Driving Your Retail Digital Transformation

Driving Your Retail Digital Transformation

Technology holds massive promise for the retail industry, and retail brands are each in their own stage of the digital journey. In this post, we look at how to drive a digital retail transformation.

As I look back at all the connections we’ve made, partnerships we’ve formalized, and solutions we’ve launched during Valence’s month of retail, it’s apparent that this industry – which is no stranger to change – faces a large crossroad. There are major threats as well as exciting opportunities as the retail landscape gets more competitive, more personal, and more connected.

Throughout the month, we’ve covered a lot. I started by asserting that experiential retail is not new, but rather an ever-evolving paradigm. I then announced our Retail Innovation Accelerator, which will help incubate transformative solutions for our customers across voice, data, and blockchain. And finally, I recapped the 5 most important trends and insights we gleaned at NRF’s Big Show.

For my final blog post in this series, I’d like to provide some color on how you can help drive digital transformation in your retail business. Whether you’re a c-level executive, technology director, or store manager, there’s no doubt that you’ve been exposed to changes brought by a digitizing world. Just the fact that your customer carries a smartphone in their pocket should be seen as a major disrupter. In this post, I hope to illuminate how you can drive your organization to embrace these disruptions rather than fight them, and lead the right investments that yield future growth.

Embracing Change for Operational Efficiency

What does the term “digital transformation” make you think of? It more than likely conjures thoughts of big, flagship-style customer experiences: wow moments that are high-touch, highly-personalized, and focused on making a brand memory. While these kinds of experiences are important to engaging fans, they won’t drive lasting momentum unless coupled with internal and operational digital transformation.

Retail strategy can be mapped on a pyramid, similar to Maslow’s hierarchy of needs. While there are exciting opportunities around customer experiences at the top of the pyramid, retailers will have more success along their digital transformation if they consider basic and operational needs first to build a strong internal foundation. The best way to secure budget for transformative customer experiences is to save money through operational efficiency. Can you utilize AI to predict stocking needs? Can you better analyze sales data to inform your buyers’ decisions? How about use sensors to understand traffic patterns to more efficiently staff your store? By establishing transformation from the ground up, you’ll unlock more business opportunities and free up budget.

Justifying Your Digital Transformation Investment

Embracing any kind of transformative business practice takes an up-front investment. However, all too often this fact leads retailers to think that digital transformation is only for the risk-takers. I’ve heard it before: “we want to build a proof of concept and deploy a pilot experience, but don’t know how to justify it to our CEO”. The truth is, if you’re trying to paint the picture of a 1:1 connection between a transformative PoC/pilot and immediate profits, you’ve probably already lost the battle. Investing in the future takes a jostling of resources in the near-term, and I could write an entire thesis on the intricacies of reorganizing and reallocating your investments to drive change. However, justifying your investment in digital transformation can be a whole lot easier.

Simply put: learning about your customer is the most important investment you can make. A good digital transformation strategy always unlocks more data points – whether from IoT sensors, mobile traffic analysis, or AI services – about how your customers interact with your brand. The key to driving digital transformation investments with internal stakeholders is to communicate the ROI of enhancing your understanding of customers’ needs and desires. Furthermore, digital implementations can often act as a mirror: by learning more about your customer, you in turn learn more about your company.

Thanks again for following this retail series, and don’t forget to check back for future posts. If you want to chat more about how we can help you on your digital transformation journey, contact us.

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The Future of Retail — Trends From NRF

The Future of Retail — Trends From NRF

After a great week at NRF talking tech with industry leaders about the future of retail, experiencing cutting-edge demos, and learning about retail’s biggest challenges and opportunities, we’re back in the office with a heightened appreciation for the exciting possibilities ahead.

In my last post, I announced our Retail Innovation Accelerator, which is focused on harnessing emergent technologies to develop customer solutions in an agile way. This retail solutions incubator — which is powered by internal innovation projects and strategic partnerships across voice & chat, telemetry & insights, and modern supply chain — provides a framework for our customers to more easily identify the technologies best suited to digitally transform their businesses.

This week, I’d like to switch gears a bit and discuss some of the trends we saw at NRF. While by no means an exhaustive list, I hope this helps paint the picture of how retailers should think about digital transformation efforts over the next year and beyond.

1. The whole is greater than the sum of its parts. One thing that stood out compared to past NRF Big Show’s is how technology companies are thinking about the power of multi-platform solutions. To unpack that, it’s becoming more and more evident that there isn’t one technology that can truly transform your retail and brand experience. Rather, a suite of technologies must be integrated into a cohesive, omni-channel strategy to really move the needle. If you are considering RFID sensors to make your dressing room “smart”, pair this with digital signage powered by a recommendation engine to help complete your customers’ outfit. Or how about taking that a step further with an AR-powered selfie app that shows customers what those boots would look like with their new dress? Individual technologies may generate some buzz, but the right suite of technologies can truly transform a retail business.

2. The year of the edge: connected everything. The best brands react to their customers in real-time, and the only way to do that is by listening smartly. The collection — and more importantly analysis — of data will continue to be one of the primary differentiators between successful and unsuccessful retailers. But how do you capture the kind of meaningful data that yields actionable insights? At Valence, we’ve been working in the IoT space for many years. However it was still eye-opening to see such a strong focus on the “connected everything” store. Edge devices and sensors are seeing exponential advancements in on-board compute power, connectivity, and battery life, while AI-powered cloud services continue to evolve. With technologies like computer vision, it’s amazing how much you can learn about yourself and your customers.

3. Retail robotics is maturing, but not there yet. We all know robotics in the warehouse is already here, but when will robots be roaming the sales floor? Can a robot re-stock shelves? How about provide wayfinding to a lost customer? We saw some compelling “front-of-house” demos from hardware and software companies alike, but at this time robotics still resonate best when tackling “back-of-house” challenges. However — as with all promising technologies — it’s only a matter of time until the cost-benefit ratio leads retailers to use robotics for more purposes.

4. Your platform is your product. While we used to only think of your platform — whether web site or store front — as the place to showcase your product, today’s competitive landscape means that your platform might just be your most important product. There are so many ways to buy, it’s important that yours is the easiest, fastest, and has a little extra flavor than the competitor. Improving your platform can be as simple as re-writing your web site copy to better match your brand’s voice, or can be as complex as restructuring your inventory management system and releasing a “buy online, pick up in-store” app. Whatever the approach may be, it’s important to understand how vital your platforms are in differentiating your brand.

5. Amplify your voice with…voice! It seems obvious, but in order to stay relevant brands must operate at the pace of consumers. And with the exponential evolution cycle in consumer technology, this is getting harder and harder to do. Voice may one day usurp touch as the primary user interface, and it’s important to consider the user flow for customers interacting with your brand on services like Amazon Alexa. We didn’t see as many voice-based demos at NRF as we expected…all the more reason to start investing in this space before your competitors do.

Next week, I’ll be providing a recap of everything we’ve learned and announced throughout our month of retail. I’m excited to share the opportunities on the horizon for all retailers who are ready to adopt emergent technologies.

What is Experiential Retail?

What is Experiential Retail?

Experiential retail or experiential commerce is a type of retail marketing whereby customers come into a physical retail space and are offered experiences beyond the traditional ones such as browsing merchandise, talking to salespeople, touching products, and checking out. Experiential retail amenities may include interactive art, live music, virtual reality, cafés and lounges, and video display walls.

There’s a short, often-overlooked scene in Alfred Hitchcock’s Vertigo that’s always fascinated the retailer in me. I’m going to avoid spoilers and simply say that Scotty (Jimmy Stewart) takes his new fling Madeline (Kim Novak) shopping, in search of the exact suit worn by his previous love earlier in the film.

There are a lot of complex psychological layers at play here, and — aside from the painfully-dated line “the gentleman seems to know what he wants” — it’s not typically considered a comedic moment. However, as someone who’s spent the first 10 years of their career in Retail Experiences, this scene cracks me up.

While Scotty and Madeline sit in the store — attended to by two sales reps — a woman comes in and out of the dressing room wearing various suits like an animatronic mannequin. She’s modeling clothes for the very customer sitting in front of her. As in don’t experience our product, experience someone else experiencing our product! This has always been both interesting and absurd to me, made all-the-more comical by Scotty’s response once the model comes out in the right suit: “We’ll take it. Uh, will the thing fit?” 

Okay, that was a whole lot on Hitchcock’s 1958 masterpiece. But this is a Retail Transformation blog, so, what’s my point? Well, there are a few:

1. Experiential retail is not new. So much of what I see and read on modern retail transformation makes it seem like all anyone thought about prior to 2010 was merchandising. I hope this scene in Vertigo showcases how wrong that thinking is. While Madeline is distant from the product itself, the retail interaction is purely experiential: she experiences the outfit while hardly lifting a finger. Sound familiar? It really is the analog version of those 360-degree image galleries that retailers use on digital storefronts. The means of implementation have changed, but the concept of curated experiences is as old as retail itself.

2. If you listen, they will come. What’s evident in this scene — and would be clear if you were to walk into any major department store in the 1950s or 60s — is that customers were expected to listen to brands, not the other way around. Purchase decisions were based on wanting to be rugged like the Marlboro man, or elegant like the model standing in front of you. Brands put their version of perfection in an advertisement or experience, and customers aspired to it. In today’s world, retailers actually need to aspire to their customers. Think of Apple’s original iPod commercials. Instead of featuring cool, beautiful people with iPods, it featured silhouettes. The message being: you are already the cool, beautiful person, we’ll just help you find your groove. The script flipped even more dramatically with social media, where brands must constantly listen and adapt to their fans to stay relevant.

3. Customer satisfaction is simple, consumer behavior is complex. This one is all about that last line from Scotty: “We’ll take it. Uh, will the thing fit?” I don’t know, Scotty, maybe Madeline should try it on? Every time I watch this film, I half-expect the sales rep to have an epiphany: we’re doing this all wrong…the customer should be going into the dressing room! But more importantly, what does this say about consumer behavior? Working backwards it’s easy: customers will be satisfied if they wind up with the right product at the right price with the greatest convenience. But what gets them to your store instead of your competitor? What influences their behavior in defining the right price, or the acceptable amount of friction? The exciting thing is that an agile digital team armed with analytics can demystify these questions.

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Robotics: Cue the Pizza Drones?

Robotics: Cue the Pizza Drones?

Drones and robots are going to solve all of our delivery woes!

Well…. not so fast. It was definitely fun to see Domino’s deliver its first pizza by autonomous drone in New Zealand a bit over a year ago. But the truth is we’re not going to see fleets of airborne delivery bots anytime soon, no matter how much Domino’s, Amazon, or UPS invest in drone technology (plus the critical AI needed to make the devices smarter than flying Tinkertoys).

First, let’s look at what was behind the scenes of that first pizza delivery. As Business Insider put it, “A team of drone experts and a pilot autonomously controlled Flirtey’s DRU Drone through GPS navigation to drop off the pizzas.” Even if it were a small team of drone experts, say three at most, that still requires four people to deliver a pizza. A great stunt. Something to spark the imagination. But not a realistic business model for getting hot pizza to the masses any time soon.

Part of the hold-up is FAA regulations protecting the public (and our collective airspace) from errant pies or inept drone operators, not to mention high-tech electronics falling out of the sky. At the moment there is a “line-of-sight” rule, generally requiring all drones to be directly visible to their operators. So for now, drone flight is all pretty manual and pretty complicated. The other part of the hold-up is technical. As in, there’s work to be done before drones are safe and reliable enough to deliver pizzas (or other packages, for that matter) in the real world. Once these barriers are resolved, we expect to see rapid adoption.

The field of robotics is actually fascinating right now. On the one hand, there’s a bunch of tech that’s exciting to watch but not quite ready for Prime Time. (Here’s where drone pizza delivery fits in.) And on the other hand, there’s old technology that’s been in widespread use since the ’80s. Massive industrial robots that perform repetitive tasks with perfect precision in automotive factories, for example. But those robots are extremely expensive, not adaptive, and they must be precisely programmed to perform incredibly specific tasks.

So, what’s in the middle? Are modern robots being deployed in the real world? Of course, there’s the famous example of the 45,000-strong workforce of Kiva robots powering Amazon’s warehouses around the world. And some retailers are currently conducting trials in big box stores. Lowes, for example, which is experimenting with a “Lowebot” to help people find products. Or Target, where a Simbe Robotics model called Tally monitors the stock on shelves, freeing up sales associates to focus on clients.

Plus watch out for anyone planning mischief at a mall or stadium parking lot. Robots are starting to supplement security guards to identify suspicious activity in public parks, at sporting events, and in enormous indoor shopping venues.

As it happens, the drone world is also an area of exciting innovation in robotics, despite the stunt with the pizza boxes. Already, advanced drones fitted with navigation systems, sensors, and AI are able to inspect thousands of miles of track for railroad companies; assess the safety of offshore oil rigs; fly over wind turbines to check for maintenance issues; and examine miles of overhead power lines searching for damage. When equipped with computer vision, navigation, and other AI capabilities, autonomous drones are cheaper, safer, and faster than humans conducting the same kind of industrial inspections.

Although this technology is not mainstream at the moment, it is developing rapidly and more cheaply than ever before. Where drones once cost millions and were affordable only to military forces and the like, today they are available for hundreds (at most thousands) of dollars. Plus, open source platforms that offer AI and other advanced functionality are cheaper and more widely available than ever before.

So while it’s not likely for your pizza to drop out of the sky thanks to drones and robots anytime soon, there are real applications for drones and robots at industrial scale that can transform your business. Particularly when paired with advanced sensors, AI, cloud computing, and IoT technology.

Wonder if drones or robots could advance your enterprise? At Valence we help our clients separate fact from fiction and incorporate leading-edge technology that drives real results. We’d love to show you the way. Interested? Contact us, and we’ll help you get started!