Monday Sep 30, 2013

Standards Accelerate Innovation

At the beginning of the US Civil War there were over 20 different railroad gauges in use across America. That meant railroad cars could only travel on the track with a matching width thus limiting how far cars could travel.  For example, in 1853 there were three different gauge tracks leading into and out of Erie, Pennsylvania where a booming business grew for workers to unload cars on one track and transfer cargo to cars on a different track.  It was clear this approach wouldn't scale in our westward expansion so in 1862 Congress specified a standard gauge for railroad tracks.  During the spring of 1886 the standard was adopted across the US thus freeing minds to solve more important problems.  Instead of researching ways for cars to adjust their wheels to fit different gauge tracks, the industry focused on other aspects of improved transportation. Standardization frees capital for additional innovation.

The Association of Retail Technology Standards (ARTS), takes a similar approach.  One of its goals is to standardize the way in which we handle data so retailers can focus their limited resources on innovations that more directly impact consumers. Retailers spend far too much time integrating systems instead of adding features.  (Sometimes integration can be the innovation, but often times its just the cost of doing business.)

There's a three-stage cycle I've observed.  Typically an idea emerges, adoption begins, its standardized, then we move on to the next idea.  Its a cycle where the idea gets optimized and standardized for mass consumption.  Standardization reduces costs thus freeing resources to work on the next great idea.  In the case of the railroad, we don't really care if the gauge is 3 feet or 6 feet.  The important thing is that we all agree on a standard (by the way, the standard is 4ft 8.5in or 1435mm) and move on.  The earlier we agree on a standard, the less rework that must be done down the line (11,000 miles of track had to be fixed in the South to match the standard).

The Technology Adoption Lifecycle depicts how new ideas are adopted by the masses. (This was extended by the book Crossing the Chasm by adding a gap between the Early Adopters and Early Majority.)  The graph is depicted below along with ARTS inputs.

ARTS provides whitepapers, blueprints, and webinars that inform retailers and help the industry cross the chasm.  When its clear the industry is interested in adopting an idea, ARTS creates database and XML standards that lower the cost of adoption thus making the idea more affordable for smaller retailers.  To help the late majority, ARTS creates Request for Proposal (RFP) templates, training, and appears at conferences to tout the idea and best-practices for its use.

As you can see, ARTS helps retailers take advantage of emerging technologies at various stages of adoption.  Membership and participation in ARTS is open to both retailers and vendors that want to be on the forefront on innovation.  I've certainly found it a valuable resource over the years.

Thursday Sep 19, 2013

Aligning Strategy to the Future

People like to ask me what retail will look like in five or ten years.  I can paint a futuristic picture involving lots of tech toys, but the reality is that I, like most people, am horrible at making accurate predictions that far into the future.  There are just too many variables, and the biggest one is the consumer.  Its really hard to predict the success of an idea AND get the timing right.  I recall testing tablets at a retailer ten years ago, but they've only recently taken off.  People are saying tablets will replace registers, and maybe they will, but I never could have predicted that ten years ago.

So perhaps instead of asking what will be different ten years from now, maybe we should ask what won't change?  That's one approach Jeff Bezos takes when deciding where to focus energies.  You can bet consumers will still want low prices, vast assortments, and fast delivery so those are constants in the Amazon strategy.  So what are some other things that won't change?

The internet isn't going away, that's for sure.  If anything, bandwidth will increase and open up even more features.  How can your business benefit from a 10x improvement in bandwidth?  Would all the products on your website be animated, perhaps with 3-D perspective?  Would you offer live video help online and from store kiosks?

Mobile will still be important as well, but it might take some additional new forms like wearable devices.  Its always going to be important to serve customers wherever and whenever they want to shop.  We need to stay flexible and support various form-factors for communicating with consumers on the move.  That might include watches, holograms, and displays projected on the nearest piece of glass (Total Recall 2012).

You can bet the marketing department will still be around, and they might just wield even more power. Assuming we're able to increase the amount of data we collect about our customers, how will we use that data to improve the shopping experience?  Can we provide real-time, personalized pricing?  What new types of security can we employ to protect that data?  How do we better include the customer's voice in our business processes?

My best advice for retailers: First and foremost focus on how technology can improve the things that aren't going to change.  Adopt technologies that help keep prices low, improve the customer experience, and make better merchandising decisions, for example.  These will vary depending on your business model, but the point is to not waste energy aiming for something that may never take hold.  Even the best ideas have fits and starts, so don't even try to align your strategy to predictions of the future.  But always track innovation and be ready to adopt when the timing is right.  Awareness and agility are key.

Thursday Sep 12, 2013

How much is your privacy worth?

I have an offer for you.  You tell me some details about yourself, like marital status, number of kids, where you live, your hobbies, etc., and I'll make sure all the advertising you see online and receive in the mail is relevant to you. No more receiving coupons for diapers when your kids are already driving.  No more online ads for dating services when you're married (unless, of course, your hobbies override this).  Fewer credit card applications in the mail (hey, at least they're not as bad as those AOL CDs we used to get).

Seems like a good deal to me.  You get offers you can actually use, the number of mailings that go straight into the trash are cut down, and advertisers get a bump in effectiveness.  Its all good, right?  Wait, you don't like the deal?  What if I can show you you'll actually receive discounts that exceed $100 each year?  That goes straight into your pocket.  No?  Well, how much is your privacy worth?

That's really the big question.  I'd venture to guess that if you're age 99-50 you won't put a price on your privacy.  49-31 will actually give it some thought and provide a number.  Those 30 and under aren't worried about privacy -- they appreciate the reduction in clutter and time savings.

My mother-in-law thinks the NSA is listening to her phone conversations, so my teen-aged son likes to throw in the occasional "bomb" or "hijack" during conversations just to taunt her.  My mother refused to use ATMs.  My dad carefully shredded every piece of discarded mail.  Contrast that with the constant sharing of personal information by teenagers, even in the face of increased identity theft and socially engineered hacks.  Its amazing to step back and look at the dichotomy between the levels of sharing across age groups.

So who's right?  In the words of Jessie Jackson on SNL, "the question is moot."  Retailers must continually adjust to the dynamic tastes of their customers. Is it proper to show a toilet on TV?  In the early days of TV it most certainly was not.  Thankfully, "Leave it to Beaver" broke down societies' hang-ups and sneaked one past the censors.

Nordstrom tried an experiment this summer by tracking mobile phones in their stores.  The fact they were doing this was posted at the entrances, and no personally identifiable information was collected.  They just wanted to see how often anonymous shoppers visited, how long they stayed, and their path through the store.  This is really no different than the cookies in your Web browser.  The same information can be obtained using cameras or simply by following people, but the mobile phone makes it much cheaper to do.  It wasn't until the media proclaimed "big brother is watching you shop" that there was backlash.

AdAge recently reported on the D2 Digital Dialogue conference in which Julie Bernard, senior VP-customer strategy, marketing and advertising of Macy's, spoke on retailers collecting and using customer data. "The media has spun this story so negative, and it's really a shame that people in our positions have not taken a more dominant position on speaking on the macro and micro economic benefits of delivering relevancy by responsibly using customer data."  She went on to say, "There's a funny consumer thing.  They're worried about our use of data, but they're pissed if I don't deliver relevance. … How am I supposed to deliver relevance and magically deliver what they want if I don't look at the data?"

Good question.  My recommendation is to keep trying.  Knowing that consumers' attitudes are changing, its important to "skate to where the puck is going, not where its been."  This is a journey in which we'll move slowly, at each step ensuring its always a win-win for both retailers and consumers, and always acting responsibly.

By the way, if you'd like to take me up on that original offer, Acxiom allows you to access and edit the data they've collected on you at  The screen-shot above is from that site.

Monday Sep 09, 2013

Apple iBeacons in the Store

There is much anticipation surrounding tomorrow's Apple event.  I'm sure we'll hear about new iPhones and iOS7, and we might even hear a bit about iPads, iWatches, and AppleTV.  But I'm really waiting to hear more about iBeacons, a Bluetooth low energy solution for micro-location detection.  iBeacons are going to bring us one step closer to Minority Report marketing, for better or for worse.  Actually, the combination of iBeacons and wearable tech like the rumored iWatch or Google Glass could take us beyond contextual advertising and into useful engagement.  So why should retailers care?

Location is a key contextual clue for target marketing.  Knowing where a consumer is, especially relative to your store, helps determine when and how to target them.  This has been the approach behind geo-fencing, where consumers are sent marketing messages via their mobile phone based on crossing certain boundaries.  Go near the slopes and I'll send you information on new skis.  Go near my store and I'll entice you in with a coupon.  Go near my competitor and I'll remind you of our price-match guarantee.  You get the point.

Location is determined using several technologies leveraging mobile phones, none of which work that great indoors.  Current technology is good enough to know you're at home but not that you're in the kitchen.  An inexpensive way to better triangulate the position of a mobile phone is to strategically place a few iBeacons in a store.  These battery-operated devices are offered by several vendors.  (The image above shows an Estimote iBeacon attached to the wall.)  The iBeacons send signals that iPhones running iOS7 (and presumably other phones in the near future) receive and then calculate distance.  The iPhones themselves can also act as iBeacons, building a dynamic mesh network.

If you'll recall, the ShopKick app uses a similar concept based on sound instead of bluetooth.  In either case, this enables retailers to engage with consumers via their mobile phones based on their specific indoor location.  Consumers can receive offers based on the department in which they're standing, or based on how long they linger in one place.  If consumers can get past the creep-factor, then there's lots of utility in this approach.

So while you're reviewing the Apple announcements, pay close attention to what's said about iBeacons.  And consider how iBeacons combined with an iWatch might enhance the Passbook experience while shopping.

UPDATE: Looks like Paypal Beacon is similar.


News and ideas about the retail industry with a focus on customers, innovation, trends and emerging technologies.

Oracle Industry Connect 2016

Stay Connect with Oracle Retail


« September 2013 »