Innovation and the Retail Industry

By Bob Violino, TechWeb

Business innovation not only helps companies enhance processes and improve the bottom line, it also allows them to stand out from competitors in a dramatic way. That’s certainly true in the retail sector, where innovative ideas are transforming the customer experience.

“Faced with the empowered consumer, retailers must provide a differentiated, compelling and valuable shopping experience,” says Brendan O’Meara, retail industry manager at Microsoft. “In a world of transparency of offers, differentiation is key. To avoid commoditization, retailers must deliver unique product offerings and provide unique and engaging shopping experiences. Innovation is the key to creating this unique brand experience.”

Retailers must provide a combination of products, services and experience that maximize value to the customer, O’Meara says. Innovation enables the retailer to provide engaging experiences in stores and online, and to deliver unique and valuable products and services.

As part of an effort to help retailers improve processes, Microsoft is using Kinect, a motion-sensing input device for the Xbox video game console, for a variety of applications in the sector. While the projects are still in the early stages, they show real potential for giving companies interesting new ways to serve their customers and gather useful business data.

One beta project is a “virtual dressing room” created with FaceCake Marketing Technologies Inc., a personalized, interactive marketing firm based in Calabasas, Calif. FaceCake has developed a product called Swivel, an interactive mirror that allows customers to virtually “try on” clothes without actually having to change into the clothing.

With the system, customers can view themselves in real time wearing particular outfits and accessories, and see how the clothing looks from various angles by turning different ways. The system automatically sizes clothing to fit the person standing in front of the mirror.

Using Swivel in conjunction with Kinect, the companies created the concept of the virtual dressing room, which is now being demonstrated as part of a tour of shopping malls in Southern California.

“The response has been pretty phenomenal,” says Marty Ramos, industry solution specialist at Microsoft. The system enables users to view themselves in front of a variety of backgrounds. For example, if a woman wants to see what a wedding dress would look like in front of the church where she plans to be married, she can virtually try on the dress and upload a picture of the church into the system in order to get the view.

One of the biggest benefits of the technology is that it can enable clothing retailers to make it easier for customers to shop. The application “allows customers to try on an unlimited number of clothes without having to bring them into the dressing room,” Ramos adds. When they’ve found two or three items that they especially like, they can bring the items in and actually try them on, he says.

Digital Signage

Another project leveraging Kinect involves digital signage. Microsoft is working with companies such as IdentityMine, a Seattle-based business that provides interactive design, software development and user experience solutions, to create digital signage applications for retailers.

Electronic displays that show content such as television programming, advertising and other messaging to consumers are springing up in a variety of public and private settings such as stores, restaurants, hotels and office buildings.

Kinect brings the ability to make digital signage interactive at a fairly inexpensive cost, Ramos says. “You plug Kinect into the USB port of a signage player, and it enables the signage so that a customer can scroll through an ad, or hover over certain areas and get a coupon or zoom in on a particular product. You essentially turn a static display into an interactive advertising medium.”

Using the technology, retailers will be able to obtain more metrics data than ever before, Ramos says, such as knowing how many people walked past a sign, how many glanced at the sign and for how long.

In another example of innovation in retail, Tesco and its Homeplus brand in South Korea have developed a subway virtual store, in which displays are installed in subways that look identical to supermarket aisles. People waiting for subway trains can use smartphones to select items they want to buy, specify quantities and decide when they want the items delivered.

These are just a few examples of retail innovation. Many more are sure to emerge as retailers look to the latest technology to improve customer service and add business value.

“Retail is going through a dramatic period of transformation, driven by a hypercompetitive landscape, and a consumer who has a radical new level of empowerment,” O’Meara says. “Retailers are increasingly leveraging technology to support their unique brand experiences, and to stand out against the competition. And the pace of technology and change will only continue to accelerate.”

The retailers that best embrace change and drive innovation will succeed, he says.