Internet shopping is set to hit the high street, as bricks-and-mortar stores harness the Internet of Things (IoT) and the always-connectedness of today’s smartphone-carrying shoppers to combine the benefits of online with the advantages of physical presence.
Online and in-store; strengths and weaknesses
Internet-only retailers appear to have put owners of traditional stores at a disadvantage. Saving the cost overheads of a physical premises, and with the ability to provide easy access for customers at any time or in any location, online businesses have been able to start and grow relatively quickly and at low cost. Sales of goods and services online continue to increase by as much as 16% in the UK in 2013, according to the IMRG-Capgemini eRetail Sales Index. Market conditions on the high street remain challenging and show little growth according to comments and figures from the British Retail Consortium.
The current surge in online business, however, is not due to the success of pure Internet retailers alone, but also reflects the way traditional stores are developing multi-channel strategies that combine in-store sales with Internet as well as mobile commerce via smartphones and tablets. Some chains with an established nationwide network of stores have successfully exploited their infrastructure to offer click-and-collect as a convenient and cost-effective delivery option.
On the other hand, some online retailers are becoming attracted to the advantages of owning one or more physical stores. A survey by Royal Mail, reported in the Financial Times, found that just over 40% of small online-only retailers said they would seek space in a physical store during 2014. Between online and conventional stores, today’s retail sector is complex and multi-faceted. Both models have strengths and weaknesses.
In-store retailing retains some key advantages over online, such as the fact that customers can see and touch the products, try before they buy, and take their purchases away with them immediately rather than having to wait for a delivery. Major challenges for bricks-and-mortar retailers, however, include capturing information about customer preferences and personalizing services to suit the tastes of returning customers. Stores must rely on the talents of their sales staff, but it is not cost effective to hire enough staff to deliver an individually personalized service for every customer walking into the store. Inevitably, the customer’s experience could be improved, and the store could be taking advantage of cross-selling and up-selling opportunities that unavoidably are sometimes missed.
Internet shoppers, on the other hand, can enjoy a highly-personalized service. Simply logging-in upon arrival draws a personal welcome, and leading online retailers have developed applications that present relevant offers based on past purchase history as well as current cart contents. These types of applications not only support the perception of a personalized service for customers, but also help the retailer maximize selling opportunities by presenting the right combinations of offers at the right times to the right customers. Data from any customer’s online session – including data from abandoned purchases and data not linked to the identity of individual shoppers - can be used to assist stock-purchasing decisions, optimize inventory to reduce “out-of-stocks”, and measure customer interest in promotions.
High-street retailers understand the advantages these data-collection opportunities provide for their Internet-based competitors, and would like to have the same kind of data for their own use. Stores have been able to go some way towards this goal with loyalty cards, although these do not provide the detailed, real-time data that online retailers enjoy. For their part, Internet retailers considering opening physical stores will not want to lose the insights into customer behavior that the Internet-based data provides.
The Internet of Everything
The Internet of Things (IoT) is a concept that could more or less eliminate the distinction between Internet and high-street shopping, particularly when extended into the Internet of Everything (IoE). Cisco defines IoE as the networked connection of people, process, data, and things. As far as connecting with people and process is concerned, the smartphone represents a vital link in realizing the benefits of IoE in retail: since shoppers can now be online continuously, in any location, store owners can deliver Internet shopping experiences to customers while they are on the premises and can also capture data previously only available to online retailers.
Storeowners are building mobile apps for customers’ smartphones, to use on the premises in conjunction with items like QR codes or barcodes on items of stock. These can be used to request samples, place an order, or connect to a remote specialist for one-to-one sales advice. One retailer is streamlining its fitting-room service by enabling customers to scan the barcode of a wanted garment and specify details like size and color to have the item delivered automatically for fitting. The system responds by nominating a fitting room number, and the item is delivered via a chute ready to try on. This delivers a smoother, faster experience for the customer while saving the staff overheads associated with monitoring the fitting rooms and returning stock to hangers and shelves. Moreover, staff relieved of these duties can be more readily available to help customers who need the expertise of a human sales assistant.
Perhaps one of the most poetic IoE innovations is the smart shopping cart. After years of using virtual shopping carts online, represented by a graphic mimicking a conventional cart or basket, shoppers visiting in-store could soon be using real shopping carts that are connected to the Internet. The carts will be able to identify items placed inside by capturing data from smart tags comprising an RFID transponder such as a Texas Instruments
Tag-it™ HF-I series 13.56 MHz transponder inlay. These transponders are available in a circular
form-factor, compliant with ISO/IEC 15693-2, -3 and ISO/IEC 18000-3, and have 256 bits of user-programmable memory. They are nominally 0.085 mm thick, and less than 0.4 mm at the thickest point where the chip is located.
By reading data from the tags, the smart cart is able to compare each customer’s chosen items with other sales data to present relevant offers via the cart’s built-in screen. This enables the high-street retailers to implement “customers who chose these items also bought...” applications that have become a familiar aspect of online shopping, and hence convert far larger numbers of up-selling and cross-selling opportunities than is typically possible during a conventional in-store sales process. Moreover, when used in conjunction with a mobile payment application, the smart cart can enable customers to simply walk into the store, take the items they want, and leave without queuing for a conventional checkout. This is another opportunity for stores to deliver a better customer experience. After all, there is no queuing to complete an online purchase.
To assess customers’ interest in specific in-store features, such as a new seasonal range or a new type of stock, a storeowner may want to monitor numbers of people in a particular area or aisle. Some commentators have suggested applying analytics to images from in-store security cameras to gauge the numbers of people visiting a specified location.
Connected digital signage is also changing customers’ perception of the in-store environment. Connecting the signage to the Internet allows the playlist to be controlled dynamically from a central office or other location on the net, for example to target different customer profiles at different times of day. A motion detector such as the Zilog ZMOTION® Detection Module II (ZDM II)
allows signage to respond automatically when a person enters the vicinity, and begin playing back a selected message. This ensures that the viewer is able to see the full message, and also enables the signage to save energy by entering a power-saving sleep mode when no potential customers are present. The ZDM II is a board-level module that combines a ZMOTION Z8FS040 microcontroller with a pyroelectric sensor and clip-on Fresnel lens (Figure 1). The lens is interchangeable, and the sensitivity and activation time can be adjusted to suit various application requirements.
Figure 1: The ZDM II module can provide proximity detection for smart digital in-store signage.
A more advanced application for video technology captures customers’ eye movements to monitor response to in-store features such as signage, a point-of-sale fixture, or items on shelves. An eye tracker may be built using an infrared light source, which is directed towards the observer’s eye, and a camera sensor that tracks reflections of the light source and also detects visible features such as the pupil. A tiny CMOS camera module such as the OmniVision OV07740
, which has been used in security, gaming and webcam applications, is able to capture 120 frames per second at QVGA resolution, and is small enough for the tracker to be embedded in a store fitting such as a smart shelf or the bezel of a digital display.
The Internet of Things and, perhaps more importantly, the Internet of Everything is eroding the distinction between Internet and online shopping. Almost any object in a conventional high-street store, from shop fittings to signage, point-of-sale fixtures and the tags on items of stock, can potentially be made smart and connected to the Internet, to interact with the retailer’s systems or customers’ smartphones, or both. The only limitation is the imagination of retailers and their application developers to create applications that will truly enhance the customer’s experience and improve business performance.