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Future shop

Hardware and software shows up all over retail outlets. And it's only the crest of a sea change in how we shop.

By MARK ALBRIGHT
Published February 4, 2007


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When shoppers want a custom ring, jewelry designer Richard Chador fires up his PC to help them draw exactly what they want. "We use it for 90 percent of our business," said the owner of Earth's Treasures on Beach Drive in downtown St. Petersburg. "Otherwise I'd be sketching on paper and customers would be making a leap of faith we make exactly what they visualized."

It's one example of how retailing at every level is being revolutionized by technology. The sweep filtered from the biggest chain down to single stores. Indeed, retailers spent an eye-popping $43-billion on computer software since 2001, according to IHL Consulting Services.

Yet only a tiny fraction of that went into online shopping. The lion's share went into new sales tools, automation to improve the store experience and business intelligence systems to enhance retailers' financial performance and pricing.

Customers have had mixed reactions. Some love self-service checkout at Home Depot and supermarkets. Others loathe it. Macy's uses PDAs (personal digital assistants) to speed delivery of shoes from the stockroom to customers eager to try them on. Despite Publix investing millions, Florida, the nation's fourth-largest state, still has no online grocer bigger than a glorified delivery service.

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Retail technology all but hijacked the National Retail Federation convention in New York last month.

More than 90 percent of the 550 trade show exhibits and half the seminars were vendors pitching technology applications for stores. About a dozen touted systems that give wireless devices like cell phones a role in the store. Even Steve Ballmer, CEO of Microsoft Corp., which ranks in the five top retail tech suppliers, delivered a keynote with no mention of the software giant's new Vista operating software.

"The young generation has grown up in a connected world which will continue to revolutionize how people shop," he said. "People will expect to research what they buy from home or a wireless device wherever they are. They want it in real time. Any time they walk in your store they will expect you to be able to deal with all their gadgets. They will expect to be the center of attention of any business that tries to serve them."

Online shopping has been around only a decade. But efforts to blend it all together - stores, catalogs, online and now wireless devices - into one seamless service is finally gaining focus.

Signs of change abound. Barnes & Noble takes books bought online for returns in stores. Best Buy shoppers can order online and pick up merchandise at the store they choose. Circuit City does the same thing with a guarantee the purchase will be ready for store pickup within 24 minutes. J.C. Penney has installed live touch-screen monitors that link to jcpenney.com at 35,000 cash registers.

"The Internet will be the architectural framework of our company going forward," said Mike Ullman, CEO of J.C. Penney.

To one-up Netflix, Blockbuster Video lets mail-order DVD renters swap movies at its nearest store. When Apple Stores sells a computer, a receipt is e-mailed to your home.

Until now, most of retailers' IT investment went into stock room logistics systems that have brought many notoriously old-school chains up to higher standards of productivity and efficiency.

The retailing industry parlayed the back-of-the-store systems into better inventory turnover that enhanced profitability. That's why few retailers shed crocodile tears at a mediocre Christmas shopping season. They can make more educated guesses about what's going to sell and when.

"It's amazing how far the industry came and how fast the technology payoffs are being realized," said Bob Buchanan, a securities analyst with A.G. Edwards.

Despite productivity gains, there's plenty to do. A Deloitte & Touche survey found two-thirds of shoppers walked out of a store recently because they couldn't find what they came for. Half left because of long lines and half left because they couldn't find somebody to answer questions.

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Store retailers are realizing online shopping is changing shopper expectations.

"People are beginning to expect the ease of navigation in a store they get from online shopping," said Pat Conroy, consumer products practice manager for Deloitte & Touche.

In short, more retailers see their future linked to offering service to consumers "your way." They're gearing up to compete for an order anywhere a customer expects to place one: in a store, online, via cell phone or a PDA.

Some retailers try to inject their stores inside young shoppers' insular cell phone networks. Some of it is guerilla advertising at the YouTube or MySpace level, the source of 3 percent of online shopping referrals. IconNicholson came up with the Magic Mirror, a dressing room camera that allows a shopper to broadcast pictures of outfits she tries on to an invited circle of friends who text message responses that are displayed on the mirror.

In 50 stores, Circuit City hands out tablet PCs equipped to summon product demonstrations, take orders and access live feeds to people trained to answer questions.

One tablet PC lets store managers answer e-mail and monitor store performance while on the sales floor. One study found it got managers out of the office eight more hours a week.

Digital signs are poised to become a big deal. Today, thousands of store signs, recorded video promotions and price tags must be manually managed daily by store workers. New flat-panel displays that include high-definition video and LED message boards are controlled like TV networks from corporate headquarters. With LED shelf tags, price changes can be programmed in real time from afar.

It's not just stores. The National Restaurant Association polled its members to rank their top priorities for 2007. Technology was rated No. 1, just ahead of self-service as an option in full-service restaurants.

Some Chuck E. Cheese Pizza Parlors are outfitted with self-service touch-screen menus in booths that offer video games.

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Meshing it all together is a ticklish choice for stores aiming to straddle diverging consumer expectations.

Store formulas range from Nordstrom, which operates on the intensive service model of a 1950 department store, to Wal-Mart, which does whatever it takes to pare prices. While baby boomers demand the customer service of old, but faster, a younger generation is enthralled with a linked life tied to the latest electronic gadgets and hottest brands endorsed by their social peers.

The future of retailing is not for the squeamish. Many new tech experiments raise questions about consumers' willingness to part with more of their privacy in return for discounts and unsolicited, misdirected pitches to buy more stuff.

Some experts think retailers will use labor-saving devices to reduce payrolls.

"I think it's more likely technology will free employees to keep the shelves stocked and actually take care of the customer," said David Polinchock, chairman of Brand Experience Lab, a New York firm that tests technology on consumers.

Microsoft's Balmer showed his vision of the near-term future in a recorded demonstration of a women shopping a store for paper towels. Like the Terminator, she is guided by a changing data stream on a screen in the corner of her eye. It knows the object of her trip while highlighting products she usually buys and sale items that lurk down each aisle. It walks behind a clerk wired for sound who is stocking shelves with rolls of paper towels. Without missing a beat, he hands her a roll over his head. She walks out, not even slowing for checkout where her receipt pops out of a door frame slot and the screen in her eye points her back to the car.

Many of the same retailers saw the same vision at the same convention 15 years ago. The difference is the technology exists now. It's a matter of stores making it reality.

Mark Albright can be reached at albright@sptimes.com or (727) 893-8252.

 

Breakthrough technologies?

Emerging technologies have the potential to fundamentally alter how people shop and retailers sell. A sampler:

CELL PHONES AND PDAS: Wireless phones and personal digital assistants allow online shopping and comparison price shopping inside stores. A Nokia camera phone is coming that transmits bar codes. Retailers want to tap into shopper social networks with their own text messages, prices and product photos. Ahead, they may become payment devices that activate vending machines, place orders and display product info or live feeds of customer help inside stores.

PAY BY TOUCH: System based on 40 fingerprint measurements may replace payment cards and guard against identity theft. Local theme parks use it to identify passholders. Payday loan firms use it for check cashing verification and a few local convenience stores use it to speed transactions. Ahead, systems may gather consumer data better than key fobs or plastic loyalty cards. Shoppers may get custom printouts at the door of past purchases that are a deal today.

More breakthroughs

SMART CARDS: MasterCard's PayPass, embedded with a computer chip, lets registers at many stores read it from a distance by radio signal. Some local McDonald's and convenience stores Racetrac and Circle K use them. American Express and Visa offer versions and Discover Card is getting one. It's like a Mobil Speedpass that can be used at any store.

RFID product tagging: Radio frquency identification devices are paper-thin computer chips that can be tracked by radio signals and replace the bar codes embedded in products. Until its price tag comes down, RFID's limited to high-theft items like razor blades and batteries. What's ahead? No checkout. No cashier. Shopping carts add and subtract prices and products put in them. Or laser scanners that read 100 items a second make a tally at the door. Radio waves picked up by sensors inside the exit door frame learn the payment account and print a receipt.

 

[Last modified February 4, 2007, 20:15:51]


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