Insight-Driven Retailing Blog

Reinventing Retail

2012-02-06T18:42:16+00:00

Just like physicists are fond of saying matter is neither created nor destroyed it simply changes form, so goes retailing. The industry has morphed from small independent stores, to chains, to big-box, to online, to mobile. Consumers' tastes, habits, and preferences change over time, thus retailers must always stay in-tune. Unfortunately, many don't.

The most recent whipping-boy of the industry seems to be Brian Dunn, the CEO of Best Buy, who's company was attacked in a recent Forbes article. (A follow-up to that article, which includes an indirect rebuttal from Brian Dunn, is here.) While not calling out Best Buy by name, Marc Andreessen also predicted Best Buy's forthcoming demise. I just finished watching the show Best Buy: The Big Box Fights Back on CNBC, and was struck by the pessimistic future painted there as well. But in my experience, Best Buy is one of the most innovative retailers in the industry. Unfortunately, I think their problems are more a reflection of the products they sell rather than a lack of willingness to change.

So are all retailers in trouble? Ron Johnson, who is credited with Apple Stores' success, recently said retail isn't broken, store are. Now he needs to prove it as CEO of department store chain JCPenney. His recently announced transformation plan includes "fair and square" pricing, but Apple was able to avoid discounting because of a lack of viable competition. JCP doesn't have such an advantage, so it remains to be seen if that strategy will work.

Barnes & Noble did a nice job moving into digital books, unlike competitor Borders, but B&N is still in a fight for its life. Now they are considering spinning the Nook business off. While that might unlock additional value in the Nook business, any decoupling from B&N makes their stores less relevant, a step in the wrong direction.

And while physical stores are doing more to be connected to consumers online, there's a rumor that Amazon might just open its first physical store in Seattle, ironically in a former Borders location.

I hate to use this overused phrased, but I will... retail is at an inflection point. Chains need to lighten the burdensome cost of physical stores, find a way to offer more value to in-store shoppers, or preferably do both. It starts by building Your Experience Platform to support a strategy for empowering employees to delight your customers. That includes making better product, placement, pricing, and promotion decisions on the backend, and delivering a unique shopping experience across all selling channels.

We're running fast toward the future of shopping, but only those willing to change will finish the race.

Curated Commerce

2012-01-31T21:52:41+00:00

As we create more and more digital information, it becomes harder to find exactly what we're looking for. Google has done a fantastic job of enabling search, but it still takes work to comb through the matching results to find the right answer. And if you're not really sure what you're looking for, Google is probably not the right tool.

If you're looking for products, choosing your favorite retailer's site is a good start. There, you can browse using facets to figure out options. Retailers will often group items together, as if they were designing a store window, to show related items together. However, that approach may be difficult to scale. A better approach might be to allow customers to do the curating themselves. This is not unlike the crowd-sourcing I described in this post about Polyvore.

The latest in curated commerce is Pinterest, a site that let's people "pin" interesting things they find online to thematic "bulletin boards." When those interesting things are products, its possible to make browsing the collections seem like shopping in a boutique. This helps consumers discover and share, which in turn elevates sales.

According to Mashable, Pinterest is becoming a significant referrer to retailer sites, especially fashion ones. With 7.5M users, 58% of which are women, this trend is expected to continue.

This is yet another consideration for any retailer's social strategy.

JCPenney Starts Their Journey

2012-01-26T19:43:38+00:00

Ron Johnson's contributions to the Apple stores were many, but it remains to be seen if that experience will translate to JCPenney where he's now CEO. After all, the two companies couldn't be more different. Apple is a technology company with very few products and a loyal fan base. JCPenney, on the other hand, is a promotions-driven mass-merchant with many products and large stores anchoring malls.

I doubt the genius bar will fly at Penney's.

Yesterday the journey began when JCPenney revealed its four-year blueprint to bring the brand back from the brink. The focus is on providing what the American shopper wants. This includes dropping the plethora of promotions and simplify pricing. The redesigned logo is clearly influenced by our flag, and the in-store experience is changing to better reflect main street, complete with a town square in the middle of the store. Susan Reda did a fine job describing the changes, so I'll just refer you to her article for details.

Only time will tell if the changes make a difference, but I must say its impressive that JCPenney is willing to make such sweeping changes. From what I've seen so far, they are on the right track.

I'll close with a video announcing the changes, which are set to begin on February 1st.

Navigating the Store

2012-01-26T18:45:22+00:00

Here's an update on my 2010 posting Going Inside the Store. Has you phone ever displayed a message saying you'd get better map results if you enabled WiFi? That's because companies like Skyhook, Apple, and Google send people to public places to correlate WiFi signal strength with locations. Then they use the information to more accurately determine your location, which is especially important when line-of-sight to the GPS satellites is not possible.

Retailers like Home Depot, IKEA, and Macy's have provided store floor plans to Google so that Android maps actually extend from the streets to the aisles, making it easier to navigate big-box stores. Similar efforts are ongoing for airports, malls, and arenas. Wouldn't it be nice for the mapping on your phone to take you directly to your seat in the stadium, your gate in the airport, and a product on the shelf?

Here's a short video showing how you can navigate inside an IKEA store using your phone.

ARTS Social Retailing Blueprint

2012-01-11T07:09:12+00:00

At ARTS, we focus on helping retailers succeed with using technology. Technology can be a competitive advantage, but it can also hold companies back if its allowed to grow stale. Its important for every retailer to stay abreast of emerging technologies, and understand how adoption may or may not benefit the business. Using social media is the latest topic being addressed by ARTS.

The ARTS Social Retailing Blueprint is a 143-page whitepaper that describes the use of social media by the retail industry. It includes ten specific tactics, examples of those tactics in use, and suggestions on organizational alignment. The document was written by representatives from the following companies: 8th Bridge, MicroStrategy, Verizon, Cisco, IBM, Oracle Retail, Versatil, Epson, SAP, Pier 1 Imports, Meru Networks, Red Prairie, Safeway, Criti, Cellpoint Mobile, and Push Science (in no particular order).

Below is my favorite part of the blueprint, a summary of the ten tactics on a maturity scale. Retailers should first determine which of the ten tactics makes sense for their business, then for each tactic there are varying levels of maturity. Retailers will ideally start with the Novice level and grow to the right toward Advanced.

If you're having trouble reading this eye-chart, click here for the raw version in which you can zoom.

At the ARTS User Conference last year, I delivered a presentation on the Social Blueprint which you can find here. Two other great articles are at the NRF Big Blog and RIS News.

There is no perfect recipe for social retailing, so its necessary for each retailer to experiment to find what works for them. Also, set realistic expectations for your social media efforts. Its unrealistic to think you'll substantially increase sales by creating a Facebook page, for example. Social media campaigns are an investment in your relationship with your customers, so give it some time to grow and strengthen. There is great potential for a relatively small investment.

Retail Orphan Initiative

2012-01-10T08:18:49+00:00

A few years back we had the CIO of SuperValu, Paul Singer, speak at Oracle Open World in the retail track. While I was expecting the usual stories about retail IT, Paul surprised everyone by showing a very inspiring video about the benefits and importance of adoption. Not only was Paul an adoptive parent, but he used his influential positions at SuperValu and Target to be an advocate for kids.

I recall two people in the audience, Greg Buzek and Jeff Roster, both analysts for the retail industry, being moved by Paul's passion. It wasn't long before they helped form the Retail Orphan Initiative along with Marc Millstein and Rose Spicer. The organization, called RetailROI for short, raises funds from the retail community for the benefit of orphans all around the world. This is the third year for the SuperSaturday session at the NRF Big Show, a very informative event that doubles as a fundraiser.

Oracle's Rose Spicer, who is also on RetailROI's board of advisors, has collaborated with Build-A-Bear to raise awareness and funds for RetailROI at NRF. On Monday morning she and many customers will meet at the local Build-A-Bear to create 150 stuffed animals that will be donated to New York orphans in partnership with the KIDS organization.

Additionally, anyone that donates $20 to RetailROI in the Oracle booth will receive one of the bears pictured above. With just 2,000 donations, RetailROI will get $40,000 which will support 1,000 kids in Malawi. As you can see, there are several opportunities to support this worthy cause next week during the Big Show.

Engineered Systems for Retail

2012-01-09T12:11:33+00:00

I've been speaking to analysts in preparation for attending the NRF Big Show next week, and one comment I heard concerned me. The analyst said there's a misconception amongst some retailers that Oracle's software only runs on Oracle hardware. Clearly that's a misconception, but I understand how people may have jumped to that conclusion.

Just to review, Oracle has announced three important engineered systems. Exadata is the database machine, Exalogic is the middleware machine, and Exalytics is the BI machine. Each system includes the hardware and system software built to work together for that specialized task. Typical engineered systems provide about a 3X performance boost on average, with some tasks significantly faster.

Oracle's engineered systems are hardware and software built to work together. The "software" part of the equation includes things like the operating system, database, and middleware but not the business applications. One of the key benefits of this approach is that applications require no changes, so they will run on anyone's hardware as well as Oracle's engineered systems.

And specifically for retail, we continue to partner with different hardware vendors to test and certify our applications. None of our retail products require Oracle hardware. Buying hardware from Oracle is optional, and that's the plan for the future as well.

That said, there are lots of benefits from running Oracle Retail applications on Exadata, Exalogic, and Exalytics that retailers should consider. Blazing performance, hardware consolidation, reduced energy consumption, and easy expansion are a few.

Best Buy in a Downward Spiral?

2012-01-03T15:45:06+00:00

Larry Downes seems to have struck a nerve with his popular Forbes article Why Best Buy is going out of Business...Gradually. As of this writing, he's already had over 550,000 views for the five-page, somewhat long-winded diatribe that was posted yesterday. Larry basically lays out his reasoning for Best Buy's demise based on poor customer service while refuting the excuse that cheaper online retailers like Amazon have an unfair advantage. He cites the recent cancellation of orders by Best Buy just before Christmas as the ultimate failure to serve customers.

As a former Circuit City employee, I can feel Best Buy's pain. Electronics is a tough market. The products become obsolete quickly, installation and configuration can be customer service nightmares, and the Web has made competition more fierce than ever.

I haven't shopped at Best Buy in quite a while, so I don't have any good or bad recent experiences to relay. But I did have three good customer experiences recently, so I thought I'd share:

1. We decided to do some remodeling in the kitchen so I ordered a faucet, cooktop, and range hood from Lowes.com. They were available to be delivered from the local store in two weeks, but since we'd be on vacation I put a specific date in the comments. Within an hour of submitting the order, my local Lowes called to verify exactly when I wanted the items delivered. Everything arrived as planned.

2. I ordered a MicroSD card from Amazon, but the wrong type of card was delivered. My order was accidentally switched with another Austin resident who got my product. I called Amazon and they immediately shipped my original product via 2-day delivery with no questions asked. I understand mistakes happen and just want them rectified quickly.

3. Lastly, I bought an expensive blender from Costco which went on sale the next week. I called and they happily refunded the difference. By the way, I chose to buy the blender from Costco not because they were cheapest but because they have an excellent return policy.

All three situations had a few things in common. First, the employees I spoke with had good attitudes. I felt they enjoyed their jobs, and it made the conversation that much better. Second, all three retailers had the necessary systems to enable my purchase and handle post-purchase issues. Third, the people I talked to were empowered to make me happy. There was no runaround at all.

In this blog I focus lots on the technology that powers retailers, but in the end its the human touch that makes it work. Perhaps Best Buy needs to get back to its customer service roots.

Retail Strategy for 2012

2011-12-20T15:48:55+00:00

Earlier this month I reviewed my 2011 predictions and made new ones for 2012. Of course I wasn't the only one thinking about what's next for retail. RIS News published their 2012 outlook, Retail Touchpoints has their 2012 insights, and Stores has their 2012 predictions so there's no shortage of opinions. Reading these articles, its easy to pull out the major themes and they're exactly what you'd expect. I could write about each theme, but I thought it would be more fun to remove all but the buzzwords. See if you can still understand my summations...

Mobile-- anywhere/anytime commerce, always on consumers, omni-channel, Amazon's showroom, ubiquitous access to product info, QRCodes, online inside, NFC, loyalty, empowered employees, endless aisles, tablets
Social-- one-to-marketing, f-commerce, big data, customer analytics, psychographics, contextual offers
Cloud-- deployment, management, access data from anywhere, lower TCO, elastic, utility pricing, security, SLAs, SaaS, outage

This shortened version of writing sure saves time! Here's the point. Now is a good time to reflect on this year and think about your strategy for next year, which had better address all three mentioned areas. I'm not saying you need to embrace all three, but you do need to have a point-of-view on how each can affect your business. As you're reviewing your strategy, here's a little advice for the new year:

Don't get caught up in the buzzwords. Look past the coolness factor and figure out how things directly impact the business. A Twitter account might increase sales, but old-fashion supply-chain management might move the needle even more. Put a little money toward innovation, and invest the rest toward improving the basics.

Skate to where the puck is going. Your strategy must not only address your customers but also your future customers. Run ideas past your teenage kids because they will soon be your customers. This is especially important for matters relating to privacy, which continues to vary greatly by generations.

Measure twice, cut once. Strategies must be based on data, not gut feelings. Execute only after you've done the necessary analysis and have metrics in place to assess results. Challenge the statistics and use multiple sources.

Food for thought. See you next year at NRF!

Happy Holiday From a Friend

2011-12-13T09:16:20+00:00

As you may have learned from TV commercials, retailers like Walmart, Toys-R-Us, and Kmart are offering layaway programs this holiday season. The programs are welcomed by families living paycheck to paycheck that might not have the cash on hand to take advantage of great deals. They can lock in a good price and pay the amount off over weeks without having to worry about stores selling out of hot items and disappointing the kids.

While this has been great news for many, something even better is happening across America. In Grand Rapids, Michigan a woman entered a Kmart and asked to see a list of layaway accounts so she should could pay a few off. At first the associate thought the lady wanted to take the items, but that was not the case. She chose three accounts that each included kid's toys and paid them down to a $10 balance.

"They said that someone had paid $180 on my layaway and there was only $10 left," one of the beneficiaries says of being told about the mystery woman's gift. "I thought it was a joke...I thank her. It's the best gift that I ever received, and it's the gift of believing in people... And believing that there's good out there, 'cause you don't always see that."

On the receipt the Secret Santa wrote, "Happy Holiday from a friend."

Once a local TV station reported the deed, more such acts of kindness have been occurring across the country. Its tempting for Kmart to take advantage of the situation to boost its bottom line, but it claims it will not. “The beauty of this is that it's organic and coming from the customers and not from us,” said Salima Yala, the retailer's division vice president for layaway. “It's being driven by outside the company. It's just people to people.”

Fantastic!

Secret Santa picks up 3 layaway bills: woodtv.com

2012 Predictions for Retail - Part 2

2011-12-06T11:29:14+00:00

I think the first four predictions are pretty likely, so let's look at some things that are a bit of a stretch. These next four predictions are based on emerging technologies making inroads but not widespread adoption. Let me know if you agree or disagree in the comments.

5. Usable Augmented Reality

The first usable augmented reality app I used was Yelp when they had a semi-secret backdoor to access Monocle. The concept has been accessible to us since Apple combined the camera, GPS, and accelerometer in the iPhone, but I haven't seen anything I would use on a regular basis. Amazon's Flow is certainly a step in the right direction as is Tesco's subway store, and I think we'll see some more useful applications of AR next year.

And AR isn't limited to consumers. It can be helpful for store managers to be able to get information about sales and inventory as they walk the store. If a manager wants to know how many transaction per hour a checkout associate is doing, she need only point her camera.

6. Accurate Indoor Location

GPS has saved my marriage in several situations, and I can't live without it anymore. Its perfect for driving, but its not accurate enough to help me navigate my local Lowes and Home Depot. That's because GPS doesn't work well indoors. Smartphones typically use a combination of GPS satellites and WiFi access points to triangulate your position. The WiFi part is getting more accurate, and some systems leverage closed-loop security cameras to help. This year will be first rollout of accurate in-store directions for a big-box retailer. Not sure which one will be first, but I think the home improvement chains have the most to gain.

Imagine standing in an aisle and pressing a "help me" button on your phone, and a clerk walks right to you for assistance. Or getting turn-by-turn directions to find the garage door openers, for example. Accurate indoor location also helps with geo-fencing that I mentioned earlier. You might receive location-specific offers and product information as you walk.

7. Shopping with Siri

Apple's Siri is bringing to light the augmented humanity concept, the collaboration of humans and machines in transparent ways that enhance our everyday lives. A subset of the concept is using natural user interfaces that are easy to manipulate. In the case of Siri, voice response systems that understand questions and provide useful answers in context.

As smartphone adoption continues to grow in 2012, so will our dependence on them for providing information. New mobile application that take advantage of voice response, computer vision, and even eye-tracking (remember, while you're using your iPhone, there's a camera pointed at your face) will begin to emerge.

This means it will be even easier for consumers to get any and all information about products and brands. Look for Google and Apple to take the technology lead, and Amazon to capitalize on the advancements.

8. Behavior Profiling

When I shop, there are certain things that persuade me to buy: free shipping, good reviews, great price, perceived quality, easy returns, etc. But those things vary by person and situation. What if a retailer had a shopping profile on each of its customers and knew how to efficiently market to that customer? While I don't that we'll get to that point in 2012, I do think significant progress in that direction will occur.

Take myLowes for example. Lowes is collecting valuable information about each of its customers and will be better able to tailor offers that are more likely to be of interest. Lowes will sell more, and its customers will have a better experience.

Look for retailers to offer more differentiated loyalty programs and then develop sophisticated marketing plans at more granular levels using all that psychographic big data.

2010 was the year when mobile went mainstream in the retail industry. 2011 marked widespread adoption of Facebook to drive sales and engage consumers. I think 2012 will be the year that cloud computing gets serious. Look for lots of acquisition in this space, and more retailers to dip their toes in the water.

2012 Predictions for Retail - Part 1

2011-12-05T10:57:06+00:00

2012 is less than a month away, so this is the time of year we start seeing annual predictions.Susan Reda at Stores just published her take and I know IDC and Gartner have also released theirs. Many of last year's predictions could easily move forward to this year's: we'll continue to see lots of new alternative payment types, more engineered systems, better social analytics, more 2-D barcodes, greater adoption of cloud, and improved f-commerce.

In past years we've seen the rise of Apple, Google, Facebook, and Amazon but 2012 will mark a year of war between these juggernauts on the retail battlefield. They will fight over NFC, tablets, digital content, and most importantly, trust from consumers. Retailers must keep a close eye on all four companies.

1. Mobile Loyalty

Often, loyalty cards are just a way for retailers to give away margin in the hopes that consumers will select them as their preferred store. But strong programs involve a trade-off: consumers get discounts, and in return retailers get to learn more about their customers (and serve them better), and have the opportunity to influence their behavior. The loyalty card was a blunt instrument that worked well for the consumer, but didn't deliver for most retailers.

The concept of geo-fencing has been around a while, but there are few retailers that have really adopted it. The smartphone, with geo-fencing enabled, needs to become the consumer's loyalty card where retailers can incent, learn from, and communicate with customers. In 2012, geo-fencing will take off and deliver value for both consumers and retailers. Look for new loyalty programs built around smartphones.

2. Facebook Levels Off, Google+ Stalls, Groupon Withers, Amazon on Fire

To put Facebook's 800 million users in perspective, that the same number of people that were using the internet in 2004 worldwide, which incidentally is when Facebook got its start. Only India and China have bigger populations. That kind of growth just can't continue, nor do I think engagement can increase. The novelty is wearing off, so while there are lots of users, I believe the engagement of those users will wane.

Some of those users will feel more at home with Google+, but I seriously doubt many will close their Facebook accounts and make a permanent move. Google+ may continue to grow is user base, but users will spend more time on Facebook. Google will continue to dip its toes in retail with more small stores, a possible free-shipping program (similar to Amazon Prime), and of course Google Wallet and Google Offers. Other than Wallet, these efforts will go nowhere.

The potency of Groupon offers will dilute with all the "me-toos" that pop up, and retailers will learn that their exchange of profits for new, disloyal customers isn't sustainable. Not taking $5.75 billion from Google will down in history as a huge mistake.

Amazon's success with the Kindle will translate into more Prime customers and greater loyalty. The trend for shoppers to skip Google searches and go directly to amazon.com will continue, and Amazon will get more aggressive with books, movies, and music. Look for Amazon to acquire in the digital content area. Also, expect Amazon to have another AWS hiccup that gives retailers pause about using the cloud, but overall AWS usage continues to grow.

3. Apple Payments

With all the news about alternate payments, this isn't a stretch at all. Apple will finally release the iPhone 5 with NFC support and start to leverage their iTunes customer base for payments in non-Apple stores. I don't see how this will be financially viable with both Apple and credit cards taking a cut of each sale, so look for Apple to push customers toward ACH (debit/checking) as PayPal does. Look for Apple to start a loyalty program to incent consumers to use the new payment vehicle.

While we're on the subject of Apple, I'm betting they will release a new Apple TV product in 2012. Retailers should care because it will eventually allow viewers to "click on commercials" to get more details on products and sales.

4. Mobile Self-Checkout

Self-checkout, especially at grocery stores, has been around for a while. Some love it, and some don't. Smartphones now make it possible to simulate an e-commerce experience in the physical store. As you add items to your physical cart, you can scan them into your transaction, then pay and walk out the store. No need to stand in line at all.

Retailers are already putting mobile POS in the hands of its associates, so its not a huge step to expose that functionality directory to customers. As Apple leads the way, look for grocery chains to quickly add the capability followed by home improvement stores.

Reviewing Retail Predictions for 2011

2011-11-23T07:16:33+00:00

I've been busy thinking about what 2012 and beyond will look like for retail, and I have some interesting predictions to share. But before I go there, let’s first review this year’s predictions before making new ones for 2012.

1. Alternate Payments
We've seen several alternate payment schemes emerge over the last two years, and 2011 may be the year one of them takes hold. Any competition that can drive down fees will be good for everyone. I'm betting that Apple will add NFC chips to their next version of the iPhone, then enable payments in stores using iTunes accounts on the backend. Paypal will continue to make inroads, and Isis will announce a pilot.

The iPhone 4S did not contain an NFC chip, so we’ll have to continuing waiting for the iPhone 5. PayPal announced its moving into in-store payments, and Google launched its wallet in selected cities. Overall I think the payment scene is heating up and that trend will continue.

2. Engineered Systems
The industry is moving toward purpose-built appliances that are optimized across the entire stack. Oracle calls these "engineered systems" and the first two examples are Exadata and Exalogic, but there are other examples from other vendors. These are particularly important to the retail industry because of the volume of data that must be processed. There should be continued adoption in 2011.

Oracle reports that Exadata is its fasting growing product, and at the recent OpenWorld it announced the SuperCluster and Exalytics products, both continuing the engineered systems trend. SAP’s HANA continues to receive attention, and IBM also seems to be moving in this direction.

3. Social Analytics
There are lots of tools that provide insight into how a brand is perceived across popular internet sites, but as far as I know, these tools are not industry specific. The next step needs to mine the data and determine how it should influence retail operations. The data needs to help retailers determine how they create promotions, which products to stock, and how to keep consumers engaged. Social data alone does not provide the answers, but its one more data point that will help retailers make better decisions. Look for some vendor consolidation to help make this happen.

In March, Salesforce.com acquired leading social monitoring vendor Radian6 and followed up with acquisitions of Heroku and Model Metrics. The notion of Social CRM seems to be going more mainstream now.

4. 2-D Barcodes
Look for more QRCodes on shelf-tags, in newspaper circulars, and on billboards. It's a great portal from the physical world into the digital one that buys us time until augmented reality matures further. Nobody wants to type "www", backslash, and ".com" on their phones.

QRCodes are everywhere. ‘Nuff said.

5. In the words of Microsoft, "To the Cloud!"
My favorite "cloud application" is Evernote. If you take notes on your work laptop, you will inevitably need those notes on your home PC. And if you manage to solve that problem, you'll need to access them from your mobile phone. Evernote stores your notes in the cloud and provides easy ways to access them. Being able to access a service from anywhere and not having to worry about backups, upgrades, etc. is great. Retailers will start to rely on cloud services, both public and private, in the coming year.

There were no shortage of announcements in this area: Amazon’s cloud-based Kindle Fire, Apple’s iCloud, Oracle’s Public Cloud, etc. I saw an interesting presentation showing how BevMo moved their systems to the cloud. Seems like retailers are starting to consider the cloud for specific uses.

6. F-CommerceTop of Form

Move over "E" and "M" so we can introduce "F-Commerce," which should go mainstream in 2011. Already several retailers have created small stores on Facebook, and it won't be long before Facebook becomes a full-fledged channel in the omni-channel world of retail. The battle between Facebook and Google will heat up over retail, where both stand to make lots of money.

JCPenney and ASOS both put their entire catalogs on Facebook, and lots of other retailers have connected Facebook to their e-commerce site. I still think selling from the newsfeed is the best approach, and several retailers are trying that approach as well. I just don’t see Google+ as a threat to Facebook, so I think that battle is over. I called 2011 The Year of F-Commerce, and that was probably accurate.

Its good to look back at predictions, but we also have to think about what was missed. I didn't see Amazon entering the tablet business with such a splash, although in hindsight it was obvious. Nor did I think HP would fall so far so fast. Look for my 2012 predictions coming soon.

Four Emerging Payment Stories

2011-11-14T16:06:05+00:00

The world of alternate payments has been moving fast of late. Innovation in this area will help both consumers and retailers, but probably hurt the banks (at least that's the plan). Here are four recent news items in this area:

Dwolla, a start-up in Iowa, is trying to make credit cards obsolete. Twelve guys in Des Moines are using $1.3M they raised to allow businesses to skip the credit card networks and avoid the fees. Today they move about $1M a day across their network with an average transaction size of $500. Instead of charging merchants 2.9% plus $.30 per transaction, Dwolla charges a quarter -- yep, that coin featuring George Washington.

Dwolla (Web + Dollar = Dwolla) avoids the credit networks and connects directly to bank accounts using the bank's ACH network. They are signing up banks and merchants targeting both B2B and C2B as well as P2P payments. They leverage social networks to notify people they have a money transfer, and also have a mobile app that uses GPS location.

However, all is not rosy. There have been complaints about unexpected chargebacks and with debit fees being reduced by the big banks, the need is not as pronounced. The big banks are working on their own network called clearXchange that could provide stiff competition.

VeriFone just bought European payment processor Point for around $1B. By itself this would not have caught my attention except for the fact that VeriFone also announced the acquisition of GlobalBay earlier this month. In addition to their core business of selling stand-beside payment terminals, with GlobalBay they get employee-operated mobile selling tools and with Point they get a very big payment processing platform.

MasterCard and Intel announced a partnership around payments, starting with PayPass, MasterCard's new payment technology. Intel will lend its expertise to add additional levels of security, which seems to be the biggest barrier for consumer adoption. Everyone is scrambling to get their piece of cash transactions, which still represents 85% of all transactions.

Apple was awarded another mobile payment patent further cementing the rumors that the iPhone 5 will support NFC payments. As usual, Apple is upsetting the apple cart (sorry) by moving control of key data from the carriers to Apple. With Apple's vast number of iTunes accounts, they have a ready-made customer base to use the payment infrastructure, which I bet will slowly transition people away from credit cards and toward cheaper ACH. Gary Schwartz explains the three step process Apple is taking to become a payment processor.

Below is a picture I drew representing payments in the retail industry. There's certainly a lot of innovation happening.

Transparent Technology from Amazon

2011-11-10T10:33:15+00:00

Amazon has been making some interesting moves again, this time in the augmented humanity area. Augmented humanity is about helping humans overcome their shortcomings using technology. Putting a powerful smartphone in your pocket helps you in many ways like navigating streets, communicating with far off friends, and accessing information. But the interface for smartphones is somewhat limiting and unnatural, so companies have been looking for ways to make the technology more transparent and therefore easier to use.

When Apple helped us drop the stylus, we took a giant leap forward in simplicity. Using touchscreens with intuitive gestures was part of the iPhone's original appeal. People don't want to know that technology is there -- they just want the benefits. So what's the next leap beyond the touchscreen to make smartphones even easier to use?

Two natural ways we interact with the world around us is by using sight and voice. Google and Apple have been using both in their mobile platforms for limited uses cases. Nobody actually wants to type a text message, so why not just speak it? Any if you want more information about a book, why not just snap a picture of the cover? That's much more accurate than trying to key the title and/or author.

So what's Amazon been doing? First, Amazon released a new iPhone app called Flow that allows iPhone users to see information about products in context. Yes, its an augmented reality app that uses the phone's camera to view products, and overlays data about the products on the screen. For the most part it requires the barcode to be visible to correctly identify the product, but I believe it can also recognize certain logos as well. Download the app and try it out but don't expect perfection. Its good enough to demonstrate the concept, but its far from accurate enough. (MobileBeat did a pretty good review.) Extrapolate to the future and we might just have a heads-up display in our eyeglasses.

The second interesting area is voice response, for which Siri is getting lots of attention. Amazon may have purchased a voice recognition company called Yap, although the deal is not confirmed. But it would make perfect sense, especially with the Kindle Fire in Amazon's lineup.

I believe over the next 3-5 years the way in which we interact with smartphones will mature, and they will become more transparent yet more important to our daily lives. This will, of course, impact the way we shop, making information more readily accessible than it already is. Amazon seems to be positioning itself to be at the forefront of this trend, so we should be watching them carefully.

Self-Checkout at Apple Stores

2011-10-31T10:23:37+00:00

Back in mid-2010 Apple launched their own iOS application to support their stores, but it was overshadowed by the release of the iPhone 4. I finally downloaded the app, and it appears to be well-done (no surprise there). Users can get detailed information about stores and products, and even buy some products via the app. The app locates the nearest store where you can reserve products, make a genius bar appointment, arrange for training, or see the event schedule.

Now MacRumors is claiming the next version of the app will allow self-checkout in stores for items on the floor. This makes lots of sense since the high-value items aren't stocked on the floor anyway. If you'd like an iPad, you still need to talk to an associate, but if your just looking for a case or adapter, then grab one and check yourself out.

Now for the interesting part: self-checkout uses your iTunes account for payment. I have been predicting that Apple will someday enter the payment field, and this seems like the start. In theory, Apple could extend the ability to purchase items outside Apple using the iTunes account. That might be particularly valuable once Apple adds an NFC chip to the iPhone. Some big hurdles to overcome but still on the path.

Amazon Is Doing it Right

2011-10-26T11:49:28+00:00

Wall Street is broken. Yesterday Amazon announced it barely missed top line estimates, but fell far below expectations for the bottom line. Although revenue was up, net income was down 73% from last year. This caused investors to dump the stock, sending it down from $240 to $200 as of this writing. But nothing is wrong at Amazon. They have simply increased their investments in technology and people in order to position the company for the long-term.

As I pointed out in this post back in April, Amazon has consistently made "investment decisions in light of long-term market leadership considerations rather than short-term profitability considerations." To that end, they have hired 8,100 people this past quarter at a time when many businesses are sitting on large sums of cash riding out the storm. They will be well positioned for Christmas this year.

Amazon makes "bold rather than timid investment decisions" like challenging Apple in the tablet market. Their new Kindle Fire sells for $200 but reportedly costs around $205 to produce. This is the old Gillette trick of giving the razors away to sell the blades. They will extend their leadership selling e-book but also break into other media as well. I have already pre-ordered my Kindle Fire, which will get plenty of use in my house along with my iPad2 and regular Kindle.

Amazon continues to "focus on growth with emphasis on long-term profitability" by doing things like securing media content from the likes of CBS, FOX, PBS, NBC Universal, Sony, and Warner Bros for the Amazon streaming service, which is free to Amazon Prime members. Customers that pay $79 a year get free 2-day shipping plus all-you-can-eat access to its growing media library. On average, Amazon Prime members spent $400 the previous year before joining, and $900 after. Pure genius.

I wish more retailers would open their pocketbooks and make more long-term investments in technology. Yes, there's risk involved, but there's also reward when its done with passion and conviction. As I pointed out in this post, the big technology companies are changing the retail industry forever, so its time to get on board. If you don't have a research/innovation team, get one -- this month.

By the way, Jeff Bezos lost about $2.2 billion in stock value this week and he's probably happier than a tick on a fat dog. (This Texas living is rubbing off on me.)

Shopping with Siri

2011-10-25T13:06:34+00:00

Regardless of how sexy Apple and Google make smartphone user interfaces, they will always be limited by their screen size. That is until you consider some of the other capabilities of the smartphone, such as image and voice recognition. Last year Eric Schmidt, the former CEO of Google, announced our entry into the age of augmented humanity and the recent release of of the iPhone 4S has been an incredible example.

Using the Google app on my iPhone 4 (yeah, I'm not looking to upgrade yet), I can search using voice recognition. For example, when I say "ASICS running shoes" a search is performed which renders lots of results, including where I can buy those shoes nearby. And that brings up an important concept: the search is contextually aware. It knew my location and was able to infer "nearby" in my request.

Amazon's Price Check app lets you search for product information by scanning the UPC, snapping a picture, or by saying the product using your iPhone. Again, saying "ASICS running shoes" returned lots of matching products, albeit without any context. How easy is that?

So not being one to be left behind, Apple bought a start-up (a spin-off from the Stanford Research Institute) called Siri and the rest is ~~history~~ the future. While Siri is not general purpose, I don't think the day when we have easy access to Watson and Wolfram Alpha is far off.

So what does this mean for retailers? In the not-too-distant future you can expect to see shoppers asking their phones "is there a better price nearby?" and "what will this blouse look like on me?" and "is this compatible with the camera I bought last year?" Product information will continue to be easier to access, be of better quality, and be personalized and contextual. Here are three things retailers must do in order to remain competitive:

1. Make sure you are a trusted provider of information to your customers. Share pricing, promotions, reviews, origin, content/ingredients, recalls, compatibility, etc. with your customers. They are going to get this information anyway, so it might as well come from you.

2. You can't win on price anymore. With perfect access to information, it will be too easy to find the lowest price for any particular item. Its better to differentiate on convenience, service, and exclusivity. (And its no accident that's Apple's model.)

3. Get serious about loyalty. The younger generations are less concerned about privacy and more interested in relevancy. Every interaction is a chance to provide personalized service.

In this age of augmented humanity, embrace Siri and don't be a HAL.

Moneyball for Retail

2011-10-18T17:46:27+00:00

Back in 2003, Michael Lewis wrote Moneyball:The Art of Winning an Unfair Game which was also released last month as a feature film staring Brad Pitt. The story focuses on the Oakland A's baseball team modernizing its scouting methods to be less subjective and more analytical, allowing it to compete with better funded teams.

Just like it’s not fair that the Oakland A’s $41M budget had to compete with the Yankee’s $125M budget, many retailers find it difficult to compete against Walmart, Target, and Amazon, companies that spend an enormous amount on IT. But it’s possible to follow Oakland’s lead and compete on analytics. Retailers that better understand their customers will have an advantage, sometimes regardless of the prices they charge or the products they carry (although you really need all three to be successful over the long-haul).

Aileen Lee of Kleiner Perkins Caufield & Byers presented on this topic at the Web 2.0 Summit, which was covered by Richard MacManus in this article. (Read the article for some real-world retail examples.) Even small retailers can gain a competitive advantage if they (1) collect the right data, (2) analyze it correctly, and (3) act upon it quickly.

Traditionally retailers didn't do this type of analysis because the data just wasn't available, but since the advent of e-commerce much more data has been collected. Other sources include loyalty programs, and more recently, social networks. Retailers have optimized supply chains, new store locations, and even pricing, but the next generation of analytics will focus on individual consumers, understanding what they want and what offers will influence their purchase.

There are lots of ways to attack the problem, and one that's extremely scalable leverages Oracle's engineered systems as described by Jean-Pierre Dijcks:

Not every retailer needs this much analytical horsepower, but imagine if answers were available at the speed of thought. Privacy aside, the possibilities to personalize the shopping experience are tremendous.

Mobile Payment Videos

2011-10-11T10:47:16+00:00

My friend Andrew Morris, who I work with at ARTS, recently sent an email listing the many videos showing the future of mobile payments. I've selected a few to include here that represent where we're heading.

To get you in the right frame of mind, let's check with George Costanza first:

Here's a demonstration of Google Wallet using a Macy's POS register in the Google lab:

AT&T, T-Mobile, and Verizon formed Isis to advance NFC. Here's their marketing video:

And here's PayPal's vision of where payments are going:

Andrew was recently on a panel at the ARTS User Conference, and had this to say afterward:

After our panel discussion in Orlando, I’ve been thinking quite a bit about this issue – and my gut is that we’re starting to spend too much time talking about the inevitability of EMV/NFC and not enough time talking about the real business opportunity with regard to mobile payments and how retailers can either ‘take advantage’ or ‘be taken advantage of.’

Well said.

Non-Retail Change Agents

2011-10-07T15:47:42+00:00

During my OpenWorld presentation earlier this week, I pointed out that four men and their associated mega-companies have had a huge impact on the retail industry without being traditional retailers. Obviously Amazon is a retailer, but when they started they were definitely not considered a traditional retailer.

Arguably Amazon set the standard for pure-play e-commerce and have been a leading innovator for online shopping, including early pushes into user created content, mobile commerce, and personalization. And don't forget they are putting lockers in malls and on campuses for easy pickup of their products. Some might call that a small step toward a physical store.

Apple stores have been the king-of-the-hill with the highest sales-per-square-foot, one of the best customer service models, and innovative features such as the genius bar, mobile POS, and iPads with product information. Their bigger contribution has been moving commerce to mobile devices, which is a channel that will continue to grow.

Now no one will mistake Facebook for a retailer, but they continue to influence how consumers talk about brands and products. The forthcoming "want" and "own" buttons will make it easier for people to express their relationship to products, and probably spur conversations that result in purchases.

Then there's Google, which has been helping consumers search for products, show them off with haul videos, and more recently introducing a new payment method. But the big story here is Google's foray into physical stores. They are starting small with their Chromezone store-within-a-store concept for selling Chrome-based netbooks. With their purchase of Motorola, I can see them adding mobile phones, GoogleTV boxes, and other consumer devices in the near future. Isn't that exactly how Apple got started in their quest for stores?

Its tough being a retailer, especially when these four companies keep changing the rules.

Steve Jobs' lasting legacy for retail

2011-10-06T18:42:09+00:00

I have written about Apple on many occassions (just click on "Apple" in the tag cloud to the right). What really amazes me about Steve Jobs is that he created six successful products (Apple ][, Macintosh, iMac, iPod, iPhone, iPad), launched three companies (Apple, NeXT, Pixar), and change three industries (computers, media, retail) forever. Not during my lifetime has one man had such a positive impact on society.

I was going to write about Steve's impact on the retail industry, but I found that Mike Wittenstein did a fine job in his article Steve Job's lasting legacy for retail, so I'll refer you there.

RIP Steve Jobs.

OpenWorld 2011, Retail Perspective Part 2

2011-10-06T16:55:14+00:00

For those that can't afford the capital investment, Oracle is offering its Exadata and Exalogic machines as part of the Oracle Public Cloud, as was announced at OpenWorld Retailers can easily provision both database and middleware environments in which they can deploy their applications and pay a monthly fee. Additionally, Oracle is offering its Fusion applications on the cloud.

What's unique here is the fact that Oracle is using the same technologies normally used on-premise. This means that existing on-premise applications can be moved back and forth between the cloud and data center as appropriate. So your next question must be, can I run my Oracle Retail applications on Oracle's cloud?

If all the requirements of the product are met, then it makes no difference whether you deploy on-premise or on the cloud. If you're using the supported version of the operating system, database, and middleware then where the hardware is located should make no difference. While we've not yet had the opportunity to test our products on the Oracle Public Cloud, we have tried them on Amazon's cloud without issue.

But do retail applications like merchandising and POS really belong on the cloud? I'm not quite there yet -- I cling to the belief that core applications should be on-premise, but many non-core applications work just fine in the cloud. We will get there eventually -- its really a matter of organizations catching up with the technology.

OpenWorld 2011, Retail Perspective Part 1

2011-10-04T17:16:49+00:00

The big announcements at OpenWorld this year revolved around engineered systems, where software and hardware are optimized to work together. Larry Ellison kicked off the conference by explaining that Oracle's engineered systems use a "parallel everywhere" approach to squeezing greater performance out of commodity parts.

Below are six such systems and my thoughts on their applicability to retail:

1. Exadata

There are several retail customers that are running Exadata with great results. When lots of data is involved, be it analytical or transactional, Exadata increases database performance, reduces storage and electricity costs, and simplifies through server consolidation. Exadata is perfect for running merchandising, supply chain, and data warehouse/BI applications.

2. Exalogic

Exadata's brother is Exalogic, the middleware machine. It shares much of the Exadata architecture but instead of focusing on data, its focused on fast application execution. It does particularly well with Java-based applications like ATG Web Commerce.

3. SPARC SuperCluster

While Exadata specializes in database workloads and Exalogic specializes in middleware workloads, the SPARC SuperCluster is a general-purchase system that handle both well. Think of the SuperCluster as Exadata and Exalogic merged together in single lower-cost rack running the new SPARC T4 and Solaris 11. This might be the best solution for mid-tier retailers that can't invest in Exadata and Exalogic separately.

4. Exalytics

When dealing with data, memory is faster than flash which is faster than disk. Exadata uses a cost-effective approach by using all three types of storage to maximize performance. Exalytics, on the other hand, is simply focused on speed and therefore memory. It's a specialized BI Machine that uses the TimesTen in-memory database to render very fast analytics "at the speed of thought." Essbase is also a database option. This is where real-time analytics and visualization shine. Retailers running Hyperion and/or OBIEE will benefit from Exalytics.

5. Big Data Appliance

With Twitter generating a billion tweets per week, we are being overwhelmed with data, and more specifically unstructured data. To help deal with this deluge of data, the Oracle Big Data Appliance includes the necessary hardware and software to acquire, manage, and analyze huge volumes of data. It includes open-source versions of Hadoop and R, popular choices for big data problems. Retailers that are serious about collecting social data about their brands, products, and customers will benefit from this solution.

6. Database Appliance

At the low-end, if your database needs don't require Exadata or Exalytics, then the Oracle Database Appliance is the perfect combination of hardware and database in a simple, cost-effective package. This data center simplification play will likely resonate with smaller mid-tier retailers.

Part 2 will discuss cloud computing.

Upcoming Conferences

2011-09-15T14:20:29+00:00

I bet many of you are just back from the Shop.org Summit today. I saw some pretty good sessions on the agenda, so I'm sorry I didn't go. In two weeks ARTS is having its third annual user conference in Orlando. Topics include mobile, social, cloud, and the use of standards in the retail industry. I really enjoy this conference because it doesn't involve selling, and its light on marketing fluff. The attendees come from IT and are only interested in solving real problems. I'll be presenting on the use of social media in retail, previewing some of the content from our upcoming ARTS Social Blueprint.

The week after is Oracle OpenWorld, starting on October 2nd. I'll be kicking that conference off with a run at the Bridge-to-Bridge 12K in the morning, then catching the start of the conference later in the afternoon. Larry Ellison is always entertaining, so I don't want to miss his general sessions. There will be several new products announced during the week, many of which have applicability to retail.

This year the entertainment is Sting and Tom Petty. Neither does much for me, so this is the first year I'll be skipping the customer appreciation event. Regardless, if you get an invitation you should definitely attend. The spectacle of so many people, free food and drinks, and the carnival games is a great experience. I promise you'll have tons of fun.

As has been the case in past years, the retail sessions will be held in The Palace Hotel a few blocks from the Moscone. I actually like this arrangement as its much more intimate so people are able to relax and talk. Ever try finding a place to sit and talk in the Moscone?

There are lots of good retail sessions, so I'll just name a few here:

Monday 11:00-12:00	23821 - General Session: Retail Mike Webster, Senior Vice President & General Manager, Oracle	Palace Hotel Concert
Monday 12:30-13:30	38841 - Powering Business Transformation at Morrisons to Build the Supermarket of Tomorrow Mike Davies, Senior Vice-President, Wipro Technologies Gary Barr, CIO, Wm Morrisons Supermarkets	Palace Hotel Concert
Monday 15:30-16:30	23445 – The Next Generation of Cross-Channel Customer Experience Solutions Andrea Morgan-Vandome, Vice President, Retail Strategy and Solution Marketing, Oracle	Palace Hotel Concert
Monday 17:00-18:00	23816 – Exploring New Technology in Retail David Dorf, Senior Director of Technology Strategy, Oracle Leif Larsen, Vice President, Oracle	Palace Hotel Concert
Tuesday 13:15-14:15	23806 – Retail Analytics and Critical KPIs John Bible, Senior Director of Insight Analytics, Oracle Mark Lawrence, Senior Principal Product Manager, Oracle	Palace Hotel Pacific Heights
Wednesday 16:45-17:45	23818 – Oracle Order Management: How Starbucks' Solution Surpassed Expectations Karen Metro, Vice President of Business Systems Development, Starbucks Tanya Trejo, Director of Business Systems Development, Starbucks	Palace Hotel Concert
Thursday 12:00-13:00	07442— Improving Market Insight at Outback Steakhouse Jim Marzoppi , Vice President of Applications, OSI Restaurant Partners Sal Seno , Senior Manager, Deloitte Consulting LLP Carla Daniels , Senior Manager, Oracle	Moscone South Room 310

Shameless plug: I haven't started building my OOW presentation yet, but I'm pretty sure its going to revolve around the research we've been doing with mobile and social (surprise!). The guys from ATG are going to join me and demonstrate some of their omni-channel concepts. I just hope we can get good networking so the iPad and iPhone stuff works. Lord knows the AT&T network will be useless.

Hope to see you at one or both of these events.

Mobile POS Momentum in Retail

2011-09-13T16:51:55+00:00

The idea of mobile POS isn't new. Back at 360Commerce, we created a web-based mobile POS we called "Unleashed." At the time, most mobile devices didn't have enough power to render the pages quickly, so it never really took off. Home Depot deployed it on tablets attached to carts, but most retailers limited mobile devices to inventory processes. Even Apple's first version of the mobile POS, deployed on Symbol devices running Windows CE, didn't garner much attention. It wasn't until Infinite Peripherals, working with Apple, created the iPod sled that suddenly the concept caught fire.

I suppose there are a couple reasons mobile POS is now trending up. First, nowadays many retailers have upgraded their in-store networks to support WiFi. Retailers need a fast, reliable in-store network for mobile POS to work well. Second, the cost of the iPod is significantly lower than traditional (hardened) handhelds. They are cheap enough that when one breaks, nobody has to be fired. Third, customers carrying smartphones increased the their expectations for mobile checkout.

Below I created a table of tier-1 deployments of mobile POS. The dates are approximate, based on news coverage I found on the Web. I'm sure I missed some, but if I couldn't find a reliable date, then I skipped it. I used the earliest date I could find.

Date	Retailer	Notes
11/2009	Apple	iPod
12/2009	Home Depot	Motorola
11/2010	Disney	iPod
12/2010	Gap/Old Navy	iPod
01/2011	Guess	iPod
03/2011	Urban Outfitters	iPod
06/2011	Nordstrom	iPod
08/2011	Lowes	iPod

Now there are several software vendors writing mobile versions of the POS, usually on the iPod and iPad. And the solutions range from tier-1 to Mom-and-Pop stores. One has to wonder if Google, who purchased Motorola, will find a way to get in on the hardware business. Or whether Microsoft will manage to get its operating system into mobile POS devices. It just seems like the iPod has all the momentum right now.

What about Apple's Stores?

2011-08-25T14:27:02+00:00

There's been lots of buzz surrounding Steve Jobs stepping down at Apple, but its not at all unexpected. Everyone knows that Steve has health problems, and I'm sure Apple has been slowly transitioning responsibilities to Tim Cook over the past year. Steve will remain involved as Chairman, so I''' bet he'll be involved in major decisions. But don't forget that Ron Johnson, SVP of Retail at Apple, is also on his way out. This could be a double-whammy for Apple's stores.

Recall that Ron was hired away from Target by Steve in 2000 to spearhead the creation of the Apple stores. At the time, Apple had tried selling via independent dealers and large electronics chains, but neither allowed them to control the user experience. They theory was that customers were not seeing the value of Apple's products and required a more high-touch environment.

To open a chain of stores in the shadow of Gateway's failure was a risky move, but at the time Apple needed to take risks to get back to its past glory. The stores are unique, that's for sure. Only half of the space is used for selling products, with a great deal of space used for training, setup, and demonstrations. Apple's Genius Bar, EasyPay (mobile point-of-sale), and replacement of shelf tags with tablets are all industry firsts.

Jerry McDougal is Ron's heir-apparent, however, Apple has begun an executive search so make no assumptions. Jerry previously worked for PC Connection and IBM before being hired by Ron at Apple. We likely won't know until November, when Ron takes the CEO job at JCPenney, who the replacement will be.

Whoever gets the job will have big shoes to fill. The Apple stores are a key conduit between Apple and its customers, so continued investment and innovation will be key to the company's growth. As they say, when one door closes, another opens.

UPDATE: If you haven't already seen it, you should view Steve Jobs' 2005 Stanford Commencement Address. I promise its worth the 15 minute investment in your time.

By Your Command

2011-08-18T11:24:12+00:00

At home we use a Mint robot to clean our floors. We used to use a Scooba robot but we found the Mint robot was smarter and provided better coverage of the floor. Its not perfect, but it does 80% of the work and that's a big help. In the post I did a couple days ago, I noticed that mobile robots were listed on the hype curve and starting thinking about robots for retail. Could my Mint robot help the retail industry?

By far the best example is picking in the warehouse for e-commerce orders. Mick Mountz of Kiva Systems used to work for Webvan, the online grocery store. He tells the story of picking an .$89 can of beans at a cost of $1 -- thus the demise of Webvan. The typical retail warehouse was designed to deliver items in bulk to stores, not pick single items from here and there to complete an order.

After Webvan went under, Mick thought about the problem and considered the perfect solution would be assigning a no-cost worker to each item. The picker could then simply yell the name of the product and the worker would run the item over and drop it in the box. Since workers aren't free, robots seemed like a good alternative.

Kiva Systems has several big retailers such as Gap, ToysRus, and Walgreens running its automated warehouse robots. These robots intelligently transport the shelves of products to the pickers, thus making the process much more efficient. Watch this Zappos video to see the robots in action.

The big question is when will people be ready to interact with robots in stores. Since people are already used to dealing with kiosks, perhaps the next step is making those kiosks mobile. In much the same way the Kiva robots bring products to pickers in the warehouse, perhaps mobile kiosks can be summoned by customers to provide product information, pricing, offers, etc.

GeckoSystems, a robot designer for the healthcare industry, is considering just such possibilities. They want to provide a mobile kiosk that provides product information and also provides mobile video surveillance. Starting with touchscreen technology initially, they could eventually use voice recognition to answer questions about products such ratings, alternate color/size, promotions, etc. While not answering questions, they patrol the aisles where video cameras can't always see, deterring theft (and maybe even cleaning the floors!).

Someday you might just be purchasing that tie from a Cylon.

Emerging Technology and Retail

2011-08-15T15:31:32+00:00

Gartner recently released their 2011 Hype Cycle for Emerging Technology, and there are several items that impact the retail industry, many of which we've been studying carefully. The hype-cycle diagram is below, and for those that haven't seen one of these, technologies start on the left and move toward the right as they mature.

Source: Gartner, “Hype Cycle for Emerging Technologies, 2011,” July 28, 2011

I have a few comments to make, starting with the mainstream and moving back towards the triggers.

Location Aware Apps- Foursquare and the like are pretty commonplace now days, and I believe there must be some consolidation coming. We can't expect consumers to use multiple check-in apps, so I'm betting that Facebook will emerge as the winner with ShopKick sticking around as well. Apps that find products in nearby stores will also flourish.

Predictive Analytics- Predicting demand is key to running a profitable business, so this is pretty mainstream with tier-1 retailers now. Adding data sources like social networks to better predict trends should be coming soon.

Biometric Authentication- We added biometric authentication to our POS, but we haven't seen much interest from retailers. I would guess not having to worry about passwords would be a big cost savings over the long run.

QR Codes- We added the printing of QR Codes on shelf-labels so consumers armed with smartphones can access detailed information. This seems to be catching on with consumers, and I'm seeing QR Codes everywhere.

Consumerization- As I understand it, this trend means technology gets adopted at home first then makes its way into the business environment. That's certainly what happened with the iPhone and iPad, Facebook and Twitter, and many Web 2.0 technologies. These types of technologies will continue to follow young employees into retail stores.

Mesh Networks- RFID buzz died off for a while but seems to be making a comeback. We've had several retailers express renewed interest in tightening their supply chain using tags that are getting cheaper.

In-Memory Database- Over the past three years we've seen the rise of engineered systems where the software and hardware are engineered to work together yielding better performance. Memory continues to be cheap, so moving as much data into faster memory makes perfect sense. In addition to Exadata, look for more on this topic from Oracle in the near future. Open World is just around the corner.

Cloud Computing- I'm a big fan of utility computing regardless of where the resources are located (private, public, hybrid), which is why I really like Amazon's EC2. But I'm just not sure retailers are ready to give up so much control. After all, it only takes one hiccup on Black Friday to ruin a year.

Augmented Reality- The software libraries to support augmented reality apps are finally maturing, so we've started exploring uses in retail. Get ready to think of advertising and reporting in new ways.

NFC Payment- The technology has been ready for years, but until recently there haven't been big sponsors. Now we have Google and Isis with competing approaches. This will take-off, but it will take a while for all stores to be retrofitted with readers.

Social Analytics- I keep hearing that social for retail is overblown, but I truly believe it should be part of any retailers marketing activities. Yes the ROI isn't very clear, but since when has marketing had a clear ROI?

Gamification- People are competitive so using games to drive behavior is a natural fit, especially for the younger generation that is never far from an XBox, Wii, PS3, or DS. Look for more retail tie-ins with games from Zynga.

Big Data- I'm surprised this wasn't placed further along on the chart as I believe the technology is pretty mature, with several competing platforms. The key is to make Big Data and traditional database systems work together. This is how retailers will move from segments to individuals and achieve one-to-one marketing.

Video Analytics- As bandwidth and storage continue to get cheaper, video becomes more accessible to retailers. There's so much information we can gleam from customers by watching how they shop. Look for interesting combinations of video and location-based applications.

Overall, I believe the major emerging technologies are well represented on the chart. I can't think of anything that's missing, can you?

Don't Forget to Check the Rearview Mirror

2011-07-20T12:03:38+00:00

Over at AppsLab, Jake is reminiscing about retailers gone by the wayside and it got me thinking a bit. Arguably Tower Records was killed by Apple, Blockbuster was killed by Netflix, Borders was killed by Amazon, and Circuit City was killed by Best Buy. (I guess its never that simple, but at least we can say there was a clear winner and loser in each of these battles.)

But here's another way to look at it: Tower Records was killed by MP3s. Blockbuster was killed by streaming video. Borders was killed by e-readers. (Okay, Circuit City doesn't really fit this motif. They went down due to a whole host of issues, none of which were really technology based.) These companies saw the writing on the wall and tried to save themselves, but they just didn't move fast enough. Blockbuster knew it needed to offer DVDs by mail, kiosks, and streaming but it was too slow to market. Toward the end its offerings were at least as good as Netflix, but the customers had already left. Borders offered the Kobo (anagram for "book") e-reader via a partnership, but it was long after the Kindle and Nook had established themselves.

So I think there are a few lessons to take away from the Borders liquidation.

No business model is sacred. What works today is no guarantee for the future.
Timing is everything. Established businesses are best at being fast-followers (with emphasis on fast).
What sounds impossible today may not be in a couple years, so don't dismiss it offhand.

Retailers need to be looking in their rear-view mirrors not only at their competitors, but also at alternative technologies that might sneak up on them. (Yes Gamestop you're on top today, but platforms like Steam and Microsoft Live are sneaking up on you!) I'm sorry to see Borders close its doors, but I'm excited by the e-reader technology and the pace at which other innovations are coming to market.