Transformational Tech in Retail, Part 2: Innovation That’s Changing How We Shop

This is part 2 in a series of articles exploring how much-discussed new technologies work and why they’re game-changers for retailers. Click here to read part 1, and subscribe to our Supply Chain Nation blog to make sure you get all the insights in this series.   

In this article, we’ll take a closer look at the details of innovative shopping technologies you might have heard of, but might not fully understand, so you can grasp the benefits these technologies could bring you in terms of new shopping and buying experiences.

Augmented Reality (AR)
A technology which superimposes a computer-generated image on a user’s view of the real world. The game “Pokémon Go” is probably the best-known example of AR technology, as millions of people use their phones to search for and capture virtual characters.

Within retail, AR is already driving benefits for shoppers as well as retailers. IKEA enables customers to preview on a smartphone how the furniture they’re looking at would look in their home. Dulux Paints allows customers to view their walls in any color before purchasing paint. And eBay now allows for a visualization to evaluate required box sizes for shipping, making it easier for sellers to plan.

Also, with the addition of ARKit into iOS11, Apple has made it easier for developers to integrate AR into their apps. As customers become more comfortable and familiar with this technology, expect the use of AR to become the norm – for instance, enabling customers to see how they may look “virtually” wearing items of clothing or make-up, both at home and in-store.

Virtual Reality (VR)
While similar to AR, this is a more complex technology where three-dimensional simulations are created that shoppers can interact with in seemingly real or physical ways. While the concept has been around for decades, its use in retail thus far has been limited. However, Alibaba has previously offered a VR-enabled shopping experience for its customers which generated much interest.

Some retailers have also experimented with 3D websites to try to bring the VR shopping experience to life. As this technology develops, you can expect it to help overcome some of the barriers that still exist with online shopping, such as providing a 360-degree view of products, or helping customers shop from home in a virtual, personalized environment. This technology is also being used internally to create 3D visual view of stores so retailers can review layouts.

Voice & Visual Search
While the vast majority of searches today are conducted by typing text into a device, the use of voice and visual search tools is growing. Personal assistants such as Amazon Alexa, Apple Siri and Google Home are leading the voice search trend, both on mobile phones and via standalone devices. Voice search is growing quickly, with estimates of between 30%-50 percent of all searches being voice searches by early 2020’s, with voice shopping estimated to grow from around $2 billion annually up to $40 billion within just a few years.

Meanwhile, visual search is a growing trend in shopping, using image-matching to find items similar to those a customer would like to buy. UK fashion retailer ASOS, for example, recently integrated this capability into their mobile app: a user can take a photo of an item and the app will display similar items based on that photo. In the future, one could imagine spotting an item online or on television, then searching with a photo or screenshot either to find that exact item or to see if a favorite retailer sells something similar. We’re most likely to see people using visual searches across multiple platforms and retailers, which will probably be more useful than a visual search for one specific retailer.

In addition, voice and visual search are both starting to be incorporated into many business applications as alternatives to text search, enabling enable quick and targeted results.

Established Technologies with New Applications
In closing, let’s take a fresh look at two areas of technology that are no longer brand-new and emerging, but which are definitely still evolving and impacting retail differently with the passage of time: smartphones and wearable devices.

Over a third of the world’s population, and over two-thirds of people in developed markets, use a smartphone, with the average user spending around four hours per day on these devices. And smartwatches and other wearable devices are now a part of who we are, not only tracking our fitness and helping us use mobile phones, but adding contactless payment capabilities as well. “Wearables” refers to any electronic technologies that are worn on the body, either incorporated into clothing or as an accessory, such as activity trackers.

As we’d expect with this adoption curve, mobile commerce now accounts for more than half of all online commerce and their use will only grow further. Retailers are already aware of how commonly smartphones are used in the retail decision-making process, whether it be for price comparisons or searching product reviews. Our new playbook for retailers, Retail Reimagined for Dummies, talks about the ways that the lines between sales and shopping channels are blurring, as we move from the status quo of omni-channel retail toward a unified commerce model where shopping journeys begin on one device and end, seamlessly, on another. This is particularly important in light of estimates that by 2020, over 85 percent of electronic purchases will involve the use of a smartphone.

Smartphones should be the first place a retailer sends their customers to find out product information, place an order or find out when a delivery is due. Smartphone shopping still suffers from relatively low conversion rates due to screen size and difficulty of payment, and much work is going into resolving this. But these challenges are not as great of an an issue for other mobile devices, such as tablets. Mobile purchases account for more than half of all online purchases on China, Japan and South Korea today, and are forecast to approach 40 percent of purchases in Europe in the next three years.

What this means for you, as a retailer, is that it’s time to lay the groundwork to reach customers when they want to shop your brand using these emerging and evolving technologies. Will you have the systems, the support structure and the technology stack in place to support visual searches, for example? Will you be able to provide the right information to help potential shoppers find items and experience them in VR or AR?

The time to start planning for these future technologies is now. Stay tuned for the next article in this series, where we’ll explore the innovative new technologies that can improve your day-to-day operations.

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