The Stores of the Future: Modernizing Fashion Retail using Technology

Today’s shoppers are shopping from the comforts of their home and this phenomenon was propelled by COVID-19. But does that mean that brick and mortar stores are witnessing slow and steady demise? Thankfully, this is not the case as nothing can beat a great in-store experience. And to ensure that the shoppers are having the best experience, retail stores are doing everything in their capacity to fulfill both the conscious and unconscious needs and wants of their customers.

In this article, we try to take a stab at highlighting the ways in which retailers can transform both their frontend as well as backend systems, technologies, and processes to ensure that the customers are getting the world class experience which they have come to seek.

Immersive & Personalized In-store Experience

Retailers must keep upgrading their stores & offerings regularly to meet the ever-evolving customer expectations to stay relevant with the emerging trends & optimize the in-store customer experience. After COVID-19, though online shopping has seen a boom, offline retail has also been impacted positively. Consumers now look at shopping more from an “Experience” lens rather than a buying process. Thus, to provide a better, immersive & a more personalized experience to the fashion retail consumers, the retailers can adopt some of the following technologies:

1. Digital merchandizing techniques & digitally enabled browsing experience:

• Virtual shelves and endless aisles — This technology allows customers to browse & purchase items that are not available in the store. These items may be available online or at other store locations. Retailers usually opt for digital display screens or kiosks. At some locations, this technology is used by the store associates in their devices to assist the customers to order the required products online. This technology will allow retailers to increase customer satisfaction & loyalty and reduce lost sales. Recently, Indya introduced an Endless Aisle Kiosk in one of its stores.

Endless Aisle Kiosk in Indya Store

• In-store navigation — In fashion stores, navigation is particularly important due to the high number of SKUs available. Clear signages have been the convention. Retailers can up their game by adding digital maps or in-app navigation maps to guide the customers through the stores to help find the required products using real time information about product locations & availability. This helps improve the customer satisfaction & also drive more sales.

2. Differentiated in-store trial experience:

• Virtual Mirrors- Screens are used as mirrors which scan the customer’s body features & you can try different products in the mirror using the virtual mirror screen. Shoppers Stop used such ‘magical mirrors’ to enable customers try different products virtually.
• RFID Enabled Fitting Rooms — With the automatic identification technology of RFID electronic tags, the walls of fitting rooms are used as screens to suggest products that would be suitable to be bought with the shortlisted products available with the customer in the room. Inside Zara’s fitting room, customers can see on a touch screen the product information of the items they brought in, all tagged with RFID, as well as request for other available sizes and colors.
• 3D Body Scanning — This technology uses 3D body scanning to create digital avatars of customers, after which the customer can virtually try on various products on the avatar. Hong Kong’s Unspun, Gay Giano and Isabella Wren are using this technology to tailor personalized attire for men and women

All these options are a way to reduce the trial room & waiting anxiety that customers face & also enhance their experience.

3. Tech-enabled Checkouts:

• Self-checkouts — With self-checkouts, customers can scan and bill their own purchases rather than relying on staff intervention. Zara introduced self-checkout machines to helps customers ‘beat the queue’.

Self-checkout machines in a Zara Store

• Mobile checkouts — Customers can also use their mobiles to scan the barcodes on selected items, pay online & leave the store by showing their digital receipt to any store employee.
• RFID Checkout or Smart Carts — Inbuilt-RFID technology in shopping carts is used to scan items as they are added to the cart. The bill gets automatically updated as the customer adds items to the cart. Uniqlo uses a similar technology where shoppers simply place the shortlisted products in the designated area. Then, the machine automatically displays each item and the price on screen.

These technologies enable the users to checkout faster & provide a seamless shopping experience.

This was just a glimpse of what technology can do & how it can transform the in-store shopping experience. But this is just the front end, that is visible to us. Let’s try to understand what retailers can do at the backend & enhance their operations as well as customer experience.

Beacon Technology — Changing the Landscape of Personalized Marketing

Beacons are small, battery-operated, wireless sensors which are powered by Bluetooth Low Energy (BLE) Technology which can send one-way signals to nearby devices such as smartphones. They work when a piece of code is added to mobile apps that enable smartphone Bluetooth technology to detect a beacon’s specific signal. This technology was first introduced by Apple in 2013.

The technology is now witnessing a lot of popularity and it is being adopted by different retailers. This technology has multiple use cases which allows the retailers to improve their understanding of their customers and reach out to them with advanced personalized offers. This has also led to an increase in customer satisfaction for the retailers who have adopted this technology.

Some of the ways in which this technology is being used by different retailers to improve their customers’ experience are:

1. Proximity Marketing — Beacons can be used by retailers to send out targeted alerts and notifications to customers whenever they are near the stores. These notifications are usually personalized based on the browsing history of the customer on the app.

2. Customer Movement — Beacons can also be used to track customer movement within the store and provide them with insights or guidance on how to navigate the store.

3. In-store Alerts — By using beacons, the retailers can provide the customers with discounts and coupons based on their location. Although this technology has some limitations based on the store size but, for large fashion retailers, it can be a great way to target their consumers with specific promotions.

4. Loyalty Program — Beacons can also be integrated with the loyalty program as done by some retailers who use this technology to monitor the time spent by a customer within their store and reward them accordingly.

Some of the famous retailers who have implemented this technology and are benefitting from it are:

1. Target uses beacons to help its customers locate specific products or find their way in the store.

2. Nordstrom also uses this technology to integrate its customers’ online and offline shopping experience. The customers get a notification on the app if they are passing a store and the store has stock of a product which is in the shopping bag in the app.

3. Urban Outfitters has successfully combined the usage of beacon technology with social media, and it has successfully turned its customers into its brand ambassadors. This is done by encouraging customers to take selfies in the dressing room once they are within the stores and upload them on social media with the hashtag, #UOonYou.

Beacon Technology equips the retailers with a tool which can change the way they provide personalized experiences to the customer.

In-store Video Analytics — Improving In-store Customer Behavior Understanding

In-store video analytics is a great tool to bolster the relationship between a store and its visitors and retailers have been trying to utilize it to better understand their consumers’ psychology and provide them with all the facilities which would streamline their experience in the store. Video analytics is an overarching term for several capabilities which can be achieved with the help of cameras and the right software. The video cameras are used to record videos of the store and areas around the store whereas the software uses sophisticated machine-learning algorithms to monitor, analyze, and manage large volumes of video.

Some of the data points which in-store video analytics can provide are people counting, customer movement, dwell time, and demographic information. This goldmine of data can be utilized by retailers for transforming many aspects of store operations such as:

1. Store Layout — By understanding the customer movement within the store, retailers can adjust the store layout so that the customer’s movement in the store is maximized. It allows the customers to view maximum products and enhances their shopping experience.

2. Product Layout — By identifying the hot and cold areas in the store, retailers would be able to switch up the product layout so as to ensure that more and more customers are spending time in different parts of the store. It can include actions like placing slow-moving items near the check-out counter etc.

3. Promotions — There would be items which the customers are checking out but not purchasing, which suggests that maybe the price point is not correct. The data from these analytics tools can be used to identify such items and then the customers can be provided with some form of promotional scheme to improve the sales of such items.

4. Prevention of Theft and Losses — Video analytics is one of the ways in which theft and other damage can be prevented as it would allow for a faster response time and better tracking of unusual activities.

5. Employee Productivity and Staffing — By using people counting technology, retailers would be able to identify the peak times in a day and peak months in a year for their stores. This would provide them with important data as they can then rotate their staff in such a manner that they have maximum staff in the busiest periods. Also, they would be able to identify the product sections which need maximum personnel to ensure a smooth customer experience.

These are some of the ways in which in-store video analytics will allow the retailers across the world to transform their understanding of their customer behavior within the store as well as act upon workable data points to ensure the best experience for their customers.

These are some of the technologies which can help retailers build stores of the future with all the modern facilities. There are many other technologies which can contribute to the success of retail stores and help them improve all the facets of their business. The most important aspect is for retailers to better understand their goals and aspirations so that they can pick and choose the technologies which would be most relevant for them and help them reap maximum benefits.

Co-authored by Akanksha Sinha

Avantika (IIMC) and Akanksha (IIMC) are Business Consultants under the Strategic Leadership Program (SLP) for Tata Consultancy Services in the IMEA region.