Although retail has been in existence for a long time, the use of technology in retail has been relatively recent, with a very slow adoption curve, but with significant advantages for those who adopted and exploited the business advantage of technology.
2014 marks the fortieth anniversary of the first use of bar codes in retail. Clyde Dawson was the first consumer to buy a 10 pack gum of Wrigley Juicy Fruit gum at a Marsh’s Supermarket in Troy on June 26, 1974.
This kicked off a revolution of sorts in retail. With the bar codes in use, retailers were able to count what items were sold, leading to better replenishment, better ordering, and soon, better information sharing with the supplier community. Retailers who adopted technology soon started collecting data centrally, analyzing the data from POS and sharing it with their vendors.
Within the US, adoption of technology clearly determined the growth trajectory of retailers. Wal-Mart and Target, for example, who rapidly adopted technological advances, soon started growing rapidly, while retailers such as A&P, which did not even use rudimentary Point of Sale (POS) technology till the 1990s, soon faded from dominance.
The next major advance in technology came with the adoption of the internet, not by retailers, but by the consumers.
For a long time, retailers and their vendor partners used to decide what products they would sell and display in the retail stores, where, when and at what prices. The tendency was to push the merchandise into stores, and thence to the consumer’s hands.
The embracing of the internet, and the adoption of smart phones by consumers led to one of the most dominant shifts in the retail industry – power shifted from retailer/supplier combine to the hands of the consumer.
Until then, all information about the product, price, features and competitive products had to flow through the supplier-retailer channel to the consumer.
For example, in 2003, if you were looking to buy a TV, and walked into a TV showroom, you would have been dazzled by the displays, and totally confused by the choices available, the terminology used by manufacturers (often to confuse the consumer rather than to educate him/her). Your chance of getting a TV that suited you most depended on the retail associate – his or her knowledge, his or her attention to you and your needs, and perhaps the amount of commissions/he stands to gain from the sale of the TV to you. There might be product brochures, but very often, these brochures were conveniently “out of stock”.
You were in no position to compare the prices unless you were prepared to trek to a number of stores and actually noted down the prices. It might happen that when you are in the fifth store, the prices in the first store you visited either went up or down depending on a promotion they might have triggered or ended.
Fast forward to today: in the era of ‘showrooming’, today’s consumer has much more knowledge than was ever accessible to the store associate. The consumer has all the product knowledge that the manufacturer has put out on the internet.
In addition, today’s consumer has the advantage of reading peer reviews. How did a person who bought this product and took it home, feel about it? What does the community say? What does his close circle of friends and social circle think of the product, and particularly its suitability to him? The answers to all these are powerful influencers of the buying decision.
The most important influencer of all is that of price which has been subject to more transparency than ever in the history of merchandised products. The power in the hands of the consumer – to determine what product to buy and from where, at the lowest price – prompted many powerful retailers such as Best Buy and Target to rethink their retail strategies.
Here is a consumer carrying a small but powerful device which gives him other all the latest information, including that on price, and on the other hand, here was a sales associate, used to influencing the consumer’s choices through product and price knowledge that was restricted to himor her,. ‘Showrooming’ has caused the single biggest change in recent history.
SMAC and retailing
Many traditional retailers such as Circuit City, CompUSA, Borders, Hollywood Video, and Musicland shuttered down and went off business. Though this cannot be directly attributed to the advances in technology, a key factor certainly was the inability of retailers to adjust to the changing behavior pattern of consumers, who are now aided by newer technologies.
The largest combination of disruptive technologies that has forever changed the landscape of retailing is SMAC – Social, Mobile, Analytics and Cloud.
Consumers talk with, interact with, share experiences and communicate feedback more than ever before with their peers, social circles, to the world at large and to anyone who is listening.
This has given rise to an era where it is also easier to be aware of consumer’s buying preferences or to their buying experiences. Consumers use their cell phones to communicate with each other and to seek information about products, prices and features. This in turn exposes them to retailers who are looking to identify and interact with them in their stores.
The cloud has enabled large amounts of data to be stored and distributed. Retailers can use data from the cloud to send personalized offers and coupons to specific customers within the store.
Retailers have long been gathering data about their customers but not put the captured information to use enough for analyzing and forecasting trends. Until 5 years ago, most retailers had a shotgun approach, wherein they pushed together a wide swathe of merchandise, hoping that margins from those that sell will more than make up for losses from those that a left on the shelf.
It is only recently that retailers have started using analytics in a significant way to understand what consumers are buying, when they are buying, where they are buying from, at what prices and in what quantities. Add to this all the social chatter from consumers who buy merchandise and talk about it on social media, leaving retailer with huge amount of information that can be used to enhance productivity of all assets that are deployed in the consumer value chain.
Mobile makes it possible to further refine merchandise offering by tailoring information, offers and prices to meet specific individual needs, thereby making the shopping experience of consumer more meaningful and satisfying.
The pace at which technology is evolving today is mindboggling. There are smart cameras that can identify a customer or groups of customers, and alter the message that are displayed on advertisement screens to look more relevant for their profile.
Cameras can scan shelves, spot empty spaces or merchandise that is out of place on the shelf, and identify customers who might need assistance to make a product selection at the store.
Mobile devices in the hands of retail associates enable them in eliminating long lines at the checkout point, and in some cases eliminating check outs altogether by providing knowledge about products, their availability and pricing. This also helps in identifying and assisting value-adding consumers who are within reach.
At UST Global, we work with a number of world’s leading retailers, empowering them with the technology to manage inventory effectively and cater to customer needs more efficiently.
These are exciting times for the retail industry, which is swiftly adopting technology to stay relevant and ahead of the game.
Mani Subramaniam, vice president, Global Retail Practice, UST Global