Retailers enjoying the fruits of technology
Retailers and technology providers gathered in New York City for Retail’s Big Show, organised by the National Retail Federation (NRF), the annual event showcasing the latest solutions that will determine the future shape of retail as technology becomes increasingly embedded in the sector.
There was a noticeable upbeat narrative to this year’s event as retailers are arguably becoming more confident with how they deal with technology and recognise it as enabling their businesses rather than dictating how they are run.
Retailers upbeat about technology
This tone was set in a keynote by Kevin Johnson, chief executive of Starbucks, who says: “We’re dreaming about building an enduring company. If online has created a digital relationship then we’ll do this but not at the expense of the [physical] aspects that built this company.”
Therefore the stores and the personal connection between employees and customers will remain but the company is also developing things such as its artificial intelligence (AI) initiative ‘Deep Brew’. The technology frees up the baristas to concentrate on delivering a rich customer experience. Among its many capabilities is calculating the specific inventory to order for each store, and predicting how many baristas are needed for every 30 minute period in the workforce schedule within each outlet.
Artificial Intelligence (AI) was very much in evidence at NRF as its capabilities are now incorporated into many solutions. Among those looking to benefit from this is Lars Gunnarsson, digital transformation leader at IKEA Food, who says the company is implementing a solution from JDA that uses AI to help it with its forecasting and management of the supply chain.
AI powering sustainability
“It’s super exciting and we’re currently putting the right data points in place for it. AI will support our sustainability and drive less waste. It will be massive for us,” he says, adding that the solution will enable the company to see the demand curve and coordinate deliveries of food, manage portion numbers, and more intelligently manage labour based on demand. The supervisor will also receive notifications of waste levels on each shift.
But Gunnarsson cautioned that care has to be taken: “It will challenge the existing ways of working within the business. Among the changes will be standardising the supply chain – balancing the global food offer with the local proposition.
Sustainability is also an element of the solution from Texel, which seeks to reduce returns by solving the perennial issue of fit. Sergey Klimentyev, co-founder of Texel, says its body scanner solution involves customers using their phones to take front and side photos that provide the necessary data points – with it delivering 95% of the accuracy of a professional tailor.
It will shortly be introduced by Marks & Spencer within its menswear offer initially for ecommerce and its app before then being used in-store. Texel is also working with John Lewis. This incorporation of technology into stores continues to drive changes in the role of physical space. Stacey Shulman, chief innovation officer at Intel, says it is about understanding where the store now fits into the retail model.
Selective technology
On the Intel booth this year there was an array of different technologies – from autonomous coffee making robots to facial recognition type solutions that are being used in cafeterias to visually recognise dishes and charge the customer accordingly. But the key point is not putting digital into stores for the sake of doing so.
Amazon has certainly shaken things up in this area with its Go stores that are packed with technology to deliver a cashier-free checkout experience. This has set the ball rolling on a massive level of development in technology solutions to monitor and manage inventory – both from the perspective of dealing with on-shelf availability and also to provide the ability to operate cashier-free stores.
A variety of players were present at NRF with their differing solutions. Issac Banon, business development manager at Trigo, says using ceiling cameras is the only scaleable and robust solution and that Trigo runs the images it takes through its algorithms to map the store in 3D co-ordinates that can track the movement of customers and products in-store. Tesco is among the companies undertaking low-key trials with Trigo.
Managing inventory through vision
Bossanova is focused on inventory management and has its tall robots currently roaming the aisles of 1,000 Walmart stores in the US. Red McKay, global vice president of sales at Bossanova, says its computer vision and analytics gives 90% accuracy for on-shelf availability – compared with only 40-60% when the task is undertaken by people. He reveals that the technology is to also be placed in other forms such as drones and much smaller robots that can navigate tight aisles in compact outlets.
Richard Schwartz, chief executive of Pensa Systems, has also taken a more flexible approach of late and has added a scanning capability via a mobile phone app that can be used in conjunction with its drone solution – that fly around stores taking video of the goods on shelves – to give much richer picture of the inventory.
The accumulation of data and its subsequent analysis was also apparent in the developments at Under Armour where Kevin Plank, executive chairman of Under Armour, describes his operation as a “connected fitness company” with its app and chips incorporated into its Hovr shoes, which help it better understand its customers.
“The backbone of our business is connected fitness. We’ve the number one health and fitness app with 300 million consumers and 70,000 downloads every day. We use this data to be smarter about our customers. Data is at the centre of what we do to understand customers and where they are going,” he suggests.
The need for speed
Customers can upload their meal details and fitness workouts, which combine to help the company be “smarter about our customers”. Plank also details how the Hovr shoes range incorporate a chip that gives users the distance they have covered, the cadence, and speed among other things that can then be used to help improve their performance and also feed into the company’s developments.
This highlights how technology really is being incorporated into all areas of retailers’ businesses and has led some major retailers to reassess how they handle it and look to insource their technology.
Mike McNamara, CIO at US-based Target, made just such a move and is enjoying the benefits: “It has more than paid off. We can produce technology at a speed that was unimaginable. New features and functions need to come out immediately today. We can do daily releases. We could only previously do two or three releases for the PoS annually but now we can do it on a weekly basis.”
He says everything is now built in-house, apart from non-retail specific aspects such as ledger and payroll, but he recognises that this approach is more relevant to a business of the scale of Target. However, he does recommend the insourcing of certain aspects of technology for retailers of all sizes.
“I’d look at the most important things for [achieving] competitive advantage. Whereas the likes of warehouse management could be outsourced. Things like allocation and assortment planning I’d build it and embed machine learning,” he says.
Stores providing discovery
What was clear this year at NRF was the growing recognition that the store has a key role to play and that this should be all about discovery. This is the belief of Tal Zvi Nathanel, founder and chief executive of US-based co-retailing store Showfields, who says: “It’s still all about discovery. This is what Selfridges did but some things have been lost in translation. We’ve not invented anything new, we’ve just brought it back.”
An interesting aspect of Showfields is its use of technology to attract online-only brands to take physical space in its store. It makes the process painless for them. “Every brand needs a physical presence but it’s hard to do. It does not necessarily fit their business models, its expensive, how do you translate 2D to 3D, and the most challenging aspect is meeting the expectations of the new customers out there. All this deters brands from going physical,” suggests Nathanel.
Words by Glynn Davies.
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