Tuesday May 13, 2014

Dark Stores

Toys"R"Us has been offering omni-channel (I'm so sick of that term) journeys such as buy-online-pick-up-in-store for several years.  Additionally they can use the store to fulfill online orders, which is an important part of their business, especially during the holidays.  Both cases require a store employee to pick product from the floor and move it to the backroom.  I was speaking with someone from Toys that told me a funny story about this.  You can imagine the chaos on the floor during the holidays, so when employees were picking items they were constantly being interrupted to answer questions or retrieve items from high shelves.  To combat the issue, employees assigned picking duty did so without an official uniform.  Yep, they had to wear street clothes to get the job done.

Although online grocery shopping hasn't yet taken off in the US, its quite popular in the UK.  Customers place their order online which is fulfilled at a nearby store and delivered by truck.  Pickers are given a large cart with separate bins for separate orders, and they use a tablet to efficiently navigate the store.  With enough orders, you can imagine those customers slowing down the pickers.  The grocery store layout isn't really conducive to both types of foot-traffic.  Thus the dark store was born.

Just as you might expect, the dark store has no customers and is used strictly for picking and fulfillment.  Its location and layout are similar to traditional stores, but there's no price tags, no endcap advertising, and no checkout lines.  Its a neighborhood warehouse, complete with fresh, frozen, and dry goods.

Sainsbury, Tesco, and Waitrose continue to open dark stores in the UK, filling 4,000 online orders a day per store in some cases. I suppose this makes perfect sense in areas where order volume is high, like in big cities.  Then in the suburbs, it might be acceptable to leverage the existing store, perhaps with an express lane for crowd-sourced deliveries like Instacart.

Although I don't know of any dark stores in the US, it wouldn't surprise me to hear that Amazon Fresh and Fresh Direct are using them.

Image from The Guardian: Waitrose, Aldi and Lidl eat further into major supermarkets' market share.

Wednesday Jun 19, 2013

Accelerating Innovation for Retailers

In today's competitive marketplace, a big differentiator can be technology, where advancements in social and mobile have opened new possibilities for increasing employee efficiency and enhancing the customer experience.  Therefore, its critical that retailers establish their own labs to track and adopt new ideas.  There are several different approaches, and there's no single right way to establish a lab.  Below I describe the most common three approaches I've seen from retailers.

1. Organic approach.  Some retailers, like Tesco and Wet Seal, fan the flames of innovation within their four walls. Using internal employees, they design and implement novel ideas that improve the business.  Tesco has continued to innovate with their website, loyalty program, and their mobile apps, much of which is developed internally.  Wet Seal, one of the early pioneers of social retailing, learns through trial-and-error, finding out which ideas have legs.  This approach requires strong leadership, vision, and a willingness to fail so its not for every company.

2. Kickstart with acquisitions.  In April of 2011 Walmart acquired Kosmix, a social startup, and formed @WalmartLabs.  This was followed by a string of additional acquisitions in the social and cloud spaces.  HomeDepot followed a similar path by acquiring BlackLocus to form a lab then following with the acquisition of Red Beacon.  This can be an effective approach if there's no existing culture of innovation, so buying the start-up mentality can form a basis for building a lab.


3. Partner collaboration.  The danger retailers face is losing focus on their core competency -- retailing.  Running a start-up within a large company can be costly, reliant on key individuals, and sometimes a distraction to the core business.  An alternative approach is to partner with technology companies so as to share some of the burden.  Lowes, for example, invites technology partners to present innovative ideas then chooses a few projects for collaboration.  This can be an excellent way to stay on the leading edge of innovation without some of the mentioned downsides.

CEOs know that standing still is not an option, so look for more retailers to establish labs where technology innovation can be better cultivated.


Wednesday May 02, 2012

In-store Innovation from Tesco

In this short video, Tesco's Mike McNamara tours a store pointing out innovative technology.  I particularly like the Broccoli Cam.

Tuesday Dec 06, 2011

2012 Predictions for Retail - Part 2

I think the first four predictions are pretty likely, so let's look at some things that are a bit of a stretch.  These next four predictions are based on emerging technologies making inroads but not widespread adoption.  Let me know if you agree or disagree in the comments.


5. Usable Augmented Reality

The first usable augmented reality app I used was Yelp when they had a semi-secret backdoor to access Monocle.  The concept has been accessible to us since Apple combined the camera, GPS, and accelerometer in the iPhone, but I haven't seen anything I would use on a regular basis.  Amazon's Flow is certainly a step in the right direction as is Tesco's subway store, and I think we'll see some more useful applications of AR next year.

And AR isn't limited to consumers.  It can be helpful for store managers to be able to get information about sales and inventory as they walk the store.  If a manager wants to know how many transaction per hour a checkout associate is doing, she need only point her camera.

6. Accurate Indoor Location

GPS has saved my marriage in several situations, and I can't live without it anymore.  Its perfect for driving, but its not accurate enough to help me navigate my local Lowes and Home Depot.  That's because GPS doesn't work well indoors.  Smartphones typically use a combination of GPS satellites and WiFi access points to triangulate your position.  The WiFi part is getting more accurate, and some systems leverage closed-loop security cameras to help.  This year will be first rollout of accurate in-store directions for a big-box retailer.  Not sure which one will be first, but I think the home improvement chains have the most to gain. 

Imagine standing in an aisle and pressing a "help me" button on your phone, and a clerk walks right to you for assistance.  Or getting turn-by-turn directions to find the garage door openers, for example.  Accurate indoor location also helps with geo-fencing that I mentioned earlier.  You might receive location-specific offers and product information as you walk.

7. Shopping with Siri

Apple's Siri is bringing to light the augmented humanity concept, the collaboration of humans and machines in transparent ways that enhance our everyday lives.  A subset of the concept is using natural user interfaces that are easy to manipulate.  In the case of Siri, voice response systems that understand questions and provide useful answers in context.

As smartphone adoption continues to grow in 2012, so will our dependence on them for providing information.  New mobile application that take advantage of voice response, computer vision, and even eye-tracking (remember, while you're using your iPhone, there's a camera pointed at your face) will begin to emerge.

This means it will be even easier for consumers to get any and all information about products and brands.  Look for Google and Apple to take the technology lead, and Amazon to capitalize on the advancements.

8. Behavior Profiling

When I shop, there are certain things that persuade me to buy: free shipping, good reviews, great price, perceived quality, easy returns, etc.  But those things vary by person and situation.  What if a retailer had a shopping profile on each of its customers and knew how to efficiently market to that customer?  While I don't that we'll get to that point in 2012, I do think significant progress in that direction will occur.

Take myLowes for example.  Lowes is collecting valuable information about each of its customers and will be better able to tailor offers that are more likely to be of interest.  Lowes will sell more, and its customers will have a better experience.

Look for retailers to offer more differentiated loyalty programs and then develop sophisticated marketing plans at more granular levels using all that psychographic big data.


2010 was the year when mobile went mainstream in the retail industry.  2011 marked widespread adoption of Facebook to drive sales and engage consumers.  I think 2012 will be the year that cloud computing gets serious. Look for lots of acquisition in this space, and more retailers to dip their toes in the water.

Tuesday Jun 28, 2011

Virtual Grocery Store

Because South Korean's are so busy, Tesco decided that its Homeplus grocery chain should offer a virtual alternative in subways.  As you can see in the video below, shoppers passing through a subway station can see a virtual representation of the store and scan items with their mobile phones.  This builds a shopping list which is delivered to their homes later that day.

This is a very cool example of leveraging technology to offer a shopping experience that's different from bricks and clicks.

About


David Dorf, Sr Director Technology Strategy for Oracle Retail, shares news and ideas about the retail industry with a focus on innovation and emerging technologies.


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