Features, Shoptalk, Technology

The Joy of Retailing

When you attend Shoptalk, you feel the kinetic energy, optimism and confidence of the startups and investors that are reshaping retail’s future. The guiding principles of these entrepreneurs: speed and personalization, all fueled by machine learning and delivered by voice recognition, principally on mobile. Visual search, AR, VR, and 3D printing get the lion’ s share of attention as well.

These tech mantras bring great joy to the faces of entrepreneurs who thrive in our brave new world. Conversely, they trigger unbridled panic in some traditional retailers who grimly realize they may be way too late to the party. In both cases, the decisions these retailers are making today are already too late to shape the future, making everyone anxious and burdened with — the startup concept of the moment — existential crisis. It’s an intense education to witness the collision of two these cultures, and that’s why Shoptalk is an invaluable roadmap for anyone trying to make a living in retail.

Shape Shifting

We used to talk about disintermediation; today it’s about replication. The personal shopper bots that show up on our retail screens have already pinpointed what we want, before we want it. You can find this intrusive and unnerving, or liberating. In either case, the machines have a leading edge over humans. The innovative startups are using replication to their advantage; the smart startups are merging high tech with high touch. Chiquelle is a fashion-forward retailer based in Sweden, with manufacturing facilities in Turkey. The retailer combines the power of online social media influencers with a sophisticated supply chain that is ruled by tech tools designed to deliver new fast-fashion merchandise within two weeks. Chiquelle has replicated most of its sales staff and marketing experts with social media. The persuaders, AKA influencers, are paid commissions for their sales; so who needs a sales staff? Chicquelle uses social media exclusively for marketing. Their advice for social media ingénues is to make it real, make it authentic and avoid anything commercial. They decree Facebook as conservative and Insta stories as essential.

Bloomon, doing business in Amsterdam, Berlin and London, brings the fusion of high tech and high touch to an apex with a business model based on happiness. As they say, Bloomon is “beauty in a bouquet, one delivery at a time.” Bloomon takes one of the most sentimental businesses, fresh flowers, and turns the 1-800-Flowers model on its head. Customers order online and receive fresh flower bouquets exactly when and where they want them. The bouquets are designed by artisans who have upped the artistic standards of floral arrangements, using current fashion trends to inspire colors and flowers. To build a community, there are stories and pictures of fans with their bouquets posted online, personalizing Bloomon into an extended tribe of flower lovers.

One of the darlings of Shoptalk Europe was Picnic, a startup based in the Netherlands that is replicating the nostalgic memory of the milkman with an ultra rationalized, tech-driven business to fulfill grocery market orders. Fresh foods are delivered in their eco electric-powered delivery trucks, racing through the neighborhood at four miles per hour. Customers decide what Picnic sells, creating an algorithmic, predictive supply chain that eliminates waste from unsold, spoiled food. If a requested product meets the threshold of five customers, it is put into the market order system. With enormous financial backing, Picnic has already taken five-percent market share, and is expanding quickly into other towns. In its short existence, Picnic has already achieved an impressive Net Promoter Score of 85.

Then there’s 3D printing, which has been inching into the mainstream for years, replicating larger-scale manufacturers with the 21st-century individual tech artisan and craftsperson. 3DHubs, based on Amsterdam, has plans to build a network of 3D printing facilities in 160 countries, enabling customers to design and print products close to home, all paid for on a Verifone fintech platform. The Hubs combine high automation with customization. With 3D printing, production is now democratized. Providing 3D printers in brick and mortar, store personnel become design guides to help jewelry customers, for example, create their own original designs. In addition to the industrial and medical applications of 3D printing, here’s a glimpse of your near future: Scan your feet and design shoes that fit–exactly. Print your glasses frames. Customize the frame to the contours of your face for a perfect fit. Wouldn’t it be more fun for kids to design their own toys? We’ll soon have billions of budding Toys R Us 3D entrepreneurs. Amazon is going to have 3D stored in Echo devices. Stockholm-based Volumental, is disrupting shoe shopping using computer vision and artificial intelligence. Their technology is being used by many world’s footwear brands and retailers to personalize the shopping experience and provide great fit. When their 3D body scanning scales up, the fit will finally be perfect and returns will become a zero-sum game.

The Marketplace

Community was also a focus for the startups at Shoptalk. Junique, based in Berlin, is a curated marketplace for creative people, providing accessible and affordable art (under 40 euros) to everyone, instantly democratizing fine art. Westfield Retail Solutions, based in San Francisco, is an innovation lab working on a massive community build. It will ultimately integrate a fragmented retail world by bringing together the major players and the long tail into an interconnected, tech-based platform that provides consumers with a seamless experience in search, discovery and shop. Highly tech with plenty of machine learning, the Westfield marketplace demonstrates how to adapt and be relevant in a digital economy. Voice recognition, which is the megatrend in retail tech, is key to this marketplace.

Harrods, in London, caters to a luxury customer and seems be doing just fine with old-world tactics and strategies. Their marketplace is based on rigorous personal attention, providing luxe benefits to customers who expect nothing less. Marketing to the top 0.1 percent of the world, Brexit has had no impact on Harrods’ business. Their community is international with China as their biggest customer base representing 25 percent of Harrods spend. The pathway to the next gen is through beauty, and millennials over-index in the beauty spend. It’s not all soft touch; their CRM system is state of the art, enabling 84 percent of their customers to receive personal attention based on their shopping preferences and past purchases.

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Speed Bumps

So, a few cautionary words to the retail community about speed. First, there seem to be no speed limits in today’s retail space. Spencer Fung, group CEO of Li & Fung, base on Hong Kong, admits “the environment is moving faster than the industry.” His tortoise-and-the-hare storytelling narrative illustrates the innovator’s dilemma. Speed, innovation and digitalization are the hare’s racing colors; the only recourse for the turtles may be to become a vertical model to control all supply-side risk. But there’s still the issue of how quickly and how expensive it is for both new and old-world retailers to innovate, adapt, build, buy, collaborate, re-tool, re-engineer and otherwise re-invent their business models. In the emerging 7th Kingdom of life concept of evolution, survival of the fittest will not be the human species, but rather technology as a whole system. Tech retail is looking like both the tortoise and the hare at the finish line.

There’s a dirty little secret underneath the happy veneer of all these startup entrepreneurs. The need for speed, forced by a demanding consumer who seems to be running everyone’s business, is built on a distortion – an illusion. The customer is calling the shots, expecting greater speed, more personalization, free-everything and immediate response through conversational commerce. The traditional retailers are running as quickly as they can (mostly in place) to build, buy or find platforms and systems to deliver faster and faster. But, seriously, this is like turning around an aircraft carrier, exacerbated by a non-tech culture and staff ill-equipped with the skillsets critical to success in a digital economy. The online retailers are positioned further up the innovation curve with nimble models and highly trained, digital native staffs with an intuitive understanding how technology works. But the cost of customer acquisition is a challenge, and even funded by forgiving investors, they’re not making tons of net profit either. So in both cases, retailers are speeding towards a wall, all in the spirit of an impossible mission of trying to fulfill customer expectations that are so unrealistic that they are potentially putting everyone out of business in the process.

So what is a retailer to do? Their new skillset is retail engineering. Their role is risk manager, and their business model is going to need a portfolio approach. Not everyone can offer cloud services to prop up their unprofitable retail divisions, but it’s going to take a diversified constellation of businesses to stay afloat. Think Alibaba, which could be destined to eclipse Amazon (if for some shocking reason Bezos falters in his goal to rule the word) as the dominant global player. Alipay is used in Alibaba malls and corner shops (with no cash registers) as well as online to complete a self-serving circle. Other megatrends? Mindfulness of resources. Supply the demand, not offer enormous inventories of irrelevant merchandise. Think: just enough. Automation will be the future of work. Blockchain is the future of secure fintech transactions. Data is the new oil. Apps are dead; mobile phones will recognize all bar codes. There will be a digital ID in the cloud for everything. Products will talk to you, reminding you, for example, that this is the third time you have bought this brand of wine. Immersive storytelling is the communications tool of choice for next gen consumers. Trust is key to managing vulnerability and risk. Empathy transcends all. The customer is saying, “You’ve got my attention, don’t squander it.”

So what does all of this have to do with Shoptalk? Everything. They lead the global retail ecommerce conversation. They are building a community of entrepreneurs to drive meaningful change. They are dynamic, not static, and facilitating the blueprint for the future of retail with an integrated conversation that is inclusive. If you want to know what’s happening after what’s happening next, Shoptalk is your ticket. You’ll be surrounded by a lot of smart, happy innovators, and their enthusiasm is contagious upping the game of hope and possibility for retail of the future.

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