M-Cube Magazine

DIGITAL INNOVATION IN INTERNATIONAL RETAIL

Countries compared: the Digital Innovation in Retail Observatory, organised by the Polytechnic University of Milan’s School of Management and in its fifth year, offers a breakdown of the international market, identifying technological and strategic topics and trends.

International brands clearly believe in digital innovation in retail, as demonstrated by investment and experimentation with cutting-edge technologies such as the Internet of Things (52%), Augmented and Virtual Reality (16%), Machine Learning and Artificial Intelligence (32%).

In the fifth edition of the Digital Innovation in Retail Observatory, organised by the Polytechnic University of Milan’s School of Management, analysts used global data to take stock of the situation. Despite a hesitant upturn, consumption is still far from pre-crisis percentages. In 2018, total retail sales growth (online and offline) in the most mature markets was estimated at around +3% for the US and Europe. Of the countries analysed at an EU level, growth in the United Kingdom stood at +3.5%, followed by Germany with +3.3% and France with +2.8%, while Italy languished at +1.7%.

THE KEY TO SERVICE IS EXPERIENCE

The culture of shopping has been changed by eCommerce, which has encouraged new forms of interaction and purchase. Formerly a physical space that provided access to the product, the point of sale is now the ideal means to provide an experience that involves each of the consumer’s five senses and is richer, more contextual and more gratifying in terms of emotions and information. Thanks to digital innovation, brands can enhance both space and time, transforming the store into multi-experiential hubs that also use technology to collect (and use) extremely precious data.

People are happy to have an increasingly rich and dense experience inside shops, enriched by the opportunity for important interactions, the chance to learn something new and work on one’s own professional and personal projects.

commented Emilio Bellini, Scientific Manager of the Digital Innovation Observatory

In this case, digital technologies enable increasingly immersive and fluid experiences. Access to the product therefore becomes a pretext for visiting the shop, where digital technologies help brands to reinforce the real setting and to extend physical boundaries by embracing an increasingly pervasive model of service.

A key example is selling online in-store: thanks to interactive totems and kiosks, the customer can see which products might be paired with the item they are buying, on the basis of suggestions or inspiration both in the field of fashion and mass retail.

DIGITAL INNOVATION IN DISTRIBUTION

In 2018, technology was at the centre of large investment aimed at improving the in-store experience and increasing customer views thanks to more extensive use of data. Designers use digital to create concept stores that reinvent interactions and relationships, guaranteeing ever more targeted services. The shop, in fact, changes skin and expands its perimeter of action to integrate into a multi-channel approach along with the other points of contact.

Let’s have a look at a few examples.

#1 TILL-FREE SHOPS, SENSORS AND APPS

Researchers cite Amazon GO, which has opened its first cashless store in the United States where customers can take products from the shelves and shop without going to a cash register. Thanks to an app and dozens of product-recognition sensors across the store, the articles selected are automatically loaded into a virtual basket. Once the customer has concluded their purchases, the brand charges the cost of the items and the customer just leaves with their shopping. Amazon GO is proving to be very successful, to the extent that Bezos is planning to open another 3,000 stores around the world over the next three years. Tesco in the United Kingdom and Saturn in Germany are also moving in this direction.

#2 SENSORS, BIG DATA AND ANALYTICS TO STUDY CUSTOMERS AND PRODUCT SELECTION

There are many technological experiments associated with the Internet of Things and, in particular, the sensors and smart cameras used, for example, by Clarks and River Island in the USA to collect data and information on in-store customer behaviour. Through BI & Analytics systems, Machine Learning and AI, this data is collected and processed in real time to provide specific personalised advice to support the purchasing process. For example, Burberry’s product recommendation system suggests clothing to suit the customer’s personal style, while the Sam’s Club smart shopping list recommends products based on analysis of past purchases. Carrefour, in France, uses beacons to track and monitor customer paths and better study product display and selection.

#3 VOICE ORDERING: I COMMAND

AI underlies the development of many innovative voice command tools: Kroger in the US and Starbucks in Korea allow orders to be placed online via voice commands.

#4 AUGMENTED REALITY TO ENHANCE THE EXPERIENCE

According to researchers, Augmented Reality is becoming increasingly central to the redesigning of the buying experience in some specific sectors. By virtually inserting the object in its domestic environment, Lowe’s in the US uses technology in the furniture sector to check whether it suits a certain style. In the cosmetics sector, Sephora in the US and Coty in France offer AR so that customers can test make-up products before purchasing.

#5 RADIO FREQUENCY IDENTIFICATION: HELPING PRODUCTS COMMUNICATE

The increasingly widespread adoption of RFID tags continues, used by brands to establish the movement of goods from the back end to the front end, including inventories. Following in the footsteps of Decathlon and Zara, Target in the US has also ensured its products can connect and communicate, integrating a system of traceability that offers added value.

#6 MULTI-CHANNELS FOR BETTER SERVICE

The adoption of increasingly functional and operational multi-channel systems has seen the multiplication of Click & Collect services, which have evolved to no longer require direct interaction with in-store personnel, thanks to fully automated lockers and kiosks installed inside (Zara in the UK) or outside (the Home Depot in the US) the store. Analysis of the top 100 retailers operating in the USA, Canada, France, Germany, United Kingdom, Australia and China, shows that the Click & Collect model is used by 71% of the sample, while in-store returns of online purchases is offered by 5 brands out of 10, especially in the US (73%), UK (67%) and Australia (60%), while online verification of in-store availability is implemented by 48% of the sample.

Laura Zanotti, Journalist and Technical Writer

7 March 2019

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