We’re on the cusp of a retail revolution. From Seoul’s subways to the supermarkets of Britain, technology is transforming how we shop. Rob Brown looks at today’s breakthroughs… and finds their roots in 1930s Memphis
Clarence Saunders’ moment in the sun has come. Shame he isn’t around to enjoy it.
The grocery magnate who dreamt up the ingenious Keedoozle - the world’s first fully automated grocery store, in Memphis, Tennessee - did so back in 1937 when the technology simply wasn’t there to make it work. It’s taken almost 75 years for his idea to finally come to fruition.
Last month, Home Plus Tesco’s South Korean arm converted Seoul’s Hangangjin subway station into a virtual store bearing uncanny similarities to Keedoozle. Tesco is now extending the trial with a view to rolling the concept out across South Korea and experts believe it won’t be long before the concept hits the UK, too.
If it takes off and given its ‘best of both worlds’ blend of the online and bricks-and-mortar shopping experiences, there is every reason to think it will it will revolutionise the way we shop. But Keedoozle isn’t the only old idea that has had fresh life breathed into it by new technology.
The main restriction when many such ideas were conceived was, after all, technology. It’s certainly what differentiates Keedoozle from the Home Plus virtual store, which picked up an award at this year’s Cannes Lions International Festival of Creativity.
If it weren’t for the low-tech world Saunders lived in, who knows how big Keedoozle could have been? Unfortunately, while Seoul commuters were able to swiftly peruse back-lit posters on platform walls, Keedoozle’s customers had to make do with browsing sample products in glass cabinets. Instead of zapping QR codes with their smartphones, they used ticker tape keys Keedoozle is a bastardisation of “key does all” that were prone to error.
They then had to go through the laborious process of having the ticker tape fed into an electronic reader before the goods were placed on conveyer belts and packed for collection. In Seoul, shoppers simply filled their virtual shopping baskets and their orders were delivered to their homes at the end of the day.
Keedoozle was clearly ahead of its time. The crude electronic circuits it relied on meant orders were often confused and its conveyor belts weren’t sturdy enough to handle high-traffic loads. The other problem was the shoppers themselves. They simply weren’t used to buying their groceries that way. Today, of course, consumers are au fait with self-service and online stores and virtual shopping represents a natural juxtaposition of the two.
Is the UK next?
In South Korea, at least, there are high hopes for Home Plus. The five-week trial, which embodies CEO Philip Clarke’s strategy of “using the latest technology to solve customers’ everyday needs”, boosted the retailer’s online sales in the country by 130% and increased online members by 76%, claims Cheil Worldwide, the global marketing and communications agency that helped develop the store.
Indeed, the trial was such a success it will be repeated on a larger scale next month and the concept could be rolled out across South Korea within the next two years, says Irene Lam, a spokeswoman for Cheil Worldwide. “In Seoul, everyone is glued to their smartphones,” she says. “Online shopping is a given and everyone is extremely busy, working very long hours. So this concept absolutely made sense.”
Given that UK supermarkets are widely perceived to have the most sophisticated online offerings outside Korea and that consumers are increasingly tech-savvy, but time-poor experts believe the conditions are perfect for the concept to gain traction here, too.
“The time is absolutely right for this in the UK,” asserts Simon Goodall, director of strategy at Saatchi & Saatchi X. “This isn’t about specific places subway stations or wherever. This is about bringing the store to the people if the people won’t come to the store. It will be down to individual retailers to think about how this can work for their brands.”
The beauty of virtual as opposed to online stores is that they don’t completely do away with the physical experience of shopping something consumers still want, judging by the results of a poll of 2,000 shoppers published by ad agency Leo Burnett this week. Of those surveyed, 59% rated their experience in physical stores as either dramatically or somewhat better than their experience online.
“Retailers who take heed of this and truly integrate their physical stores with the web in exciting ways will be rewarded with improved customer loyalty in the long term,” says Alan Treadgold, Leo Burnet’s head of retail strategy.
As will retailers who grasp the virtual opportunity that lies between bricks-and-mortar and online. Luckily, there’s a wealth of new technology ideally suited to meeting the needs of this middle ground.
“We’re already seeing the blurring of the lines between online and offline shopping,” says Derek Scobie, Google UK’s head of fmcg, He cites as examples Tesco’s launch last year of a barcode-scanning smartphone app that lets shoppers add goods to their virtual baskets wherever they are, and the retailer’s trials of Click & Collect, enabling customers to shop online and pick orders up in-store.
Ironically, technology is advancing so rapidly that soon even the QR codes on which the Home Plus virtual store relies could be consigned to the past, superseded by apps such as Aurasma. Its visual browser allows consumers to place orders for products whether at home, on their way to work, you name it simply by pointing their smartphone cameras at them. The company is currently in “very advanced” talks with retailers including the big four and online grocers with a view to them adopting the technology, says Aurasma MD Martina King.
Such apps mark yet a further evolution of Saunders’ ticker tape keys. The consumer no longer even needs to be in a store, physical or online, to do their shopping. That’s not to say that these environments aren’t also benefiting from old ideas made reality by new technology, though.
How many sci-fi authors have written about digital interactive advertising? Yet only now are retailers seriously trialling such Blade Runner-esque screens in-store. Some are even fitting them with tiny face-scanning cameras that can read the approximate age and gender of shoppers and tailor their ads accordingly. “Facial recognition used to be seen to be a very futuristic concept, but there’s no reason why it couldn’t be implemented today,” says Gwen Coble, retail solutions manager at HP, which has developed such technology with Intel.
Face-scanners could be a common sight in British supermarkets within the year, believes Chris O’Malley, director of retail marketing at Intel. “It’s off-the-shelf technology complete units would cost about $1,200,” he says. “Europe and Japan will lead this. It’s just an extension of self-service and that’s taken off in Europe more than it has in the US because of the difference in labour costs.”
Self-service was yet another concept pioneered by Saunders through his Foodelectric concept before he finally checked out in 1953. It, too, is finally coming of age thanks to technological advances. Payment through digital technology, smartphones and other solutions have already cut staffing costs for French retailer Auchan, which recently opened a completely self-service store in Northern France.
“This has driven something north of a 30% improvement in productivity at that store,” says Sarah Kellett, retail consultant at Fujitsu, which provided the technology for the Auchan store. “It is all about increasing sales per employee.”
If only Saunders had been alive today. Although his Piggly Wiggly chain made him a millionaire, he died disillusioned with technology. “I am really fed up with gadgets,” he told Time Magazine. There’s no way he’d have felt that way today.
The hi-tech 10
Saunders would have loved this. Developed by Intel in conjunction with Kraft, this innovation goes one step beyond automation by allowing the store to talk directly to shoppers. The kiosks are able to suggest products and recipes likely to appeal to consumers by accessing shopping lists stored on their smartphones as they enter a store. The technology can also dispense product samples based on shoppers’ preferences and entertain with interactive games, helping to drive traffic back to Kraft’s website.
All of the big four are looking at digital signs fitted with facial recognition cameras, say developers HP and Intel. These intelligent ads can recognise the rough age and sex of who’s looking at them and tailor content accordingly. They will transform the ends of British supermarket aisles within the year, according to Intel.
The price is right
Today, retailers want real- time results. They don’t want to wait weeks to find out the success of a new pricing strategy. Retailers across Europe and Latin America are already using software from US company Demandtec to tweak prices in specific stores in real time to optimise their bottom lines. Now Formula 1 giant McLaren is looking to apply similar concepts. “Retailers will be able to see immediately how the market responds to price adjustments,” says Geoff McGrath, MD of McLaren Applied Technologies.
No, this isn’t so the supers can keep tabs on wayward trolleys. They’d rather keep tabs on shoppers’ habits. Sainsbury’s has fitted trolleys with sat-nav style devices allowing the retailer to track shoppers’ routes around its Crayford store. Could be wheeled out to other stores, too.
Come in, QR codes, your time is up. So say the brains behind Aurasma, a new smartphone app that provides a ‘link between the physical and virtual worlds’, no less. By simply pointing their smartphone cameras at an item, consumers can access related information and promotions on the web and even purchase the product with a click of the shutter. The application recognises more than half a million objects and images in the real world. Now the major multiples are looking at adopting it, say Aurasma’s creators.
CCTV is no longer all about keeping tabs on would-be thieves. Now the global retail A-list is using CCTV cameras to keep an eye on their customers’ habits. New technology allows retailers to identify the busiest parts of stores and track shoppers’ routes as they browse the aisles. “With that information you can sell certain positions for more money and plan product promotions much more accurately,” says Gary Wong, an analyst at IMS. “There’s no reason this technology couldn’t be in every camera.”
A shirt that monitors your health? That’s exactly what McLaren Applied Technologies is offering companies as a means of keeping an eye on top talent. “It might seem a bit Big Brother, but if I’d invested £20m on a new CEO I’d want to be able to protect that asset,” says MD Geoff McGrath.
Aimed at putting retailers firmly in the driving seat. Now management can keep track of just how well their businesses are ticking over at any time, wherever they are in the world. The Dashboard developed by British software house Panintelligence is an internet application that allows management to monitor their company’s performance against individual, team and corporate goals in real time, without the need for huge investment in IT infrastructure and staff training. Accessible at any time, anywhere.
The recession has driven retailers to rethink their IT and many are finding salvation in the cloud. By moving to web-based data storage and applications, businesses can shave up to 50% off their IT costs, say experts. The cloud can also give staff on the shop floor access to data through mobile devices.
It won’t just be for smaller transactions for much longer. Fujitsu has developed the mother of all self-service systems in a bid to automate the weekly shop. The system a conveyor belt running through a matrix of scales, barcodes and 3D cameras has already proved a hit in a trial with US supermarket Kroger. Now Fujitsu, which claims the system has a product identification rate of more than 98%, is stepping up production as it draws up plans for a wider rollout. Shame it came 80 years too late for Clarence.
The supermarket of 2020
It will be a very different place to the stores of today. As the decade progresses, more and more of the transactional cut and thrust of retail will be done online.
But that doesn’t mean the death of the supermarket bricks and mortar will still have a place in shoppers’ hearts, so long as the retail giants of today evolve their offerings for the demands of tomorrow.
So what will be the key to success for the supermarkets of 2020? We spoke to David Martin, joint MD of retail space design specialist M Worldwide, to find out. How will layout evolve?
“Commodities will be purchased online and delivered or collected in store, leaving space for in-store theatre. Aimless aisle-walking will be a thing of the past. This will be replaced by events such as cookery classes, bringing all the buzz of an outdoor market.”
What about technology? “Card chip technology will recognise customers on entry, offering them customised promotions. Plasma screens will show promotions. Staff will be freed from checkouts by self-scanning trollies. Radio frequency ID will allow product tracking to ensure shelves are filled.”
Any additional services? “Supermarkets will include gyms and doctors’ surgeries. Banking will be more than just an ATM in the corner virtual advisors will offer video conferences on a range of financial issues. Stores will be brokers for energy, car leasing, loans, phones and mortgages.”
And outside the store? “Acres of flat tarmac will give way to multi-storey parking, providing more space outside for selling, leisure, kids’ crèches and so on. Supermarkets will become the modern-day market fair. The weekly shop will be a leisurely day out and a location for local community events.”