Machine for shopping

E&T visits Microsoft's campus in Redmond, Washington, and is introduced to some of the shopping technologies of tomorrow.

When you talk about the future of high street retail, the first thing you're assuming is that it has one. With recession still decimating economies, shopping centres are deserted, sales have been falling for months and once proud bricks-and-mortar stores are toppling like, well, once proud banks.

At the same time, Internet retailers continue to attract more visitors and sell more goods than ever before. How can it be that the Woolworths chain crashed while its closest online equivalent, Amazon, declares its best seasonal sales ever?

"It used to be that online was the poor stepchild, but now physical stores are looking to catch up to the customer service advantages online," says Brendan O'Meara, worldwide retail industry managing director for Microsoft. "Internet shopping has trained the consumer to adopt a different set of behaviours, where everything is instantaneous and transparent. You can easily get in-depth product information, compare products and make sure you're getting a good price."

While online stores can present a different, personalised shop front to each customer, the high street is ignorant of who its customers even are. Consider a retailer that has both online and physical outlets, says O'Meara: "Even if you're one of my best customers online, when you come to the store I don't recognise you and therefore what loyalty do you have to me?"

Microsoft's Retail Experience Centre

Forging a link between the convenient online world and the hands-on world of real shops is the aim of Microsoft's latest technology showcase, the Retail Experience Centre (REC). Hidden in the company's Redmond, Washington campus, this full-size replica of a typical 'big box' retailer houses technologies that Microsoft hopes will be at the heart of successful 21st century shops.

"We're taking merchandising strategies and blending them with the right amount of technology to create what we call a connected experience," says Stephen Sparrow, Microsoft's US retail team marketing manager. In practice, that means using technology to identify shoppers, give them information to make a decision, and then nudge them toward the tills with offers - and it's a process that begins before you even walk through the door.

Eyeball counters

Sparrow points out high-definition digital displays that change through the day. "If we think Millennials (15-25 year olds) hit our store at lunchtime, let's have digital signage that appeals to them. Then when Generation X (35+) comes in after work, we change our messaging to increase sales. We can also use eyeball counters."

He's referring to camera systems mounted inside digital signs. French marketing company Quividi has digital adverts that change depending on whether a man or woman is watching and is working on upgrading its system to detect different ages and family groups.

"We know this many people have walked in front of the screen, how many turned to face the ad, and how long they looked at it," says Paolo Prandoni, Quividi's chief scientific officer. "We can even tell their gender with an accuracy of 85 per cent and measure who approaches to find out more."

If detecting the age and gender of shoppers is a useful selling tool, knowing their actual identity is the Holy Grail, says Sparrow: "When shops notice their high-value customers, they can give them a higher level of service. Airlines have known this for years: it's why frequent fliers get better seats and shorter queues. Similarly, a lot of customers only buy sale items. That's not a recipe for success. Shops need to get bargain shoppers in the store with an offer and then help them see other things they can use."

Put simply, if shops wait until customers reach the tills before identifying them, it's too late. Much of the technology in Microsoft's REC involves recognising customers as soon as possible. Take the digital kiosk running Windows 7, for example. A multi-touch display presents shoppers with personalised special offers and allows them to compare products side-by-side, hopefully before buying one with a single finger poke.

Smart trolleys

Even more impressive is the smart shopping trolley. Swipe your loyalty card and the trolley's display welcomes you by name and plots a route through the shop to your favourite areas, complete with a satellite navigation-style digital map. An on-board RFID system knows where you are, so if you linger by an aisle you can expect adverts on nearby products to pop up. "I've got your eyeballs," boasts Sparrow.

One thing that's noticeable at the REC is how few items carry price tags. This is because when you pick up and scan a product into your trolley, the screen flashes up your personal price for it, which could be higher or lower than for the shoppers around you. "Personalised pricing can be very productive in rewarding shoppers," says Microsoft's O'Meara. "It's part of the value exchange between retailer and consumer in return for privacy and information."

What happens when you notice the shopper in front of you getting a bargain price for the very same Blu-ray player? "There might be some consumer backlash," O'Meara admits. "But the airline industry has shown how personalised pricing can also create loyalty."

Smart trolleys, ubiquitous RFID tags, personalised marketing and touch-sensitive displays may suit hip stores selling high-value products, but with an economic downturn in full swing, some retailers are just looking to survive. Claire Bardwell, a retail technology analyst at Datamonitor, is blunt: "Technology needs to be cheap and it needs to be quick. It needs to improve sales immediately as some retailers simply might not be around after 2009." Miya Knights, editor of Retail Technology, agrees: "The recession will stifle innovation. Retailers will only invest in technology that is proven to make a gain."

Top of the list for saving money is cutting staff costs. "Up to 80 per cent of the labour cost in supermarkets is in the checkout process," says Björn Weber, retail technology analyst with Planet Retail. One innovation being tested in Morrisons supermarkets is the Irisys queue management system. Ceiling-mounted infrared detectors provide real-time information on the number and queuing behaviour of customers, calculating how many checkouts will be needed to meet customer demand in 15 and 30 minutes' time. After watching the store for a few weeks, Irisys can begin to anticipate busy or slow periods.

This allows stores to replace human staff with digital kiosks, the self-scan checkouts that are starting to colonise supermarkets. Ironically, today's kiosks are slower than normal tills, according to Weber. "But without the queues, they feel faster," he explains. "This year, we'll see the first tests of tunnel scanners that automate the checkout process. And in 15 years, shelves will replenish themselves automatically."

It would be nice to imagine such labour-saving devices removing the drudgery from everyday retail work. Microsoft's O'Meara claims, "This technology elevates all of your staff to a higher level of service. It frees them to provide customer service that adds value."

In fact, technological innovations often just free up shops to shed staff - over 30,000 in UK retail since the beginning of the year, although many of those losses are also due to the recession. This de-staffing trend certainly won't be slowed by the Video Assist system from Avaya, a global telecoms company.

Video assist and audio spotlight

Video Assist is an in-store videophone that connects customers with off-site product experts in a call centre, whether just around the corner or halfway around the world. The agent can see the shopper, answer their questions and send instructions, photos or diagrams directly to their screen.

But why invest in flatscreen kiosks when customers are walking around with powerful portable computers in their pockets? Just as Internet retailers rely on their customers having fast computers and broadband connections, physical retailers can leverage their shoppers' phones. In fact, says Knights, by relying on their iPhones and other location-sensing smartphones, "Consumers will dictate what kind of technology retailers will need at the front end."

Microsoft Tags are small, colourful codes that can be printed or displayed just about anywhere. When a customer takes a picture of a Tag with their cameraphone, a free application decodes it and pulls relevant information, promotions or digital content from a website.

"Customers bring their own phones with them," says Microsoft's Sparrow. "It's a convenience item for them but at the same time it's helping retailers reduce their costs. Any time a consumer is doing self-service, you're driving labour dollars out of your business. It's one of the reasons that the Web channels are so competitive."

As bricks-and-mortar shops chase the rainbow of online's convenience and minimal overheads, new technology is even enabling interactive experiences akin to annoying 'pop up' adverts. US technology company Holosonic has developed the Audio Spotlight, a system that fires a focused beam of sound onto a small area from a distance of nearly 20m. The effect, the company claims, is to 'startle and entertain' individual pedestrians while remaining inaudible to anyone outside the target zone.

Unlike billboards, which need planning permission, adverts originating within shops are virtually unregulated, requiring only a local authority permit.

That's not to say that a visit to the shops is set to become an immersive, multimedia experience overnight, says Knights. "There is a vision that vendors would love to see with personalisation and technology across all channels, but that's a utopian view. Retailers are actually very conservative. They're so slow to get rid of legacy systems that the usual cycle for replacing tills is three to six years. Having said that, e-commerce has been a catalyst for change, forcing retailers to look at their infrastructure while delivering an improved customer experience."

Changing the way people shop can also have unexpected consequences. When fast food chain KFC tested digital kiosks in a UK restaurant, it expected shorter queues and faster service. What it didn't expect were customers being less embarrassed about super-sizing their meals and typically spending a third more than those served by humans.

Not all behavioural changes will be beneficial, warns Christine Bardwell of Datamonitor: "There are stores where people will be afraid to use new technology, and then retailers will need to have staff on hand to help customers - negating the benefits of having a kiosk. Technology alone can't save a failing business. It needs to work alongside business processes. If those are wrong, the technology won't help."

It seems that by making efficiency and speed top priorities, shops risk sacrificing the very things that differentiate them from online stores. To paraphrase Le Corbusier, Microsoft's Retail Experience Centre feels less like a genuine shop and more like a 'machine for shopping'. Even Microsoft Retail MD Brendan O'Meara admits: "It's not all about self-service. Sometimes I just want to talk to someone knowledgeable."

Recent articles

Info Message

Our sites use cookies to support some functionality, and to collect anonymous user data.

Learn more about IET cookies and how to control them

Close