technology-blog2

No other industry has been affected by technology as much as retail. Over the last 100 years it’s been reshaped by everything from the emergence of cars, movies, mass-produced ready-to-wear clothes, to the internet.


These days, bombarded by the media, retailers become excessively concerned about being disrupted by new technologies, possibly even left behind. To help in keeping a cool head and to restore a balanced view, I have looked at the technological noise in the media to distil the facts and reflect on their consequences for the industry.


Cloud Computing

Portrayed as the technology of the future, the term actually describes a revamped version of a well established 1960s computing model comprised of centralised mainframes, networked to dumb remote terminals and paid for using a ‘time sharing’ method. Sound familiar to the industry veterans?

A good computer system in retail must use an architecture that combines:

  • public network to provide remote customers and suppliers with access to the retailer’s system,
  • private network (VPN) to provide access to remote employees,
  • private network with message queuing for handling point of sale transactions, and
  • super-fast local head office hub to handle large scale user access and for batch processing.

The first item in the above list could be called ‘Cloud’, the next two can be best described as ‘Private Cloud’ and the last one as a ‘ThunderCloudTM’ or in more prosaic terms, simply a super-fast Local Area Network, connected to the same server environment which services the external networks (the ‘cloud’).

VERDICT: Using ‘Cloud’ for everything could hurt your retail business, as three out of the four areas listed above would work poorly if they were to rely on a shared public network. So, when people bring up the ‘cloud’ topic, you can safely ignore it and instead demand discussions about system stability, accessibility, speed, functionality, useability and simplicity.


Web 3.0

The appearance of Web 2.0 meant progression from static web pages (Web 1.0) to interactive websites. Web 2.0 allows people to access remote databases and perform interactive transactions from external stationary or mobile computers.

Web 3.0 takes this to the next level as it replaces ‘one size fits all’ Web 2.0 sites with personalised, dynamically rendered pages. This means that website content is personalised for each unique visitor, creating a more engaging experience. To achieve this, the systems powering the website must have strong analytics and smart access to ‘big data’.

In a nutshell, we will see gradual progression to LIVE (Web 3.0), replacing the older INTERRACTIVE (Web 2.0) and PUSH (Web 1.0) models.

VERDICT: Just watch it for now. The concept and the technologies behind Web 3.0 need to advance and reach commercial strength before they can be of any use (or become a threat) to your business. Likely to be the technology of the 2020s.


Smart Wearable technology

Smart Wearable technology, everything from glasses to watches, appear interesting from a retail perspective. Experiments have been run and many early adopters are eagerly awaiting more commercialised products.

One design principle puts a big question mark on the future of watch-like devices: the smaller the screen becomes, the harder (exponentially) it becomes to make it work well for the user.

Intelligent glasses sound like awesome technology too, but the idea that anyone wearing a pair could read your heart beat, blood pressure and analyse your eye movements makes some people weary of such a ‘cyborgish’ future.

VERDICT: Who knows? Video phones never took off, whilst pocket music players did. So, the level of adoption and impact remains to be seen. You could have bought a watch with tons of features 20 years ago, but many people still opted for simple timekeepers. Google Glass has been subject to mixed reviews and a certain amount of fear. Could it be yet another technology that may not gain commercial traction?


Big data

Until recently commercial retail systems were focused mainly on item lifecycle, POS, supply chain and inventory management. Over the last few years, the emphasis has shifted, and retailers now increasingly focus on the customer as the core entity that needs to be handled by their systems. One of the common catch phrases ‘a single view of the customer’ means that the enterprise must have a single customer database accessible by all its systems – head office accounts, branch systems, mobile devices in the stores, websites and mobile websites.

Furthermore, customer data must reside in the same database with transactional sales information to allow for transaction and basket analysis. Modern systems also collect enquires and quotes, including ‘abandoned baskets’ in web shops, wish lists, and even browsing history of the individual client. All such data can then be crunched to power the future Web 3.0 environment.

Given the massive data volumes involved, retailers face a challenge – how to store, manage, access and use such ‘big data’. Normal scalability rules no longer apply once the data volumes and complexity reach a certain level.

According to IBM, computer systems generate 2.5 quintillion bytes of data every day around the world. Let’s put it another way: this roughly equates to over half a billion HD movie downloads.

In a society where downloadable software applications allow people to do virtually everything from their smart phones, where geospatial applications like Google Maps generate vast quantities of transient data every day, where every transaction gets recorded as well as every potential buying decision and where digital video technology tracks people’s behaviour, new opportunities and challenges definitely exist for retailers. Smart retailers will need to find ways to manage this brave new world – to collect, store, manage, analyse and use the relevant parts of this overwhelming ocean of data.

VERDICT: Big data by itself won’t make you rich. Work on ignoring the irrelevant data and then on limiting the information available to your retail team to only show material numbers. Also, don’t believe that ‘big data’ means tailoring store range to local demographics or tailoring individual offers to consumers. Common sense has been dictating this type of analysis for decades, but most retailers aren’t bothered to use even such basic data. So, it’s vital to get the basics right first before you start to worry about how to use ‘big data’.


Beacon Technology

Yet another method to automatically identify who just walked into your store. In the good old days, corner shop retailers knew their customers by name, but supermarkets killed this. Undoubtedly, being able to talk again to people as individuals rather than faceless ‘consumers’ has high value to retailers, but without customer consent this will be near impossible.

Apple’s Beacon technology uses low energy Bluetooth transmitters that send shoppers personalised notifications via their phones when they walk into the retail space. Last year, Woolworths trialled beacon technology that notified selected shoppers about special offers or product updates on their smartphones while they shopped. Bendigo Marketplace has been using beacons for family oriented marketing campaigns.

VERDICT: Not sure yet. To really identify the customers on the shop floor you need to capture their photographs and many people may not agree to this. Arguably, once you have customer images, you could then use face recognition rather than a beacon, making the process more effective (as it would be passive, rather than requiring the customer to have an app installed and activated etc). In terms of messaging on the shop floor, you can do this now by simply using local WiFi.


Augmented reality

I could sum it up as the emerging technology that media commentators routinely choose to ignore, in spite of its massive potential for the future. It allows users to see the world by looking at the screen of their mobile pocket computer (‘smartphone’) as if it was a mere a hollow frame. Yet, the computer imposes digital images on the analogue picture coming from the camera.

Imagine being able to see inside a machine by simply viewing it through your smartphone screen. Similarly, looking at buildings in the street and seeing large billboards or landmark information digitally imposed on the cityscape.

VERDICT: Depending on your vertical, you may need to act now. Some retailers already allow you to e.g. see how your bathroom would look with a new shower cubicle installed, allowing you to make purchasing decisions without being forced to use your imagination.


3D Printing

A very promising technology, but unfortunately also a victim of a media frenzy. 3D ‘printing’ describes a machine that can construct solid objects by building them up, a layer at a time, in plastic, metal or ceramics.

Like any other manufacturing method it will find its place, or a niche, and it will become a part of the mainstream technological arsenal. One of its big advantages is the ability to create whole, but hollow, objects. Few other manufacturing methods can do this. However, other claimed benefits (making things on demand, lower cost) do not hold water.

CNC technology allowed individual objects to be manufactured one at a time in the 1970s. And, when it comes to cost, let’s not forget that modern civilisation was built through mass production, not by using smart and flexible manufacturing processes. Such advanced methods have value, but they serve specific purposes, not to manufacture a lot of high quality products fast and cheaply.

Retailers have responded to the media hype. For example, the online jewellery store Brilliance.com uses 3D mock-ups to help customers choose the right fit and style of ring. In the US, office supply chain Staples, after two years of European trials, has opened two experimental 3D printing service centres in New York and Los Angeles. These centres provide the design, scanning, and printing hardware and software for occasional use, or to try out before purchasing. So, the technology has certain application, but it won’t revolutionise retail.

Tesco’s IT Chief Mike McNamara told the media: “I think over the next few years you will see 3D printing in shops, because for the missing hose from the vacuum printer, you can print them in the time that someone enters the store, does a bit of shopping and leaves the store. So I can definitely see that being part of the retail offering in the none-too-distant future.” Personally, being an engineer myself, I think that Mr McNamara could be mistaken. When making spare parts they not only need to look the same; they also must have the same internal structural and material characteristics. 3D printing won’t be able to deliver this.

VERDICT: As a retailer, unless you want to provide customers with access to chargeable 3D printers (in the same way you can use pay-per-page photocopiers), don’t worry about it.


Semantic Web

The holy grail of IT gurus, semantic web means the development and adoption of standards so human intervention can be eliminated from the majority of computerised tasks. In other words, computers will use other computers.

VERDICT: Great idea, originating from 1970s, but still a dream.


The Internet of Things

A less ambitious version of the Semantic Web, ‘The Internet of Things’ means embedded devices talking between themselves over the Web. For example, your fridge sending a message to your phone that it’s time to take the champagne out of the freezer.

VERDICT: It will find its way into shops and offices, but you don’t need to do anything. It will filter through naturally, as devices become more advanced and standards are clarified.

[mk_mini_callout title=”In Summary” ]The best approach is to figure out what you want to achieve and then consider the technology required. This design-centric approach eliminates the reactivity inherent in trying to find a use for the latest gizmo or trend.[/mk_mini_callout]

 

Share :
ABOUT THE AUTHOR
Andrew Gorecki, MD of Retail Directions, has worked with the retail industry since 1985. Industry insiders appreciate his strategic advice and insights, as he lives and breathes for the industry. Andrew received a nomination for the Australian Entrepreneur of the Year Award in 2010.
Related Posts