The Warehouse Group’s Nick Grayston talks fundamentals and digital futures
The Warehouse Group has reported jobs cut, services sold and a complete restructure for the goal of retail simplification in its second-half financial report. The ...
Jai Breitnauer looks at the technology that will be hitting your competitors’ shop floors in the next five years, and says it’s time to catch up.
Once upon a time, an autobot was a Transformer toy and scratch and sniff cards were considered interactive services. Not so these days - tech is getting real and retailers need to stay savvy. A quick look north to Europe and America gives you just a taster of what’s to come. Here are our five picks of the top tech that companies big and small could be utilising by 2022.
Tech innovation one: Virtual reality
About 20 years ago, Jamiroquai sang a song about ‘virtual insanity’ and we all chuckled about the fear-mongering around new tech. But that future is here, now, and virtual reality (VR) technology is already being used in New Zealand.
“We’ve had the Nautilus headset since July last year, and we’ve had a good response so far,” says Alisha Walker from Paterson Burn optometrists. This small chain of optometry practices stepped up their tech game in 2016 when Essilor introduced their new VR headset to help customers choose their lenses.
“It’s great for displaying the different sun care products we have, such as transitions lenses,” says Walker, who also notes the Nautilus can accurately display different quality lenses and different coatings to the customer using their prescription.
“In medicine as a whole, VR systems have been used for some time as a surgical training tool,” says Dr Philip Turnbull, an optometrist and research fellow from the School of Optometry and Vision Science at The University of Auckland. It was only a matter of time before VR and AR - augmented reality, e.g. Pokemon Go – headsets found their way into retail practices like optometrists, where they add genuine value to the customer experience.
While the medical applications can seem quite obvious, this sort of tech is now spilling over into other areas of retail, with Lumaten recently bringing their Shopper360 VR simulation to market.
“On a global scale, we are now starting to see how new technologies are continuing to reshape the retail landscape in intriguing and unexpected ways,” says Sue Ann Chew, executive chairman and group MD at Lumaten, who notes businesses are spending more to try to find out more detail about their customers to improve experience.
Shopper360 is a research platform created to predict real shopper behaviour rather than measuring intentions. It combines cognitive psychology, predictive analytics and the gaming world’s VR technology to deliver a new type of shopper research platform, which Lumaten claims will reshape the retail marketing landscape. Wearing a VR headset, the ‘shopper’ can walk through a virtual supermarket, opening chiller doors and reading ingredients on packets, with their behavior fully recorded.
The accuracy in measurement this provides is a huge step up for researchers, who in the past had to rely on observation or qualitative data from the shopper themselves – and we all know what shoppers do, and what they say they do, are two very different things.
“VR has the ability to become one of the next best things in commerce,” says Chew. “VR allows businesses to eliminate limitations in space… to create whatever experience or design they want their customers to experience, simply from the shop floor. Using VR on the shop floor helps the customer to envisage the product that they are purchasing in a realistic environment.”
Chris Wilkinson, managing director of First Retail Group, thinks VR has its place in retail, but we aren’t going to see the shop floor replaced just yet. He notes that Stabicraft uses VR headsets to sell its boats globally. This means it doesn’t have to worry about carrying too much expensive stock and managing the logistics that come with it. Wilkinson warns, however, that VR only really works in ‘high-touch’ transactions where a relationship has already been created with the customer.
“There’s a complexity to this,” he says. “When you have products like boats or glasses, they’re expensive, one-off and there’s a certain intimacy to the sale. There’s been a high personal contact and you’ve got to know the customer quite well,” says Wilkinson. “You’re on a different level of respect with the customer. When it comes to general retail, like clothes, people are wanting easy, smoother transactions. I don’t think the likes of a VR headset would lend itself to more general transactions. VR is about adding significant value to a purchase, not volume.”
Tech innovation two: Interactive services
“New technology in retail will undoubtedly make the path to customers more direct,” says Chew from Lumaten. “Of course, one of the major factors towards the push for new retail technologies is the need for businesses to be innovative. That’s why we created Shopwave (a subsidiary of Shopper360), which is an app that detects a shopper’s presence at participating outlets, allowing them to get connected with their favourite brands and reward them instantly.”
Shopwave uses proximity beacons, and the use of beacons is something that’s been talked about in retail circles for a number of years now. But limitations in the technology, privacy concerns and cost means beacons are being used differently to early predictions of information being sent straight to a customer’s mobile device. Instead, we are seeing a flow of information in the other direction, from the customer to the retail team.
“We are starting to see more customised information, like current transactions, about a customer being made available to the shop floor team so they can provide a personalised service,” says Colin Rebairo, head of marketing automation and customer intelligence practice at Davanti Consulting. They partner with Salesforce to deliver multichannel intelligence software to businesses across New Zealand, and they also offer an agnostic consulting service.
“This is already common in telesales, where personalised information about the caller is delivered to the call handler so they can serve them better.”
Rebairo says using data from loyalty schemes, internet purchases/searches and even visual recognition software, it’s possible to tailor the sales approach to the individual shopper. In this way, mobile is going to become essential and tools like geofencing, which creates a virtual geographic field in an environment to target a shopper using their phone location settings, will be more common.
A good example of non-intrusive interactive services in New Zealand would be Westfield’s new smart screens. The SmartScreen advertising network debuted in March across local shopping centres. As well as display technology, they contain Bluetooth beacons, NFC tags, WiFi connectivity, campaign viewer analytics, audio, and can support optional touchscreens.
“The interactive ad panels in Westfield are a very good idea,” says First Retail’s Wilkinson. “They offer a way of delivering segmented information to the consumer on a real-time basis.”
“Countdown is already doing this to some extent. They know your shopping habits and they can send you segmented messaging specific to your needs and past purchasing patterns.”
He also notes the opportunity for digital couponing, already executed quite successfully over social media and email, to stimulate the local market in a way that is immediate and direct.
Wilkinson says the challenge with beacons was mostly software-based, and that consumers aren’t willing to add more apps to their phones.
“It’s rare to get consumers to adopt apps any longer. Consumers get frustrated with them now. Interactive screens offer a way of reaching out to the consumer that bypasses an app on a smartphone.”
It also gives the consumer more choice over whether they want to interact.
“You’ve got to get the balance between being beneficial and being creepy right. There’s a wide variety of perspectives on that. Too much knowledge and information can creep [the consumer] out. It’s about the depth of connection, that’s the important part.”
Tech innovation three: Delivery robots
In July this year, London-based Starship Technologies, founded by Skype creators Ahti Heinla and Janus Friis, announced a quite literal roll-out of their new delivery bots. Unveiled in Washington DC, the bots will be tested in the city of Concord, California, where the council has approved a 12-month trial. The ‘personal delivery devices’ weigh about 22kg and move at just over 6km per hour. They can store about 8kg of groceries in a locked compartment, and will be used within a six-mile radius of the town centre. A similar company, Marble, has been testing bots in San Francisco, while Amazon are trialling 30-min drone air delivery for packages less that 5lbs.
Partnering with Door Dash for grocery deliveries, Starship bot users will pay for the service using an app. The bots are secured with nine cameras to prevent theft, an alarm system and two trackers. But even the local mayor of Concord was skeptical, asking “How will it hit crosswalk buttons?’’ (Spoiler alert: it doesn’t. It has to find an alternative route.)
In New Zealand, Domino’s Pizza has jumped on the bot bandwagon, announcing it is looking at trialling similar tech. The prototype vehicle, called DRU, has compartments to keep pizzas hot and drinks cold, and is programmed with a ‘friendly persona’. General manager of Domino’s NZ, Scott Bush, told Fairfax NZ the company had a commitment to innovation and technology, and had been developing the robot for about 12 months insisting this wasn’t a gimmick or publicity stunt. But the skepticism is strong.
“It’s interesting how it has captured the media, but if you think about coastal areas of New Zealand and the wind conditions, that alone would be enough not to be able to guarantee good coverage through the country,” says Wilkinson, who thinks the delivery bot trend will be tough to get off the ground in New Zealand. “It’s real pie in the sky stuff, just stimulating conversation. I’m sitting in my office in Wellington looking across the water. The ferries are cancelled tonight, and it is windy as, and I think there would be a lot of hungry people waiting for their pizza tonight if they were relying on a bot or drone.”
Tech innovation four: Artificial intelligence
When HSBC launched call centres based in India in 2002, there was uproar from British customers. “How will they relate to us?!” people cried. “They won’t know about the weather, or what’s happening in Corrie!”
A bucket-load of training ensued to make sure that the interpersonal call-centre experience for HSBC customers still felt intimate, in spite of the fact the teller was thousands of miles away in a different country. Staff were even given different, more British-sounding names.
Fast forward 15 years, and some companies have taken the next step, introducing artificial intelligence to answer calls or chat online with customers. According to Forbes, global funding for AI-based start-ups grew by 60 percent between 2015 and 2016 and Ben Lee, CEO of US digital development agency Neon Roots, believes that AI is set to revolutionise “nearly every aspect of the modern world”.
“As someone whose company is working on building four new chat bots right now, allow me to say this: If you’re going to stay competitive over the next five to 10 years, you should consider how you can incorporate AI into your business. And I think chatbots are one of the easiest ways to start,” Lee said in a recent blog post.
A chatbot we are probably all familiar with is Apple’s voice-activated assistant Siri. Need to know something and can’t be bothered to type it into Google? The press of your thumb leads to copious results. Want to hear a computerised, female voice pretend to beatbox? She can do that too – let no one say coders don’t have a sense of humour. But aren’t these chatbots just a novelty? Maybe right now, but not forever.
“Thanks to their ability to process language, already have the potential to handle tasks like data entry, scheduling and other basic assistant-like tasks,” Lee continues, noting that using chatbots to schedule medical appointments and meetings will soon be a daily reality.
“Chatbots are powerful because they provide the most natural user interface of all: language. [They let] users voice their questions and interests in their own words.”
For those of us still flummoxed by certain types of software, or if you have a visual or hearing disability, then using a chatbot is an accessible way to access online services that might previously have been off-limits to you.
Air New Zealand has cottoned on, recently launching its online chatbot Oscar, the first of its kind in Aotearoa. The vast majority of domestic flights in New Zealand are booked online, and Oscar opens up the opportunity to interface with online booking in a similar way to how you would speak to your travel agent. It will offer links to prices and schedules, and also to useful travel information, like booking a flight for an unaccompanied minor. It’s currently quite a clunky experience – you have to ask the right questions, although Oscar will also direct you to do that if it doesn’t understand – but lots of work is being put into improving the functionality of the bots and the user interface.
“We’ve been doing a lot of work around customer experience with large public transport organisations overseas,” says Wilkinson from First Retail. “Often they get a large number of calls or email enquiries at peak times they can’t cope with. What they’re using now is essentially a ‘response bot’.”
The user can ask a simple question, like what time is the next bus from their location, and get a real-time, instant response. It also learns as it is used. Wilkinson says this is game-changing stuff, offering the London Underground chatbot as one of the smartest examples. (“It’s like Siri on steroids.”)
But do people want to talk to a robot? And aren’t we just doing real customer service staff out of a job?
“Look at the choice people have between using a self-checkout or a manned till at the supermarket,” says Wilkinson. “Consumers have been conditioned to be empowered to do anything we want to, and to be comfortable shopping autonomously without much interaction.”
“We still need people to apply the rules and optimise the bots,” says Rebairo, reassuringly. “Also, there’s only a certain level you can get to with a bot right now. The customer still needs to be able to speak to a person and resolve certain issues one to one.”
The benefit of using chatbots to get to this point, says Rebairo, is faster response time, and a well-briefed human at the other end.
“The expectation is for personalisation. People don’t want to be qualified twice,” says Rebairo, noting the bot can pass the information on so the human has it ready for your conversation. “It’s also about speed of response. Chatbots don’t replace call centre staff, they work with them to improve speed, and stop customers from being pushed elsewhere.”
Tech innovation five: Cashless economy
I was one of the most enthusiastic supporters of Semble, and was disappointed when the app was shelved last year due to poor uptake.
“Mobile payment services haven’t had the speed of uptake and usage we expected due to a variety of reasons,” said Semble CE Rob Ellis in July 2016. “These include low levels of consumer awareness of mobile payments and relatively low volumes of contactless terminals, especially outside the major retails brands.”
And yet, as Semble was finally laid to rest in September 2016, Apple announced the imminent launch of Apple Pay in New Zealand, causing many to speculate that a cashless society isn’t a concept dead in the water, but rather one that just needs to be more user friendly.
The NBR were the first to point out that Semble required a special SIM card, and also didn’t work with iPhones – the mobile choice of approximately 30 percent of Kiwis. The adoption of Apple Pay is also going slowly, but in the US Apple Pay users rose from 4 percent in 2014 to 35 percent in December 2016.
There is something very tantalizing about a completely cashless economy, with Sweden recently announcing its intention to become one of the first truly cashless economies in the world. Being cashless reduces crime, increases tax compliance and removes the costs associated with printing and policing paper money. But short of getting rid of cash so the consumer has no other choice, how do we improve adoption of cash-free payment technology? After all, mobile wallets are essentially just another app that need setting up, updating and maintaining and really – how hard is it to wave your Visa in front of a machine?
The move from mobile payment to social wallets is what has driven the cashless payment revolution in China, writes emerging technologies expert Richard McManus. In China, estimated to be the world’s biggest mobile payment market, the two leading forms of payment are Alibaba’s Alipay and Tenpay (WeChat pay). Apple Pay has had a surprising lukewarm reception, despite 30 million bankcards being registered on its launch day. Technology comment-blog Technode believes this is because Apple Pay is too one-dimensional, musing that the beauty of mobile wallets in China is their multifaceted approach that weaves seamlessly into the daily lives of the average consumer.
From QR codes to split bills, the third-party mobile wallet leaders in China make it easy to use their service for just about anything, and most stores including small dairies or the bloke on the corner selling dim sum from a cart accept Alipay or WeChat pay. Those third-party providers are also cross platform, whereas Apple Pay is limited to users with an iPhone6 or higher.
All this points to the fact that people want a cashless solution, but it has to be easy, simple to set up, secure and available to all.
Mastercard are currently trialling a biometric bankcard with a fingerprint embedded into it. This is just another layer of security at the moment, similar to the iPhone fingerprint verification system. But it has inspired some commentators to note that perhaps we really aren’t that far from fingerprints being the currency of choice.
This story originally appeared in NZ Retail magazine issue 751 August / September 2017
The Warehouse Group has reported jobs cut, services sold and a complete restructure for the goal of retail simplification in its second-half financial report. The ...
The Register provides essential industry news and intelligence, updated daily. And the digital newsletter delivers the latest news to your inbox twice a week — for free!