Cashierless checkout and in-store sensors are just the beginning of the brick and mortar tech revolution. In the wake of Amazon Go’s launch, other legacy retailers have begun piloting programs for smart displays that can show targeted ads and promotions to shoppers, cooler doors with digital depictions of the merchandise inside, and smart product suggestions based on customer purchase history. According to a recent NewtonX retail survey with executives and senior managers at large retailers (read the initial analysis of the survey here) one of the top three strategic initiatives for 2019 is digitizing in-store experiences. In this article, we look at what digital experiences the largest retailers are piloting, and how this will affect consumer shopping experiences.
Smart Shopping Doesn’t Just Mean Bargain Hunting
Cooler Screens Inc., a Chicago-based company that has raised $10M in VC funding (last round led by Microsoft), creates smart cooler doors equipped with cameras and sensors. The cooler doors serve two purposes: they can show the items inside in their best light (think: a McDonald’s hamburger on a billboard vs. in real life), and they can also serve as digital advertising platforms. The Cooler Screens technology uses facial recognition to enable targeted advertising based on demographic data, as well as advertising based on external factors, such as the weather. For instance, a cooler door would be prime real estate for ice cream brands during a heat wave, while a hot chocolate brand would want to claim the advertising space during a snowstorm.
This isn’t just speculation: Cooler Screens customers include Walgreens, Nestle, and MillerCoors. Other companies are taking different tactics for in-store targeted advertising. Focal Systems, for instance, has raised $2.8M to equip shopping carts with tablets that can display ads to shoppers based on demographic data as well as their proximity within the store to other products.
These products are largely still in pilot stage. However, they raise interesting possibilities for the future of pricing and distributor/brand partnerships. For instance, if a distributor generates an extra 10% in revenue from in-store targeted advertising, they can also offer competitive prices and deals for customers, which in turn increases traffic and revenue. Additionally, distributors can partner with brands to offer advertising space in exchange for lower wholesale prices.
The success of these products will rely on how willing customers are to be served targeted ads in-store. Brands will need to offer experiences that are improved enough from a customer standpoint (discounts they truly want, subtle enough targeting that they don’t feel spied upon but do feel tempted to buy, etc.) that they are willing to overlook privacy concerns.
Hybrid Brick and Mortar and eCommerce: The Future of Retail Tech
The NewtonX survey found that hybrid e-commerce and brick and mortar approaches are the gold standard for 82% of survey respondents. While most brick and mortar stores have made the transition into ecommerce, recent moves from ecommerce giants including Amazon, Warby Parker, Google, and Alibaba into brick and mortar have forced legacy brick and mortar retailers such as Walgreens to digitize the in-store experience.
Ecommerce brands have the advantages of a wealth of consumer data and mobile apps used by a large percentage of their customer base. This allows them to integrate mobile experiences into brick and mortar experiences. For instance, Alibaba’s Hema grocery stores, which launched in 2016 and are now open in hundreds of locations, have customers scan items on their app to get product information, pricing, recipes, etc. To purchase items, customers can use Alipay, where they’ll also find customized offers and discounts. The store offers guaranteed 30 minute delivery within a 3km radius of any Hema location (Alibaba says housing prices around the stores have soared). Meanwhile, if a customer wants to eat dinner in the store while they wait for groceries to be delivered they can go to the company’s robotic dining room, where robots heat up the grocery store food that the customer has requested and then serve it.
Experiences like this that combine the personalization and ease of ecommerce with the immediacy and tactile benefits of brick and mortar will soon become the gold standard for everything, from point of sale, to advertising.