The future of digital retail: augmented reality, clicks-and-mortar and data privacy

Digital technology is changing the way that shoppers are engaging with retailers, from online shopping and pre-purchase research, to in-store experiences that some retailers are adopting, particularly overseas. Mohit Jain, head of retail at Capgemini Australia, talks to Michelle Herbison about where it’s all heading.

Marketing: How is digital changing the way that shoppers engage with physical shopping spaces?

Mohit Jain: What we see in the market is that there’s so much digital disruption happening, whether it be online or for retailers from a shop perspective. The retailers are grappling with what to adopt to actually engage their customers. One thing that’s become very clear is the shopper sentiment and every retailer is dealing with that in their own different ways. A lot of shoppers are researching online before going into the store.

Secondly, what we’re not seeing as much in Australia is the advent of digital in-store. The North American and UK retailers have adopted a reasonable amount of digital in-store, maybe not as much as they themselves would like, but I think the Australian retailers are far behind on that; just some basic iPads to look at the catalogue or to browse through the designs is not present, but more and more is coming.

Recognition and reward is one area where digital in-store is being trialled and used, firstly to recognise who the shopper is, currently being done by beacon technology or loyalty card with a chip in it, or by you signing into their WiFi. But there is no reward for the shopper once they’ve been recognised. That’s the next wave that in Australia needs to happen. It’s already started happening in North America – Nordstrom, Macy’s and others have started using instant gratification promotions people get while they’re in-store, suggesting something is on special for them.

The second thing is about making the shopping experience better; which aisle to find the product, what designs and sizes are available. Woolworths has done a pretty good job on their app with showing what item is stored in which aisle, but if you look at the fashion retailers, they’ve got a more difficult job.

M: What ideas are there around what retailers can do to make the customer experience better? What are some of the  innovative ideas coming out?

MJ: Some of the US stores are using smart mirrors to engage the customer up-front so they don’t have to worry about going looking for your size; you pick that design and that style, and your size gets put into the changing rooms. Higher-end stores are adopting those smart mirrors. But the likes of Macy’s are still not in that range, they’re going more on the iPad route, where you have these smart kiosks where you can browse through which items are housed in which section.

Interestingly, I was speaking to one of the discount retailers, and they find it tough to adopt this kind of technology in Australia because the in-store digital hasn’t been taken up by the bigger retailers in Australia, some of the discount retailers are reluctant to use that technology simply because they’ll give the wrong impression to their shoppers. They’re worried about the perception that this is an expensive technology. But it’s not. They feel it’s sort of relevant and necessary, but they’re tasked with more protecting their bottom-line, and also the perception of the consumer that if a digital in-store has been deployed, is that an expensive thing that’s been done. Am I truly getting a cheap product?

M: OK, fair enough, but what about the higher-end retailers? What’s holding them back from adopting this technology?

MJ: I’m actually quite surprised that it’s not been adopted as yet, I’m really staggered actually, because the cost of doing the iPad kiosks is next to nothing. But I think the issue for these retailers is how to keep that information consistent. It’s the back-end systems which have not become well-integrated to provide that consistent information down at the store. Real-time view of inventory across your stores is a problem, therefore you can’t have an iPad showing inventory in-store. What’s happening at the moment is most of them are making their backend systems refreshed and ready to provide that experience to the shopper in-store.

M: Going back to the idea of shoppers doing a lot of research online but still going into the bricks-and-mortar stores to shop, I was looking at the Digital Shopper Relevancy Report. It says 72% of respondents view bricks-and-mortar stores as important or very important in all categories except electronics, compared to 67% for the internet, while 75% say that the internet is important or very important for shopping research. You hear a lot of anecdotal stories of, ‘all customers are going online, everybody’s switching to online shopping’ but these stats go against that. What are the facts around what customers are really doing?

MJ: In my mind what’s going to be the future is click and mortar; it’s not going to be brick and mortar alone. If you look at some of the leading pure-play online retailers, they’re opening brick and mortar stores as well. In New York a couple of fashion retailers who have been just purely online, they’ve opened brick and mortar concept stores to engage their customers in a physical way. Shoes of Prey are opening stores now. That trend is going to absolutely continue. I don’t think a complete pure-play online retailer is the only answer to meet customer expectations.

M: What about having an online store as well?

MJ: The traditional stores have to absolutely up their online business, because they’re losing a lot of business to the international online retailers and that has to stop. Online, the digital presence has to be completely revamped. Some of the australian retailers do not even have a good search functionality, which I think that is fundamental to online retailing. Then there is the whole thing that Amazon has done very well, which is what is your next best action; predicting if you bought this, what can you add on to the basket. Those technologies with a lot of analytics at the back-end are coming up, so a lot of retailers are beginning to use that.

Then the next wave is going to be your whole concept of augmented reality. I personally believe the whole concept of dress-me-up mirrors will not have mass scale, they’re very impractical. I think what we’ll get to is actual augmented reality of you actually visualising yourself with that dress on, whether on a mobile or on a PC screen, but there is a very fundamental step that needs to happen before that, which is the trust that exists between the shopper and the retail organisation. Today there is not trust between these two, and therefore the amount of information that’s being shared by the shopper online with the retailer is very limited and therefore that personalisation is lacking. It’s a paradox, because the consumer today does not share their personal details because they don’t trust how the data is being stored and what it’s being used for. And the retailers are not able to give that visibility to the consumer, and that paradox needs to be broken.

 

The next step in data privacy

Mohit Jain believes the next big step that Australian retailers need to take is around data privacy. “I personally would not put my body form details on a website or even on my phone unless I’m absolutely sure that that stays on my phone and goes nowhere else,” he says.

He believes consumers simply will not trust retailers to take the next step with augmented reality and similar opportunities until data privacy has a new standard similar to SSL encryption – a security technology between server and client to protect privacy.

“I think the future is going to be that if you’re shopping online there will be a validation certification to be conveyed by a third party that the retailer is a valid data privacy retailer.”

Capgemini has partnered with a number of large consumer product and retail companies, including Coca-Cola, Nestle and others, to come up with the following seven Consumer Engagement Principles, designed to promote data privacy and create consumer trust.

The Consumer Goods Forum’s Consumer Engagement Principles

  1. Communication: communicate in a clear, simple and easy to understand language,
  2. value exchange: inform customers about the benefits and value that the use of their personal information provides to both businesses and consumers,
  3. transparency: inform customers about what we do with the personal information they provide,
  4. control and access: enable consumers to easily choose whether and how their personal information is used and to have the access to information on how their personal information is used, and the ability to correct it and/or have it removed,
  5. ongoing dialogue: listen and respond to consumer feedback about the use of their personal data,
  6. protection of personal information: protect the integrity, reliability and accuracy of consumers’ personal information and be open about the status of their personal information, and
  7. integrity in social media: preserve integrity through proper disclosure of commercial interests in social media practices such as ratings, recommendations, endorsements and work with regulatory agencies on alignment of practices and guidelines.

 

Michelle Herbison
BY Michelle Herbison ON 11 September 2015
Assistant editor, Marketing Magazine.