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Control Group 2013 Retail Technology Survey

Contributing authors: Charlie Miller, P. Damian Gutierrez, and Colin ODonnell

EXECUTIVE SUMMARY
With cookie-enabled personalization on the web and ubiquitous access to information brought by smartphones, consumer expectations have changed significantly over the last few years. However, the in-store experience has remained remarkably unchanged, as people still wander around shops looking for goods and wait in line to pay just as they did thousands of years ago in ancient markets. The good news is that there are technologies available today that enable retailers to integrate the metaphors of the online and mobile world into the in-store environment to deliver a better and more cohesive experience for their customers. These technologies will transform the retail industry, but not if they are used as trophyware. Truly innovative applications of technology create value across touch points, from the supply chain, to marketing, analytics, and point-of-sale, to the overall customer experience. The technologies identified in this survey will drive significant change in the retail experience by providing more immersive, personalized and cohesive brand experiences as well as new mechanisms for capturing, measuring, and understanding consumer behavior.

BACKGROUND
Brick-and-mortar retail hasnt changed drastically since the early days of the shopkeeper. Its long been an experience based around tangible goods on shelves and a clerk behind a counter. Even if wooden boxes and coins have been replaced by cash registers and credit cards, the basic process of a retail purchase has looked pretty much the same for thousands of years. But things are changing. We are experiencing a shift in retail that moves us from predominantly human transactions to technology-enhanced interactions. A few things have happened that will ensure a wholly different retail experience moving forward: Technology is available to automate the customer experience from wayfinding, to merchandise research, comparison-shopping, and point-of-sale transactions. With RFID sensors, interactive touch points like iPads, and integrated payment products like Square, the amount of readily available, responsive technology has exploded in the past few years. Successful retailers are leveraging these technologies in a targeted, contextual way, to bring value to their customers when appropriate, and to disappear when not relevant.

Consumers have changed their attitudes towards privacy and expect more from the stores they patronize. We all expect the websites we frequent to remember us, and the apps in our pockets to recognize the places we visit. Weve proven that we are willing to provide a certain amount of personal information in exchange for conveniences such as remembered passwords, preferences, and history. Google is the obvious case in point for this value proposition: provide your location to make your search results more relevant for local searches, or entrust your valued personal emails and communications in exchange for ubiquitous access, flexibility, and convenience. The cookie-based recognition and personalization that occurs in online experiences is now being used in offline shopping experiences, and consumers are willing to provide this data when retailers provide value in exchange.

The online shopping experience is more personalized and engaging than the offline experience but people still want to try on pants. Amazon recently announced plans to offer same-day delivery service in many large cities. In order to compete, brick-and-mortar retailers are finding new ways to connect with customers and create personal, human connections in ways that online retailers cannot. These offline retailers now have access to customer analytics that rival those of online retailers, giving them the ability to welcome customers and make recommendations with a human touch that is not possible online. With real-time face detection products like CARA from Immersive Labs, customer demographic targeting becomes an automatable technique enabling retailers to employ adaptive experiences based on real-time video analytics. Additionally, with anonymized cookie-based technologies, retailers can recognize what other stores their customers have been in and track footpaths through the aisles to merchandize more effectively and accurately. It is now trivial to have a computer recognize a repeat visit, accurately recognize a shopper or identify their demographic, and customize an experience for that person.

Over half of U.S. shoppers are browsing the aisles with powerful computers in their pockets. With smartphones now in the hands of over 50% of shoppers, mobile payment and self-checkout is about to become an everyday experience. Huge retailers like Starbucks and Apple have been on the bleeding edge, but were at a tipping point. Shoppers will soon think nothing of linking their bank accounts to online platforms like Square and completing transactions by simply clicking Okay on their iPhones.

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SEVEN TECHNOLOGIES THAT ARE REDEFINING THE RETAIL EXPERIENCE

Technology as veneer is an expensive investment. The retailers of tomorrow will need to invest in technology that brings valuable interactions and services to the customer experience and solves clearly defined business problems. The technologies identified below will enable retailers to drive sales, reduce costs, and create happy, loyal customers. While these are powerful technologies, it is insight into shopper behavior that will enable them to be used as effective retail tools. These technologies are: 1. 2. 3. Computer Vision and Facial Coding Touch- and Gesture-based Interaction Projection

4. Printed Electronics 5. Wireless Interactivity (RFID/NFC)

6. Captive Portal / Passive Analytics 7. Mobile Payment

1. Computer Vision and Facial Coding / Sensor Nets

Though motion can be sensed through non-visual means, in todays retail environments, the use of Computer Vision (CV) through digital and depth-sensing cameras, such as Microsofts Kinect, are beginning to dominate the field. The ability to see a customer in relationship to product and environment is a powerful tool for providing tailored experiences in real-time. Additionally, the same infrastructure is also an effective way to generate unique metrics to aid marketers in refining their overarching strategy.

The BMW i Window Into The Near Future uses 3D cameras, blob detection, and high-lumen projection to digitally transform passing cars into electric concept vehicles.

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Applications
At Shelf / Counter CV at shelf is unique in that it can provide utility to multiple stakeholders. As a selling tool, it can detect product interest in the form of gaze, customer vector, or physical interaction, which can be used to trigger a consumer-facing experience. This can even include finer detections of hair color, skin tone or apparel. When used by brands and merchandisers as a way to measure environment and product interaction, it can uncover valuable insight into the effectiveness of in-store marketing efforts. Media Targeting As stated above, CV can be used to detect product interest, physical direction, and consumer appearance. Screens within visual range of a consumer or group can be triggered to play content, such as images, video or interactive media, depending on a desired behavior or target demographic. Venue Experience CV can also be used as a driver for interactive experiential marketing. Video walls, projections, spotlighting and audible cues are examples of sensory responses to a CV trigger. Additionally, at the venue level, CV can be used to drive useful data for consumer use. Notifications for open registers, short lines, or staff locations can all be captured and shared using CV. In Window With few exceptions, CV and motion detection are the lowest cost, highest yield methods bringing interactivity to in-window marketing efforts. An inexpensive camera is all that is required to detect a consumers proximity. Perfect for triggering attraction media, and better still for providing a consumer with the ability to interact with product and branded media through the glass.

2. Touch- and Gesture-based Interaction

A discussion on interactive technology would be incomplete without an homage to the concepts John Underkoffler created for Minority Report. Though this movie was set in the year 2054, the technology envisioned is already here. Rapid advances in touch detection and screen technologies have brought us stunning new ways to interact with onscreen media. Touchfilms, holographics, transparent LCDs, acoustic and touchless visual detection are bringing us into this futuristic vision of immersive media today. And thanks to Apple, the iPhone effect has ignited an industry and provided a generation with training on the visual manipulation of information. Today, a screen within reach that does not respond to touch is perceived as broken.

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OTG Management has put an iPad at every seat in the Delta terminals of LaGuardia and Minneapolis-St. Paul airports, giving travelers free access to the Web and the ability to order from OTGs in-terminal restaurants.

Applications
At Shelf / Counter / Sampling iPads and small touch screens at a counter are already becoming cost-of-entry for many luxury brands. With an intuitive interface, a consumer can be presented with a low-friction method to explore deeper brand or product information. Easily updated, and easily maintained, these small screens are appearing anywhere a brand can engage a customer at their moment of decision. Simple deployments can be on-counter, in small countertop displays, or richer experiences can be supported by embedded screens in counters or retail fixtures. Used effectively, these screens can also capture product experience feedback, as well as provide a platform for social amplification. And, of course, interactivity can be extended through scanners, cameras and natural language recognition. Wayfinding The archaic static directory with the You Are Here arrow has given way to interactive wayfinding solutions. These can be deployed in large common spaces for course directions, or down at shelf level to aid with product location. Even prior to providing wayfinding, a well designed solution can assist a consumer with her choices, helping consumers focus their attention on particular products or brands, and offering incentives. Assisted Selling (Kiosk) / Media Targeting Todays interactive kiosk bears little resemblance to the boxy arcade-style units that dominated retail a few short years ago. Transparent LCDs, projection & touchfilms and Apple-esque industrial design have given retail brands sleek, beautifully crafted solutions that attract consumers. The experience can be highly personalized through the use of loyalty profiles. And again, the use of additional sensory input can be used to increase the value of the engagement for the consumer. In-Window The use of projection and adhesive touchfilms has turned store windows into fertile marketing real estate. Any storefront can now be transformed into an interactive media display. Interactive experiences can be varied by time of day to drive different behavior. For example, daytime media designed to drive store traffic vs. evening media for driving an e-commerce experience.

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3. Projection
Gaining popularity as an experiential marketing technique, 3D projection mapping can transform the drabbest spaces into vibrant, immersive domains. This technology can be effectively leveraged in-venue and as an out-ofhome tactic to electrify and showcase large architectural features, or across entire buildings. This technique has also been used successfully in smaller deployments to create holographic effects using thin films and glass as refraction surfaces. The utility in these applications can be informational and contextual, enabling flexible customization of real-world spaces and products much in the same way achieved by online interactive tools. For example, Austrian wood material specialist EGGER-Holzwerkstoffe is using projection to enable architects, designers and product developers to make purchasing decisions by seeing different styles and wood textures in real-time.

Applications
At Shelf / Counter Deployed using small projectors, products and display cases can be brought to life with carefully mapped motion graphics. Projected on packaging or other objects, these graphics are capable of activating the physical forms or altering them with the appearance of motion. This can also include small holograms that can either be stand-alone content, or be made to appear to interact with product.

Woolite uses Perchs interactive display technology to engage customers to spend time learning about the product in a fun, effective way.

Venue / In-Window The most sensational use of 3D projection is on large-scale architectural surfaces. Virtually any physical shape can be mapped and absorbed into the fantasy world created by the content artist. Columns, windows, doors, walls, floors, ceilings and furnishings are all fair game to be used as media. Whole buildings are transfigured and come alive through mapped motion graphics. In the case of in-window deployments, in addition to exciting mapped objects, 3D projection can drive incredibly engaging, life-size holographic effects.

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EGGER-Holzwerkstoffes Virtual Design Studio uses 3D projection mapping to showcase their material finishes on real physical models in different configurations and combinations.

4. Printed Electronics
Electro-conductive and doped inks now allow the printing of fully functional electronics on a wide variety of substrates, such as glass, plastic, paper and ceramics. Retail packaging can now be brought to life and made interactive using little more than specialized printing techniques and a small power source. These printable circuits include LEDs, e-ink displays, batteries, RAM, transistors, as well as sensors for light, heat, pressure and chemicals. Coupled with inductive shelving and wireless power, printed electronics are particularly well-suited for bringing consumer packaged goods to life while on-shelf. These technologies can drive engaging effects designed right into the product with no need for batteries.

Applications
At Shelf / Counter / Packaging Packaged goods can be designed to engage consumers using a variety of printable electronics. Light and pressure sensors can be leveraged to detect movement and drive changes to the packaging. Small e-ink displays, LEDs, sounds, glowing inks, and printable integrated circuits can be triggered to enhance the marketing of the product.

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Fulton Innovations eCoupled Illuminated packaging makes an eye-catching statement on grocery store shelves.

Sampling The format of fragrance sampling is particularly well-suited for printed electronics. The size and shape of the average sleeve lends itself to embedding printed sensors that can be used to trigger experiences such as animated messages on e-ink, phosphorescence, audio, or perhaps even dispensing small quantities of scent. The test strips, also being made of a printable material, can accommodate a small amount of electronics, potentially supporting an experience that is triggered by proximity to the product.

5. Wireless Interactivity: RFID / NFC

Radio frequency identification (RFID) has long been a tool of the retail supply chain. Advances in antenna designs and software have given retailers new ways to use RFID as an effective means to engage consumers. Products that have been tagged for security and inventory control can now trigger in-store analytic systems designed to drive media and assisted selling. When properly leveraged, RFID tags are elevated from a logistics tool to an effective means of driving demand. NFC, a subset of RFID with a shorter range, is increasingly found in many mobile phones and consumer devices.

Applications
At Shelf / Counter RFID can be used effectively to detect physical product engagement. Moving or placing an RFID-tagged item can trigger a wide variety of actions. These can range from media and audio players, to visual cues, such as lighting, to touchscreens pre-loaded with complementary content. Assisted Selling (Kiosk) / Sampling A properly constructed display or kiosk is an excellent way to leverage RFID-tagged product. The trigger can be used to alert a sales associate, or begin an assisted shopping process. Curated product associations can drive a customer to consider complementary products, or be used to offer or dispense samples of product based on demonstrated interest.

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Bcaro, a wine retailer at Zurich Airport, uses RFID labels on their bottles to upsell and cross-sell merchandise.

Media Targeting Directional antennas have been successfully used to detect product motion at a distance. These detections are well-suited to drive targeted media to screens with proximity to the customer. Lifting product a can drive media relating to that product, or drive complementary media to inform the shopper of curated recommendations. Hotspots can also be positioned in various locations where those complementary products may be on display. An example of this might be as a customer walks past a rack of belts holding an RFID-tagged blouse, media above the rack begins to display images or video of that blouse with a particular belt.

Packaging / POS In addition to the examples above, embedding RFID into the packaging of a product is effective for extending the long-term usefulness of the container at checkout. Readers at a POS or counter can be used to continue driving sponsored media or experiences, including product offers, replenishment recommendations, or to associate the purchase with a tagged loyalty card.

6. Wireless Interactivity: Captive Portal/Passive Analytics

One of the most valuable aspects of online retail is the ability to collect site analytics and study the behaviors associated with customers and visitors to your website. Tailoring content for delivery to certain consumer profiles is key to high conversion rates and is the core strategy behind every successful e-commerce strategy. The ability to engage and gather the same level of intelligence about shopper behavior in brick-and-mortar stores is the upcoming revolution in retail. Tailoring in-store content to shoppers based on displayed and recognized behavioral patterns means retailers are able to shift business strategies based on physical space analytics, and can expand the reach of (or reduce the need for) floor staff, increase engagement and dwell times, and, ultimately, drive higher sales.

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Applications
At Shelf / Counter Lo-fi means of measuring foot traffic patterns have existed for a few years in the form of cameras, IR counters, and motion detectors. However, higher value observations can be made by sensing unique signals emitted by consumer devices. These signals can be used to track individual device dwell times, bounce rates, repeat visits, and in-store positioning.

Analytics tools such as Path Intelligence use Wi-Fi traffic to give retailers insight into traffic flow, dwell time, and product lift, and to help optimize rents and reduce vacant spaces.

Media Targeting By encouraging in-store customers to use their own devices to join a captive Wi-Fi portal, brands can further bridge the gap between the physical and online space. Stores can deliver rich editorial content tailored to exhibited interests or particular profiles, allow for social sharing and feedback and collect valuable profile information and user analytics. Customers can later be engaged after the in-store experience with follow-ups, and encouragement to return to participate in the in-store experience using digital coupons, the delivery of digital assets directly to their devices, or automated, location-based loyalty perks.

7. Mobile Payment
Enabling customers to complete purchases with as little friction as possible is the aspiration of most retailers. Whether retailers choose to equip sales staff with handheld POS devices or enable customers to use their own devices, decentralized POS eliminates the bottleneck of the cash wrap, delights customers, and enables new physical store design concepts.

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Paying with Square at Starbucks. Photo: Alex Washburn/Wired

Applications
Self-Checkout and Cashless Transactions Apple Retail has trailblazed the mobile point-of-sale concept with their custom iOS-based EasyPay units and the free Apple Store app for iPhone that enables customers to scan UPC codes themselves and walk out of the store with minimal hassle. Last year Square and Starbucks partnered to enable customers to use Square Wallet to pay for their lattes, and Square recently announced it will be the sole processor of credit and debit card payments for Starbucks in the United States. The Starbucks-Square partnership has the potential to push mobile payments over the tipping point over 50% of the U.S. population uses a smartphone and nearly everyone goes to Starbucks. Soon, shoppers will place their orders remotely, and retailers will recognize them on arrival via their Squareenabled registers. No cash or credit card required, and smartphones stay put in shoppers pockets. Also interesting to note is that Square is succeeding in this space even as Apple and other manufacturers have not fully embraced NFC in their mobile devices. Captive portals, geo-fencing, and GPS are enabling mobile payment fully using the technology that is already pervasive in our mobile devices.

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CONCLUSION
Successful retailers will need to provide their customers with the same level of personalization, accessibility, and service both online and offline. To create a meaningful and cohesive customer experience, technology investments should amplify great service not make up for it. Marketing benefits aside, the goal of these implementations should be to create efficiencies, drives sales, and provide seamless and delightful customer experiences. This requires a commitment to technology investments that provide a framework for marketing ideas and service delivery that enable long-term growth. With the proliferation of these emerging technologies, a trip to the store will never be the same again.

FOR MORE INFORMATION

Charlie Miller cmiller@controlgroup.com 212-343-2525 x4

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