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The physical web shop

RFID: bridging the gap between online tools and bricks-and-mortar retailing.

You walk into a clothing store. You notice a display of new arrivals on your left and a screen that shows complimentary outfits. Your smart phone buzzes with an SMS inviting you to click and engage with your virtual shopping assistant…

This scenario may seem like science fiction, but we have the tools to make it happen right now. And it's about time. The way that retail shops engage customers hasn't changed significantly in over 100 years. Before the rise of department stores in the early 20th Century, mail order retailers such as Sears Roebuck ruled the day. At that time, most shops kept their goods behind the counter: you had to ask to see them. Then the department store came along set the modern retail model in motion: walk through, touch and feel what's for sale. Try it on. Exciting!

This new shopping experience helped us to equate shopping with pleasure, changing it from necessity to pastime. In over 100 years shopping hasn't changed all that much. In fact we've come full circle from mail order to retail to (e)mail order. The only significant difference is that we're using the Internet instead of paper catalogues.

A flawed model

The online customer experience keeps improving, but the experience in-store remains essentially the same. The great advantage that in-store retailing has over online is that you can touch, feel, try on and otherwise experience goods, especially clothing. But for all that, we're doing many things more poorly in the real world than in the virtual one. Some are even worse now than they were a century ago.

"A century ago there were far fewer SKUs," notes Pekka Riippi, CEO at Nordic ID, a Finnish developer of barcode and RFID readers as well as software solutions for fashion and specialty retailers. "That made it easier to keep items on shelves. And of course back then shops had plenty of people working in them. If you couldn't find something, help was always at hand."

Shopping in person can be lots of fun. Especially when you find what you're looking for in the right size and colour. But it can be frustrating, too. It depends on how much time you have, how much you like shopping, and the experience you encounter in-store. Ramir De Porrata-Doria of Keonn Technologies, a Barcelona-based manufacturer of RFID systems for retail stores, notes that each obstacle to in-store shopping shaves off a percentage of sales. "Online stores care very much about minimising obstacles in the buying process. That desire is the same in physical stores, but there's been no significant change in many, many years."

Here is a short list of in-store issues facing the consumer today:

  • Security systems Security gates have been shown to create anxiety, discouraging people from crossing the threshold into a store.
  • Finding products Finding what you're looking for often means asking. If there's no one around, you might decide to leave. Staffing at most stores is lighter than it was a century ago.
  • Not the right size You find the right product but not the right size. A recent study indicates that this results in a loss in sales of between 2% and 4%.
  • Fitting rooms Even when there's no queue to use a fitting room, repeatedly getting dressed and undressed in order to find the right item or the right size can cause people to abandon the buying process.
  • Payment See a queue and you're tempted to come back another time. A recent study shows that after a wait of 5 minutes, 30% of people leave.

These are the top reasons that sales are lost, but there are more! Each shaves a few percentage points off a store's sales potential. Wouldn't it make sense to tackle these issues head-on instead of simply accepting them?

Web tools, meet Bricks and Mortar

Bringing online techniques into the real world is one solution. Take recommendations, for example. "70% of Amazon's home page consists of recommendations," says De Porrata-Doria. "And they are responsible for 35% of Amazon's sales." Even the most conservative studies show an increase in online sales of between 5% and 15% due to recommendations.

Shutterstock _169181978_fashion -store _with -smartphone _web

The best example of a 'recommendation' in fashion retail today is when you are presented with a 'look', typically a manikin wearing a complete outfit. But until recently, assembling all of those components in your size has been difficult: you have to search the store to find them. Compare that to walking into a McDonald's and the contrast is striking: a featured menu item is always front and centre. You place your order and up it comes. That's the level of service that retail technology enablers are hoping to provide retailers over the next few years…albeit without going back to the old behind-the-counter style of retailing.

"Improving the experience hinges on contextualised item recognition," asserts Riippi of Nordic ID. "In this context, that's what RFID delivers: the ability to recognize what a customer has in their hand, including size, colour, version and any other relevant data. The same granular information that has had such a profound effect on back-room logistics-vastly improving the tracking and moving of goods between manufacturer, DC and store-is now being used to improve and facilitate the shopping experience."

We now have the technology to transform the in-person shopping experience, and we're just starting to fit the pieces together by bringing online technologies into physical stores, transforming the way that physical spaces interact with consumers.

From store-centric to consumer-centric

Retailers that can eliminate just one of the barriers to a sale can create an incredible uptick in sales. One proven way to do this is by means of a retail platform. Whether it's via the customer's smart phone, kiosks, interactive fitting rooms, smart mirrors, or shop attendants' PDAs, integrated retail platforms change the in-store consumer experience.

Let's continue the scenario that we started with:

…with a voice command, you tell your virtual shopping assistant what you are looking for. She directs you to a colour-coded section of the store. You pick up a pair of pants and the nearest mirror shows you virtually wearing them. Move, and the garment moves with you. The mirror shows you what sizes are currently available, and along one side are similar options in a variety of colours. Along the other, you find complementary shirt suggestions. You press one option, which brings up a diagram of where the item is in the store.

Taking a clothing combination to a dressing room, you decide that the colour of pants you have chosen is not quite right. You engage with your virtual shopping assistant to request an alternate colour. A staff member uses his PDA to let you know that he will bring your selected colour shortly. When you try on a football team jersey, you hear the roar of the crowd and the team's anthem starts to play. Try on a spring skirt, and you detect the delicate smell of tulips.

Leaving the fitting room, you tell your virtual shopping assistant that you're ready to pay. She directs you to a kiosk where you can pay by credit card or bank debit via your smart phone. A shop assistant wraps your purchases up for you and you're on your way, across the pressure-sensitive carpet near the store entrance. An RFID-enabled electronic article surveillance system checks the item tags in your possession against your receipt.

Ok, sounds wonderful. So how does this all work?

A camera, gesture recognition software (think Nintendo Wii) and augmented reality work together to enable virtual try-ons in the mirror. SMS or a similar technology sends messages to a live assistant. Nearfield communication (NFC) enables payment via smart phone. RFID does the rest.

It's not rocket science, and according to Riippi of Nordic ID, the payback potential is big. "Every time you eliminate a barrier to shopping in-store, you realise an uptick in sales of several points," he says. "Tear down those barriers," continues Riippi, "and the shopper doesn't get scared off by anti-theft gates, frustrated from searching, worn out by the dressing room shuffle, or ticked off at a long queue. The whole experience is satisfying-it's really what's missing in bricks-and-mortar retailing today."

It all boils down to two main ways of improving the customer experience through in-store technology:

  1. Your shopper acts on recommendations, creating a sale where there might not have been one
  2. She doesn't abandon her purchase at any point

It's really that simple. RFID-enabled pilots of the kind described above have proven to increase sales. RFID systems will, of course, also facilitate a high level of inventory accuracy. With mobile RFID computers, employees can inventory the entire store in minutes, enabling cycle counts daily or even more often. Employees can also use the devices as Geiger counters to find items. Overhead antenna RFID systems can deliver real time stock data, creating the distinct possibility of never having an item out of stock or unaccounted for, ever.

Scenarios like the one above leverage aspects of transforming the shopping experience:

  • Personalisation The store quickly engages you as an individual
  • Contextualisation The store learns what you'd like to buy and makes suggestions
  • Interaction You interact with the store itself, not just with employees

Central to transforming the shopping experience is RFID. "It's the technology that acts as a bridge," observes De Porrata-Doria. "Once an item is detected in a certain context, it crosses over into virtual space. There, you can do pretty much anything with it that you can do on a website: create recommendations, show different colours, sizes and styles…you name it." 

Modern retail experiences have the potential to be even better than online ones because you can experience the excitement of shopping, of finding what you truly want, on your terms and with a minimum of hassle. It won't be long before today's pilots turn into a full-fledged retail platform.

Pekka -Riippi _Ramir

[Left] Pekka Riippi is CEO of Nordic ID, a leading manufacturer and provider of efficient store operations management with RFID for apparel and specialty retailers.

[Right] Ramir De Porrata-Doria is CEO of Keonn Technologies, a manufacturer of RFID products and systems mainly for the retail and healthcare sectors.

Sources

Impact of checkout time on customer service perception

Out of stocks

 

4 comments on “The physical web shop”

  1. Posted 24 April 2014 at 10:04:14

    This article is very interesting and for sure there is a bit of the future in it. Ecommerce is king in terms of CRM, retailers don't use it while their customers are in the middle of their shopping process (in store). Cross canal is one solution, RFID could complement it.
    The other subject : stock management is another issue, another interesting one, cos' it is expensive to count...
    I would be very interested to see a shop using those techniques, it is all very exciting !

  2. Posted 24 April 2014 at 10:43:23

    Hello Frederic,

    I am sure we can arrange this. You can send your contact information to: marketing@nordicid.com and we can try to fix this for you.

    BR, Mirva

  3. Gravatar of Marilyn ElkinMarilyn Elkin
    Posted 06 June 2014 at 20:40:44

    Is this something that is available now? I want to sell this!


  4. Gravatar of Kirsikka DrägerKirsikka Dräger
    Posted 09 June 2014 at 11:21:21

    Hello,

    this sounds fantastic, right? The tools to make it happen already exist right now. If you are interested in innovative RFID systems in retail stores, I recommend you to also read up on the intelligent store concept of Roberto Verino: http://www.nordicid.com/eng/case_studies/roberto_verino/

    BR, Kirsikka

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