Retailers and technology providers from around the world descended on New York City mid-January for Retail’s Big Show, organised by the National Retail Federation (NRF), with around 40,000 visitors, including 16,000 retailers from 3,500 companies, enjoying this annual showcase of the latest technologies for the retail sector.
Not only does the event provide a good health check on the industry, but also gives some early visibility of the key tech-based themes that will be affecting retail in the near future. It was clear from the start of this year’s event that, unlike in the recent past, there was a much more positive narrative around retail and technology working together.
Retail has been through tough times since the advent of the internet, but today the sector seems increasingly comfortable in bringing the traditional elements of retail – stores and personal service – together with complementary digital technologies.
Satya Nadella, CEO of Microsoft, conveyed this viewpoint in his keynote: “Digital technology is becoming a core part of our lives, economies and society. It’s embedded everywhere. It’s about bringing the front and back office together. Having the experience of retail as a premium – involving putting the art and the technology together,” he says, adding that technology is not something retailers should feel dependent on, but should instead use it to help them build independence.
Starbucks’ immersive mission
This thinking is very much at the heart of the Starbucks strategy. Kevin Johnson, CEO of Starbucks, outlined his view that modern-day retail has two transformative elements – creating destinations in bricks and mortar, and the connection of this to the digital experience.
On this mission, Starbucks is developing rich store environments – at the extremity are its glitzy immersive flagship Roastery outlets – and linking the physical with technological initiatives such as its artificial intelligence (AI)-powered initiative, Deep Brew, that it has created with Microsoft.
Kevin Johnson, Starbucks
Among its many capabilities is calculating the specific inventory to order for each store, and predicting how many baristas are needed for every 30-minute period in the workforce schedule for each outlet. What all this ultimately delivers is a better experience for customers. “Through data, we are finding new ways to enhance human connections,” he suggests.
The company is also investigating whether it can use voice technology for Deep Brew to enable the baristas to communicate with the app in a way that frees them up to concentrate fully on the customer, thereby delivering a richer experience that is powered by insights.
“Deep Brew will increasingly power our personalisation engine, optimise store labour allocations and drive inventory management in our stores,” says Johnson.“We plan to leverage Deep Brew in ways that free up our partners so that they can spend more time connecting with customers.”
Nordstrom’s streamlined physical space
Such initiatives ultimately help to extract more value out of physical stores. With this very aim in mind, Nordstrom has turned its department stores into fulfilment centres that are being leveraged for their proximity to customers. To help it with this objective, it has been working with robotics firm Attabotics and Microsoft to develop a micro-fulfilment capability.
The smart warehouse solution uses 85% less space, compared with a regular warehouse, and by tapping into the Microsoft platform for tracking the relevant product and order data, Nordstrom has been able to increase seven-fold the selection of goods for next-day delivery at its Los Angeles and New York City stores. Such has been its success that it plans to roll it out to its other key markets.
Robot stock checkers improve accuracy
A key part of being able to deliver such services is complete visibility of stock over all channels, ideally in real time. Feeding into this is the improved management of inventory in-store. This was one of the most competitive areas at Retail’s Big Show this year, with a number of solutions being showcased.
Although they all involve visual data being fed into algorithms to determine and manage stock levels on the shelf, they very much differ in how they go about collecting the images. One of them them is Bossanova, a robot-based solution that is currently in use at around 1,000 Walmart stores in the US, which scans the shelves for out-of-stock items, misplaced items and other compliance issues.
Red McKay, global vice-president of sales at Bossanova, says the technology achieves accuracy of around 90% for on-shelf availability, compared with a mere 40-60% when handled manually. To further enhance the scope of the solution, he reveals the technology will also be placed in other hardware forms, which will likely include drones and much smaller robots for operating in compact stores.
Pensa Systems also uses drones to fly around the stores of a number of US and European retailers taking video footage that is then analysed. To improve its capabilities, Richard Schwartz, CEO of Pensa Systems, says a mobile app has been developed to enable employees to undertake many intra-day scans by simply using their phone camera. When these images are combined with the visuals from the drones, a much richer picture of the in-store inventory can be achieved.
“The mix and match of drones and mobile phones helps us better detect out-of-stocks. We’ve found it has helped us find several percentage points of stock-outs higher than the retailers thought they had. We’ve also seen 30-40% are hidden stock-outs, where there were no actual gaps on the shelf. Lots of decisions are currently being made on false data,” he says.
3D mapping and checkout-free payments
Although Isaac Banon, business development manager at Israel-based start-up Trigo, agrees about false data, his company prefers to rely on ceiling-mounted cameras – along with a very small number of shelf sensors for tracking certain small products – to collect the data before running it through its algorithms to map the stores in 3D coordinates.
“This type of mapping of the stores enables us to operate in dense environments. This differentiates us from the others and requires complex algorithms, which we believe are necessary [for the best solution]. We can also retrofit existing retail stores,” says Banon.
The system not only enables it to track the movement of inventory within stores, but also people, which provides it with the capability to offer checkout-free stores that could compete with the frictionless Amazon Go stores.
This is appealing to Tesco, which has invested in Trigo and is among the companies undertaking trials. It has created a test site at its head office before it considers putting the technology into regular stores.
Also providing a frictionless checkout solution using cameras on the ceiling is AWM Smart Shelf, which is currently operational in 10 stores of US-based Giant Eagle. Steven Dabic, computer vision engineer at AWM Smart Shelf, says the typical requirement is for one camera per 50ft2, which is much more cost-effective than the Amazon Go solution. When customers leave the store, the goods they have placed in their basket will be charged to their account.
A physical showcase for online brands
While such automation has its place, there is a growing argument for stores to be places to browse and discover. US-based co-retailing store Showfields is very much about bringing online-only brands to its exciting, frequently changing environment – initially in New York City – as it complements their online proposition.
The average visit amounts to 33 minutes as customers engage with the rich environment and use the technology – including tablets to search for product information and make orders – that is located around the store to enhance the experience.
A clever element of Showfields is its use of technology to make the process painless for the online-only brands to open stores. Tal Zvi Nathanel, founder and CEO of Showfields, says: “Every brand needs a physical presence, but it’s hard to do. It does not necessarily fit their business models, it’s expensive, how do you translate 2D to 3D, and the most challenging aspect is meeting the expectations of the new customers out there.”
Showfields gives the brands the online tools and reports to help them overcome these challenges. They are so effective that he claims it takes only three to five weeks for a brand to open a space within the outlet – without necessarily having even set foot in the store.
AI helps reduce food waste at Ikea
Lars Gunnarsson, digital transformation leader at Ikea Food, says it is implementing a solution from JDA that uses AI to help with its forecasting and the management of its supply chain that will ultimately help it with its overarching objective of cutting its levels of food waste.
“It will support our food business and increase efficiency, traceability and sustainability. It will drive less waste, which will be massive for us,” he says, adding that the solution will enable the company to see the demand curve and coordinate deliveries of food, control portion numbers, as well as more intelligently manage the workforce based on demand.
Lars Gunnarsson, Ikea Food
An important aspect of the project involves giving the company’s 10,000 employees – who deliver as many as 20,000 meal servings per day – rich information via a very simple user interface that they can immediately act upon.
Jim Prewitt, group vice-president of project management at JDA, says: “The UI [user interface] was created to give the information back to employees. It’s the next-generation user experience that leverages the knowledge at the back end.”
This includes the supervisors receiving notifications of the waste levels on each shift that links into the forecasting and replenishment elements of the solution and enables changes to be made to orders with Ikea’s suppliers.
Dealing with the challenge around sustainability is yet another area that retailers are having to face up to at the moment, but the evidence from NRF suggests there is plenty of technology out there to help them. And unlike in previous years, they now have much more confidence in integrating it within their existing operations, including their stores.