Know Us

As GREC's Millennial-In-Residence, I'll be focusing on the retail world from my generation's perspective. But what, exactly, is a "Millennial?" Are we really that different from older generations? The answer, of course, is yes. We're more different than you'd think, and our behaviors and expectations are rapidly changing every aspect of the world, from politics to shopping to entertainment. Keeping in mind that these are very broad, opinionated generalizations and that I do not claim to speak for my entire generation, here are some key things to know about us:

• We're never not plugged in. My phone is rarely more than two feet away from me at any given moment. It sleeps next to me, and I'm not alone in this: 83% of us reported sleeping next to our phones. The last time I turned off my phone was for a plane ride, and you better believe I turned it on the second those wheels hit the ground. 55% of young adults use their cell phones or a handheld device to access the internet, compared to only 30% of adults 30 and older. To us, the internet isn't a thing you "sign on" to - it's just always with us.
• We value honesty and accessibility. We don't read the small print, and we don't even want to see it. Make your pitch quick and easy, but informative. Anything that reminds us of the hurried last 5 seconds of disclaimers during a radio advertisement for a pill just makes us skeptical about your entire brand. Engage with us on your Facebook page, respond to our complaints about you on Twitter. According to Razorfish's annual FEED report, 65% of consumers have had a digital experience (a brand responding to them on Twitter, for example) change their opinion about the brand, and an astonishing 97% of them reported that experience influenced whether or not they purchased a product or service from that brand. If you're not open, accessible, and personable, you're just going to look like a faceless corporation. And we hate that.
• The world is catching up to our expectations. We're not surprised to hear you all ruminating on the fact that consumers call the shots in retail. For us, this isn't a revolutionary new concept - it's just common sense. According to Razorfish, 73% of us have posted a review of a brand on a site like Amazon or Yelp. It's almost second-nature to us to drive the discussion about your brand. As a result, we're holding retailers to higher standards, and if they don't meet our expectations, we won't even think twice about posting on Facebook or Twitter or our blog about what a terrible experience we just had. Luckily for you, the same goes for when we have an excellent experience.
• Diversity is key. We're the most diverse generation of all: only 61% of us are white, compared to 70% of Baby Boomers. We're the face of the new America, and we don't mind it at all. It's totally normal to interact with people of different races, nationalities, and backgrounds on a daily basis. We're incredibly interested in other cultures, but we still embrace our own cultural heritage. It's what makes us unique. If a brand embraces and reflects this, we'll respond favorably. If you come across as a bunch of "old white men," you've got nothing in common... with any of us.
• There is no "generation gap." We're more connected to our families than any other previous generations, and we love it. Millennials report having had fewer fights with our parents when we were teenagers compared to the amount of fights older adults reported having with their parents when growing up. We're friends with our parents on Facebook. We call, email, text, BBM, Skype, iChat, and instant message with them. We write on their walls, they write back. They comment on our photo albums (even the ones where we're drunk, unfortunately).They still influence us, but remember that we influence them right back... even after we've moved out. After seeing my sisters and I get MacBooks, my mom immediately wanted to trade in her PC for a Mac. 
• We don't care about privacy. According to a report by Accenture, over 50% of US Millennials write openly about themselves online. And 73% of teens and 72% of young adults use social networking sites. One in five of us has posted a video of ourselves online. Sure, we censor ourselves online - who we're friends with, how much employers can see, what embarrassing pictures on Facebook get tagged or not - but we're perfectly willing to give up privacy if it's worth it. Retailers absolutely must use this to their advantage. If you offer us a good enough deal, we're willing to tell you a surprising amount about ourselves. We live in the open, with most of our lives in the public eye... and we are suspicious of brands that don't share with us to the same degree.
• We expect you to respect our privacy. This is not a contradiction to the last bullet point. We're more open about ourselves than other generations, but we hate it when you abuse this openness. Don't bombard us with emails. Don't call us (Domino's Pizza started calling me with offers a few years ago after I ordered a pizza from them - Guess what? That was the last pizza I bought from Domino's). And, for God's sake, DO NOT text us advertisements if we didn't ask for it. It comes across as invasive and needy, and we will avoid you out of spite.
• We want instant gratification. Larry Rosen, a professor of psychology at California State University, describes in the New York Times that more and more teens are texting and instant messaging far more frequently than talking on the phone or emailing. They expect an instant response from everyone they communicate with, and this includes their shopping experiences. Don't have the shoes I want in stock? Fine. Either get them for me ASAP, or I'm whipping out my phone and buying them from someone else online. (Remember: If you do manage to get them for me ASAP, you can expect me to praise you on Yelp or Facebook.)

Again, these are all generalizations about an incredibly diverse generation of tens of millions of kids. If there's anything that can be said for sure about us, it's that we value what makes each of us unique. So selling to us can be tricky, because we don't buy into the "everybody else is doing it" mindset anymore. But if retailers can figure out why we go certain places and buy certain products, they will be able to target us in much more specific, personable ways that will translate into loyalty. This all brings to mind that timeless 2009 movie classic "Confessions of a Shopaholic," in which the main character said, "A man will never love you or treat you as well as a store." If retailers engage with us and take the time to get to know us, I think they'll find many of us will feel the same.

Jim Crawford: "Adapting to the Rise of the Mobile Shopper" at RTC 2010

GREC Executive Director Jim Crawford gave a presentation on "Adapting to the Rise of the Mobile Shopper" at the RIS News Retail Technology Conference in Orlando, Florida, in April 2010. The presentation explained why mobile retail is important, who the "mobile shopper" is (surprisingly, not just techno geeks!), what exactly we mean by "mobile retail," and how you can leverage mobile in your own retail operations. The video is embedded below for your convenience.

What did you think of the presentation? Are you using any of these techniques in your stores? Do you agree or disagree with Jim's assessment of the mobile shopper?

"Adapting to the Rise of the Mobile Shopper" from Global Retail Executive Council on Vimeo.

The Retail Experience: EUROPE - "Under the Ash Cloud"

It began as a quiet and quick mention on the morning news Thursday, April 14th as I wrangled my kids at breakfast: A volcano in Iceland that had a name that I neither I or the anchorman could pronounce had erupted, and the outcome was that there might be 'some' airline delays at Heathrow. I really didn't pay it a lot of attention and got back to the business of packing lunches and shipping the kids off to school. I was leaving the next day for Berlin via Frankfurt for the World Retail Congress, but this event surely wouldn't effect me. Right?

Fast forward to the next morning when with bags packed I became just one of tens of thousands of travelers that had their plans turned upside down. It wasn't until reaching Chicago that I learned my Lufthansa flight was cancelled. Stay a night was the gate agents recommendation... Perhaps they would get me out on Saturday. Some small bit of hope remained despite increasing information I received that the last large airport hub in the EU, Madrid, Spain, had just joined the ranks of closures.

This is where I now digress from the play-by-play of negotiating my return ticket home, the hours lost on hold with Lufthansa and Expedia, and my personal disappointment of having to abandon all hope of reaching Berlin. We were going to provide news coverage of the World Retail Congress (WRC), and despite our absence  - and the uncertainty of whether or not the conference will happen at all - we will perform that task, albeit remotely, and begin to explore the implications of this "modest delay" on the world of retail. There are two stories: first the immediate perspective on how global retail is being affected by the eruption, and second, the long term implications for retailers if air travel to/from Europe is permanently disrupted. 

Disruption is an understatement. Certainly most goods travel via ships and containers, but the fresh food industry segment relies on air transport. Flowers, cheese, meat, seafood, fruits, and other specialty foods all require expedited transport. Already CNN was reporting that Holland tulips and daffodils were not going to be available to Chicago shoppers. No one at the moment seemed all too upset by this report, but shoppers all over the world will soon discover that staples in their homes are quickly unavailable and have disappeared from the shelves of the grocery story. We represent a global community with global tastes. I expect that I can easily get my Delice de Bougoine cheese from France while in Germany a shopper has similar expectations getting their Mexican mango. These "staples" simply won't be there if airplanes disappear from the supply chain, even in the short term.

Now what? Demand exists, distribution is broken, and the manufacturer/producer is left holding product... which means they'll unload it even at lower prices through the remaining channels they have. Even in the short term, this will wreak havoc for retailers already struggling to balance profit and a value proposition for demanding shoppers. If you are a retailer that is heavily dependent upon perishable goods, even a temporary disruption is potentially the preverbial "straw that breaks the camels back." British grocer Waitrose has already warned that "a handful" of products are already in short supply, including pineapple from Ghana and baby sweetcorn from Thailand, and Tesco and Sainsbury's are also monitoring for supply shortfalls. Retailers all of the world that rely on fresh goods coming into or out of Europe will need to rapidly adjust their value proposition in the face of the hopefully temporary but near total shutdown of European airspace.

But that's just one scenario and the long term implications of a belching Icelandic volcano are much more frightening than just a German citizen not having mango for breakfast or me not getting my French cheese. Global expansion plans may have to be shelved: if Whole Foods, for example, desires to continue its expansion into the UK, how would permanent restrictions on and an increase in price of air freight change their strategy or make them consider abandoning the idea all together? If this natural disaster continues for an indeterminate amount of time, what will the new face of retail look like? We certainly don't know and geologists aren't speculating on when the volcano will return to "normal," but consider just some of these possible retail implications.

About 7000 tons of goods flow via air each day from Asia to Europe, and a further 4000 tons from Europe to Asia, according to a Morningstar analyst, and while many of these represent items where air shipping is a convenience, not a necessity (electronics, for example) the impact of the shutdown on retail is broad:

Grocery/specialty foods

The aisles of the grocery store are an international tour of taste. Shoppers no longer think of Irish butter, fresh cheese from France, or star fruit from Mexico as something remarkable. It's just there. Seasons? Certainly not. If you want asparagus despite it being January in the UK, you can get it... at only a modest premium to have it flown in from somewhere warmer where it's grown. Consider for a moment that just a little over fifty years ago at the grocery store items that were once impossible to obtain out of season are now regularly stocked and expected by shoppers. Our palettes and our menus have been changed dramatically based on air freight and this sudden turn of events might force us back to being more seasonal and local. The UK is a perfect case in point: though air freight makes up only 0.5% of imports by weight, they account for about 25% of the value of imports, and almost 70% of this is carried in the baggage holds of commercial passenger flights, so the air transport ban is already hitting hard and fast. Though "fresh and local" is all the buzz for "localvore" foodies, few will easily give up their desires for the remaining nine months of the year. 

The air freight freeze is already hurting specialty food producers. Buffalo mozzarella, produced in one small area in Italy and highly-prized around the world, has such a short time from the time the cow is milked to the sale in the store that the producers association is already considering options: "In the next couple of days we have to decide," said Vito Amendolara, head of the farmers lobby Coldiretti's office in Campania, the region around Naples famed for the cheese. "We cannot sell buffalo milk as it is, because it is too fatty and is meant solely for production of mozzarella. We will either have to throw away the milk or find alternative markets" by heavily promoting it locally.

Interestingly, the reduction in air freight will have a trickle effect on producing countries' labor markets as well. Much of the "production" work necessary to get the beautifully packaged, pre-sliced and "ready-to-eat" produce into US and European grocery stores happens at the country of origin, as processing there both takes advantage of the lower labor cost and reduces the net weight shipped by removing the rinds, seeds, etc. While much of the food supply chain can be slowed to prevent spoilage, idle workers in factories in food production countries like Ghana will likely be laid off.

Mail order goods / ecommerce

Every thing we read about the ever-expanding retail channel of ecommerce would be now suddenly stalled. There would be no overnight delivery options and even a 5 - 10 business day cycle from order to delivery are compromised. Just two weeks ago I waited on bated breath for my new Karen Millen jacket to arrive from the UK. That wait alone pained me something awful, but that was because I wasn't willing to pay extra for expedited shipping, so I had no choice. Now there would be no choice what so ever so my decision to purchase from a retailer "over the pond" would be completely impossible with a 3-4 week delay for ground shipping.

Fashion

While the fashion supply chain on the whole doesn't move as fast as perishable food, one area that will definitely be affected by a long-term reduction in air freight capacity is the emerging "fast fashion" category, where collections are turned 10-15 times a year instead of the more traditional 4-5. One retail exec we spoke with suggested that unforseen delays in the availability of one collection in stores will have a cascade effect on other collections and that having collections too close together could pose some problems, but as our source said, prefering to remain anonymous: "But the reality is that retailers are very resourceful, and you could only accurately calculate that long term effect if the retailer did nothing to change course or react to the circumstances - and we always do." So for the time being, the impact on fashion is an inconvenience to mail-order shoppers, but the brands should be fine in the medium and long terms.

Pharmaceuticals

Pharma relies heavily on air freight due to the high value and low weight of the products, but other than extremely perishable products (vaccines, plasma, etc.) most drugs will be able to be rerouted onto train and ship freight. While rail travel within Europe can make it feasible to get products from factories in Germany and Switzerland to stores from Norway to Spain, manufacturers with facilities only in the US or Asia where the "slow boat" method would create weeks of delays are now at a competitive disadvantage to those with more regionalized production capacity. One short term opportunity: pharma retailers should be stepping up to help stranded travelers with prescriptions, regardless of where the prescription originated.

Intra-EU rail freight

While the focus over the weekend has been passenger traffic, rail transport and cross-channel ferries are instantly adding capacity to cope with the increased demand. The Eurostar train connecting London with Paris, Amsterdam and Brussels eight additional routes and carried an additional 50,000 passengers over the weekend, and the Dover-Calais ferry operated by P&O Ferries saw 6000 passengers on Friday. The load on a normal day is several hundred...

Restaurants

Certainly this is loosely connected to retail, but it's worth mention. If shoppers aren't able to get product at the store level, they won't be seeing it in their favorite restaurants as well. So many menus feature prominently fresh ingredients flown in from overseas. Sushi in London or Meditteranean mussels in New York? Forget about it... if it can't be frozen and ground shipped, you won't see it on the menu. Look to see menus adjust, as restaurants loath disappointing patrons by telling them "we're out of that." The impact of this will be delayed a few days as restaurants use their stocks and food wholesalers feel the pinch, and remembering the advice never to buy sushi on a Sunday, most sushi restaurants got their fish deliveries on Thursday before the flight lockdown took effect. Look for shortages throughout Europe starting Tuesday when Monday's non-delivery has a sudden sharp impact.

Overall economy

It's too early to predict the long term impacts of the eruption of the volcano, but even in the short term, workers are taking a hit. SAS is prepared to lay off 2,500 ground workers due to the shutdown. Laid off workers means less money for retail, so the "ripple effect" of Eyjafjallajökull will be with us for quite some time after the initial shockwave passes. The bottom line is that even the four days so far of this shutdown are hitting retailers hard: they represent 1% of annual sales, and with retailers struggling to eke out 5% growth year on year, Northern European retailers will feel this disruption for the remainder of the year without doubt. And when you consider that three out of the top five global retailers are Northern European, the impact on retail as a whole is likely to be profound, even if US shoppers don't feel the pinch immediately and the US media continues to ignore the global business implications of the eruption.

It's anybody's guess at this point as to how long this will last. And for the poor weary European travelers I met in the airport that were so desperate to return home that they were seriously discussing a slow boat out of New York as a way to get home, I know they wish it was more than a guess too. 

The World Retail Congress has officially been postponed to October, and though we're disappointed not to experience spring in Berlin, GREC is glad that we'll have the chance to attend and provide coverage. Last year's speakers and topics in Barcelona were outstanding and the retail executive attendees represented some of the world's largest. 

But, in its own way the Icelandic volcano (which is named "Eyjafjallajokull", by the way) represents one of the largest truisms in retailing: you can't predict the future, even a week out. And as travelers around the global struggle to discern whether the delays this week are a temporary disruption or a "new normal" for European air travel, so too will retailers have to explore what this means for them, both in the immediate term and strategically going forward.

Augmented Reality in Retail: An Overview

 What is Augmented Reality?

Augmented reality (AR) or mediated reality is a view of reality that is modified (possibly even diminished rather than augmented) by a computer.  AR is not something new to people - sports scores on TV during a cricket match or a Super Bowl is a good example for simple AR. 

The recent technological developments have significantly expanded AR’s scope. Current Augmented Reality is a next level advancement of last decade’s technology buzz - Virtual reality. Advanced AR technology captures information about the surrounding real world using currently available technologies such as digital vision (digital cameras). 

Artificial information about the real time environment and the objects in the system can be stored and retrieved as an information layer on top of the real world view. This information gets processed through the integrated Object/pattern recognition engine to make it interactive and digitally usable to users.

Augmented Reality Application

Currently AR is being used in the space of advertising, support with complex tasks (such as assembly), maintenance, surgery, Navigation devices, Military, emergency services, Prospecting, Architecture, Tourism, Collaboration, Music, entertainment, education and all other Industrial Applications.

Advantage of AR is that it makes virtual gadgetry possible. Any data-oriented physical device (e.g : clock, radio, PC, PDA, informational posters/fliers/billboards, in-car navigation systems, etc.) could be replaced by virtual devices that cost nothing to produce aside from the cost of writing the software. 

With AR systems getting into mass market, we may see traffic signs, Christmas decorations, advertisement towers and more. These may be fully interactive even at a distance, by eye pointing for example. 

Developments in Augmented Reality arena

Several technology firms targeting retail segment such as Microsoft, Cisco and Google and leading retailers are already testing ideas with this AR concept. Although none have been successful yet, few of the products / concepts such as high capacity mobile computing (e.g. iPhone & DROID) and Microsoft’s ‘Project Natal’   seem to be promising to take this technology mainstream in the near future. 

Many software firms such as Metaio, Apple and Spot Metrix, and have started developing AR-SDK that could help developers to build AR based applications. These SDKs support all major mobile platforms and features the latest image recognition technologies, 3D rendering for animations with real time interaction and optimized components for mobile hardware. 

With these toolkits, it is possible to easily develop and deploy solutions at the interface between the real and virtual world. They make it possible to create fascinating marketing experiences, intuitive information design, mobile augmented reality games or innovative retail solutions. 

Gaming and personal exchanges is another possibility for this exciting piece of technology. Families are tracking and sharing virtual experiences with this product. Avatar movie became a milestone in the animated 3D cinema arena, based on which the team built a website http://www.avtr.com  in collaboration with Coca-Cola. 

Technology companies such as Microsoft, Intel and Cisco have already invested heavily on the R&D in AR space. In addition to that there are new companies which have started to build AR solutions in collaboration with the industry leaders. 

AR comprises of multiple technologies – image capturing (through a digital camera), geo-location information (from a GPS-enabled device, or added manually by the user) and imaging-matching algorithms and Analytics. More technologies are getting added to this list which expands the list of possibilities as well. 

An AR-based experiment that enables the user to lift textures from real-world objects in live video and apply them onto 3D objects that are overlayed on top of them, is underway. The general idea could be extended to other types of 3D primitives or potentially even more complex objects with some clever image compositing and UV mapping. 

General Motors has been working with several universities to develop a working next-generation heads-up display that turns an ordinary windshield into an augmented reality information dashboard (AR windshield!). This would improve safety and advance knowledge behind the wheel, visually identifying important objects in physical space like road signs and the edges of the road you’re on in conditions of poor visibility. 

Mobile Augmented Reality

The mobile phone has become one of the most personal devices people own. It is something they always have with them, twenty four hours a day, seven days per week. There are many choices of mobile devices available, allowing people to choose the device that meets their needs. Today, these devices have so much more computing power, more memory, and greater flexibility, and the network is increasing its bandwidth and availability. 

Modern mobile augmented reality systems use one or more of the following tracking technologies: digital cameras and/or other optical sensors, accelerometers, GPS, gyroscopes, solid state compasses, RFID, wireless sensors.

Mobile augmented reality, while possible on current networks and services, will improve with better cameras on mobile devices and the launching of higher bandwidth services such as WiMAX. This is extremely likely to be the main way of access content in the future. 

Over the past year, the Mobile AR technology has reached the mainstream, with applications released for cell phones equipped with sophisticated positioning sensors. So far, most are geared towards tourism and navigation. Telecom technology giant Qualcomm opened its Austria research center, established for the design and development of augmented reality and related technologies. Similarly Nokia is also developing AR platform for their cell phones. Industry analysts expect AR to be used by more than 30% of the mobile workforce in next 5 years.

Also, it is expected that as the Tablet market gains momentum, possibilities for AR technology based solutions go beyond imagination.  

Augmented Reality in Retail

Any new technological advancement captures the immediate attention of retail technology experts and they start to think about the viability of using these technologies to improve customer experience. 

Although AR is a cool implementable concept, retailers approach it from 2 key angles – a) Can this be a competitive differentiator that create a buzz among the customers?  b) Will this be economically viable and does it have an acceptable ROI factor associated with it?

Augmented reality need to be integrated to web in order to yield great results. As more consumers turn to web, need for social content is climbing up. This includes product reviews, prior to making to a purchase. Recent surveys in the retail industry confirm that social content plays primary role in customer’s buying decision. 

Accessing or adding to this valuable Web-based social content repository is mostly limited to computers far removed from the site of the shopping experience itself. Mobile augmented reality applications, which extends such social content from the computer monitor into the physical world through mobile phones, providing consumers, information on products instantaneously to make buying decisions.

Augmented Reality would play a significant role in improving customer’s shopping experience. Being aware of this, many retailers and product manufacturers have already started developing and implementing solutions in the AR space (as an experiment).  Following are some of the interesting examples to look into. 

1. Ace Jewelers Group is the first online jeweler in the world in which people can try on jewels virtually via their website using, a revolutionary augmented reality retail tool, Holition. 
2. An innovative company called Zugara has developed AR Dressing Room and online shopping application in collaboration with RichRelevance -  Tobi.com an online retailer who has integrated “Fashionista” (solution from Zugara) to their website where shoppers literally give thumbs up (and down) to recommendations through webcam. 
3. With 3D animation "softwear", Cassetteplaya managed to successfully merge the real and virtual world and showcased augmented reality for the first time in the world of fashion, at London.  The designers are looking to make the AR “softwear” available to public so that customers can enjoy a tailored virtual experience in front of their computer or laptop webcam. 
4. Hugo Boss has created a large scale interactive augmented reality scene in their London shop windows. They were able to reach a much wider audience by integrating interaction with a store display in a unique and engaging way.
5. A new Digital Cosmetic Mirror, made by Fujitsu for cosmetic giant Shiseido and now being piloted in Tokyo malls - All customer do is sit down and let the camera scan the face. The terminal then gives tailored recommendations. Pressing a few buttons on the touch-screen paints make-up onto the captured image in real-time, allowing customer to see the results instantly.

Technology giants have understood the importance of AR in retail space. As a result, they have developed several innovative retail solutions that could engage customers in a better way and improve customer’s shopping experience. Augmented Reality was in Top 5 list of technologies that were showcased during NRF BIG SHOW 2010. 

• Microsoft in collaboration with Intel, showcased retail solution based on AR technology, where a shopper would see promotions that are appropriate for their lifestyle or needs. A store manager would see outages that influence their profitability. A category analyst would see useful product affinities they can deliver.
• Cisco has developed Augmented Reality based retail fitting rooms.
• Both Google & Microsoft have integrated AR into their map platform.

In the near future customers could simply hold a product box in front of kiosks that would display information to the consumers as 2D and 3D objects, texts or even videos. Also customers who walk by the stores could try out apparels, jewelry, accessories or foot wear in the store window without even getting inside the store. 

Conclusion 

AR technology is still at nascent stage, but considering the potential opportunities, in next few years will see more and more viable applications within the retail space.

With the help of AR systems, we may see virtual window dressings, signage and more. These may be fully interactive even at a distance, by eye pointing for example. 

Based on the current direction and pace of AR, it is clear that the AR technology would make a great impact on the Retail industry and the possibilities of solutions are infinite for customers’ dimension (Search & Seek) as well as retailers’ dimension (Serve, Sell & Service).

In future, customers might wear a AR digital eyewear that could provide information on the product you look at based on eye pointing.  Imagine something like Arnold’s AR vision in “Terminator-Judgment Day” Movie.

When I mean ‘future’, it is not very far from today!

Disclaimer: The opinions expressed here represent authors own and not those of his employer or the site where it has been published. As an upshot of having an open mind, thoughts and opinions expressed here may change from time to time based on the industry dynamics and social circumstances. 

References:

Wikipedia - Augmented reality

http://en.wikipedia.org/wiki/Augmented_reality

Hugo Boss uses augmented reality in window display

http://www.doctor-retail.co.uk/hugo-boss-uses-augmented-reality-in-window-display/

Beyond Mobile: Augmented Reality for Retail 

http://www.bluemaumau.org/beyond_mobile_augmented_reality_retail

Augmented Reality: 6 Use Cases for eCommerce & Retail

http://www.commercewiki.com/innovation/augmented-reality-use-cases-retail/

84% of Americans influenced by online customer reviews

http://www.bizreport.com/2009/04/84_of_americans_influenced_by_online_customer_reviews.html

Customer reviews influence cross-channel buying decisions, study says

http://www.internetretailer.com/dailyNews.asp?id=24361

Augmented reality hits the Catwalk

http://www.gizmag.com/cassette-playa-augmented-reality-fashion-show/14651/

Augmented Reality For Tablets Goes Where No Man Has Gone Before

http://inventorspot.com/articles/augmented_reality_tablets_goes_where_no_man_has_gone_39333

Augmented Reality Apps For Your Cell Phone

http://www.technologyreview.com/blog/editors/24147/?a=f

Augmented reality Cosmetic Mirror in Tokyo

http://www.japantrends.com/augmented-reality-cosmetic-mirror-in-tokyo/

The Retail Experience: JAPAN - The Zenith of Customer Service

I've been back for well over a week now from our trip to Japan and in addition to the terrible jetlag (which is finally wearing off), there seems to be something going on in me besides terrible jet lag. It's a sort of melancholy I get when I go into a store here in the United States. Any store... grocery, boutique, big box... you name it, it doesn't matter. I haven't been able to properly put my feelings around this emotion until today.

It was a sudden jolt... a moment in which I needed help and none was to be found... standing stranded in a dressing room half-undressed waiting for help and hearing the staff person chatting with another associate for a good five minutes while I stood... waiting and waiting and waiting... what I wanted at that moment was my JAPAN-LEVEL CUSTOMER SERVICE!!!

What is Japan-level customer service (or JLCS for short) you ask? Well, if you have been to Japan, you know exactly what I mean. There is a pervasive spirit focused on simply meeting the needs and desires of the customer.

It's the going to the hotel lobby needing a battery charger for your camera at 7 o'clock at night.. and the concierge ensuring that by the next morning you not only know what store carries the battery you need (it's Bic Camera, by the way...), but that it will be held for you, you will know what train you need to take to get it, AND the proper Japanese translation for the request will be written out for you to hand to the store employee. Yes... that's JLCS.

Now you might say... "That's only if you have a concierge in a fine hotel...right?" No. JLCS is anywhere and everywhere. From the ubiquitous combini (convenience stores) to drug store to high-end boutiques in the Ginza, service is SERIOUS business and they all seem to know that and deliver on it. As a customer, I would never know if one of the people that took care of me was having a bad day or that they thought my request was over the top. Every shopping experience came with a sense of anticipating my need and a true desire to fulfill it. Though I haven't yet been to EVERY country around the world, Japan is hands down the one country so far to which ALL retailers should aspire in terms of service.

As operational efficiency and product assortment become the norm throughout the industry, retailers have to find new ways to stand out and make money... and they should be looking to service. This, my retail friends, is the one area where the customer can be king, and you can make more profit.

I would like to share with you two examples. I could give you HUNDREDS, but these two truly stand out.

EXAMPLE #1. Giorgio Armani, Ginza.

We spent a great deal of time in the Ginza looking at department stores as well as the upscale fashion clothing flagship stores. This area of Tokyo is recognized as one of the most luxurious shopping districts in the world. I personally am in awe of their splendid-ness, but honestly am not a customer (though of course, I would be if I could...). However... in terms of brand... my heart belongs to Giorgio Armani. Always has, probably always will. So now that I've outed my bias toward the brand, I want to call attention to what I never expected.

I walked into this 5-story store (Surprisingly an entrance from the Ginza station as well as street level.) and expected the same type of service greeting I get when I've been in most luxury stores... ignore me OR make me feel somehow like I might lift something and run. Neither make me all too comfortable... ;) Anyway... I went in to look around and made my way to the second floor women's fashions where I was warmly greeted. I then quietly began my appreciation (okay, it was worship) of all the beautiful suits and gowns. At one point my hand must have lingered a bit longer on a raincoat. (I recall I basically touched the top of the coat at the hanger.) I moved to another room never having been pushed or made to feel suspect and as I motioned towards leaving it was at this point where the sales woman approached me and said in Japanese (I speak Japanese, but definitely look like a "gaijin"...) "It seems you may have liked the blue coat, would you like to try it on?" to which I expressed my fondness for the coat, but that I needed to leave due to a meeting we were heading to. Long story short, she encouraged me to try on the coat and after I did (and graciously declined to purchase it, thinking perhaps the purchase would require the sale of at least one of my kidneys) she thanked me for taking the time with her and trying on the coat despite my busy schedule. Then she rushed off to get me an Armani bag compete with a copy of the newest Armani catalog and DVD. As she escorted me to the glass elevator with my "parting gift," I was thinking how I didn't feel bad for not getting the coat, but how impressed I was by how gracious and attentive she was. As the doors closed to the elevator taking me down, I watched her maintain a deep bow even after it was quite clear I was no longer really able to see her. In summary... I left the store blown away.

OK so now you could argue... "yeah, but that's how the high end fashion experience is SUPPOSED to be. Right?" Now mind you I have had great service at luxury stores before, but this was a whole new level: a combination of the style and quality of the Armani brand with warm and welcoming service unlike that in other shopping hotspots like 5th Avenue, Oxford Street, and the Champs Elysee.

EXAMPLE #2. Fujiya Confectionary Store, Ginza.

Fujiya is one of Japan's better known candy brands and I decided that my 6 year old daughter's sweet tooth just might be satiated with the gift of a candy or two. The small store was teeming with shoppers, but one of the associates made sure to tell me immediately that she knew that I had entered the store with a "irashaimase" followed with a direct comment letting me know that she would be right with me after she finished with the customer in front of her.

Once it was my turn she helped me to navigate through the myriad of sweets and select just the right ones. Never once pushy or acting put out by my questions. At the end she held out my purchases, showing me the expiration date on each packaged cake/candy making sure that I still wanted to purchase them being that they were perishable. She also inquired as to whether the items were gifts and immediately took to wrapping each item exquisitely and point out any items that were fragile so that would arrive to their recipient intact.

At the end of the purchase, she came around from cash wrap, bowed, thanked me for my patronage and handed me my parcel. Now I know that some retailers in the US are taking to this idea of coming around the cash wrap and handing the bags to their shopper, but it hasn't caught on fast enough as a common practice.

I could go on and on... Examples abound: fast food restaurants, convenience stores, grocery stores, bakeries, pharmacies, and even a 100 yen store... all delivering consistently exception service, at least by the "are you SURE you don't want the extended warranty with that?" standards we Americans are accustomed to. Certainly there are exceptions here, but the opportunity to embrace service as a differentiator quite a "greenfield" in many areas outside Japan, and the return from exquisitely packaged sweets to the casual jumble of my first grocery shop on my return left me pining for even a little taste of JLCS...

(And ironically, JLCS extends to "self-service" as well, embracing state of the art vending systems... a subject we will be exploring soon in this blog...)