Crunch Network

E-Commerce Isn’t Everything

Next Story

The FAA’s Drone Registration Site Is Now Up And Running

The holiday season is here. For many of us that means lots of shopping. Are you doing most of your shopping online or in stores? If you’re like most consumers, the answer is both, but with a significant bias toward physical stores.

Despite all the attention about Cyber Monday and online transactions, e-commerce sales will still only amount to roughly 7 percent of all retail sales this year.

Online and mobile shopping can be incredibly convenient — a repeat order on Amazon takes seconds; Instacart can turn a trip to the grocery store into a one-minute session on your phone. Online shopping also allows you to browse hundreds of products, compare items of interest and get recommendations about similar items.

But what if you’re buying something you need to see, feel or experience in person? Clothes, furniture or art, for example. You could order these items online and return them if they don’t work out, but it’s an awkward process that defeats a lot of the convenience of online shopping.

Efforts have been made to combine the best of online retail with the best of shopping in the physical world. Online-first retailers like Amazon, Warby Parker and Bonobos have opened physical stores to allow customers to experience their products in person. Brick-and-mortar retailers have “omnichannel” initiatives to better synchronize their online and offline offerings. The result, however, has been that little has changed. Department stores today look very similar to department stores 100 years ago.

Why have attempts to bring technology into physical retail largely failed? There are three requirements for technology adoption in retailing. First, the technology must help customers do what they came to the store to do — find and experience products. Second, the ROI for the retailer must be crystal clear and compelling. And, finally, the experience must enhance the magic of a great real-world retail experience, without distracting.

Retailers or tech entrepreneurs frequently fall short on at least one of these requirements.

For instance, many retailers have created their own apps hoping customers will use them in-store for product discovery and comparison. These almost inevitably violate the third requirement. If a customer is in a well-designed physical space to look at physical products, why would they want to be looking at text and images on a small screen on their phone? The barrier of downloading and logging into an app for one store is also typically prohibitive.

Then there are video walls, which are often a piece of non-tech passed off as tech. Retailers sometimes put large video displays on the shop floor, often near checkout areas or fitting rooms. These displays aren’t interactive, and often show products that aren’t available in the store. They don’t help consumers and they don’t generate an ROI for the retailer.

Maybe you’ve had an associate use a tablet to show you content or to discuss products. While not inherently a bad idea, this often amounts to the associate browsing the retailer’s website with you on an iPad. Conversely, consumer-facing tablets in the store typically make customers feel like they are doing the work of the associate, and are rarely a magical experience.

Why have attempts to bring technology into physical retail largely failed?

So what’s the right answer for technology in physical retail? The tech that will get adopted will be beautiful and seamlessly integrated into the physical environment. It will actually save you time and help you shop. And it will help the retailer better understand what’s working and what’s not, while better serving you in the future. Finally, the technology that gets adopted in retail will be hidden from view. It won’t feel like technology. It will feel like a great personal shopper guiding you through an elegant store, with wonderful products to be discovered.

We’re seeing some progress. Wing is an investor in Oak Labs, which is pioneering a new approach to interactive technology in retail stores (Ralph Lauren is a launch partner). Oak’s first product is a connected fitting room that knows the items you’ve brought in. The mirror can help you request another size or color, as well as recommend other items you might want to try on.

Other companies are innovating here, as well. RetailNext is more behind-the-scenes in its quest to turn retail shops into data systems, drawing insights from both physical and digital data sources in and around stores. The company, which lists Bloomingdale’s and Brookstone amongst its customers, posted recently about the changes that need to occur in physical retail, calling out the need for these to be “in tune” with shoppers’ demands for such things as price transparency and consistency from digital to offline commerce.

That demand for consistency has created an opportunity for startups such as Boston-based NewStore, which wants to make the omnichannel experience a more seamless one, with a mobile platform that links online and offline activity. NewStore launched earlier this year with $38 million in funding; its first customer is a company that provides services to brands such as Jimmy Choo, Bally and Belstaff.

Slyce, which is publicly traded in Canada, provides a visual product-search portfolio to retailers, helping them convert photo searches to instant purchases. Slyce’s technology is used by large retail brands such as Neiman Marcus, Tilly’s, JCPenney and Home Depot.

For the past two decades, Silicon Valley has focused almost exclusively on a niche of retail that accounts for a single-digit percentage of overall sales — e-commerce. It’s time to think about the other 93 percent.

Featured Image: Pitsanu Kriachana/Shutterstock