Partner Article

Virtual retail and how Wi-Fi is revamping the shopping experience

While waiting at the bus stop, you realize you don’t have milk for tomorrow morning’s breakfast. Your options:

Drive down to the store and pick up some milk Order your milk from a virtual display in the bus stop that features a selection of grocery products Eat your cereal without milk

Option B may sound farfetched to some, but for shoppers in Chicago and Philadelphia, a company called Peapod is allowing consumers to order groceries from interactive displays in public spaces.[1] “Soon, [in Chicago] 17 CTA and Metra train stations will be home to the new virtual grocery stores, which allow smartphone users to buy items using a free app on their iPhones, iPads or Android phones.”

This development begs the question: how seamless will the marriage between virtual and retail really be?

The benefits of virtual retail

E-retail reduces shopper visits to the store – especially by Gen Y shoppers, who enthusiastically embrace new technologies. To maintain the attention of younger generations, brick-and-mortar retailers must create shopping experiences that are personalized, and frankly, more fun; virtual retail holds the promise of a more dynamic and engaging shopping experience.

Consider Adidas’ Virtual Footwear Wall: “Using state of the art touch-screen and precision real-time 3D rendered products, shoppers can select products on a virtual shelf, pull products, look onto the product from any angle, rotate it, zoom it in, [and] get further product and technology information.”[2] When the prototype was unveiled at the National Retail Federation in 2011, the virtual wall had proximity and gender-recognizing sensors that dictated product assortments based on shoppers’ appearances. In this way, Adidas provided individual customers an experience that was entirely their own.[3]

Extending this example, virtual stores are starting to manifest environments that match purchase history, preference, gender, age, consumer behavior and identity. Just as digital advertisements respond to user queries, virtual stores can become a platform for targeted products.

Additionally, retailers that create virtual aisles, and accompanying applications could track customers’ paths and interactions with aisles and products; offer tailored discounts to shoppers; guide shoppers through the store or to desired sections and allow shoppers to check inventory or products on hold.

Besides being dynamic, virtual retail eliminates many of the indirect costs traditionally associated with brick-and-mortar. By replacing physical aisles and products with digital interfaces, virtual retail reduces the costs of storing and replenishing inventory. Similar to an e-retail business model, virtual retail lets customers order from different locations but store and move inventory from single distribution centers. Virtual retail combines the cost efficiencies of e-retail and the tangibility of brick-and-mortar.

Will consumer behavior shift in the direction of virtual retail?

Tesco Homeplus in South Korea created a “virtual grocery store” where the walls of the Seonreung subway station – completely equipped with Wi-Fi – in downtown Seoul digitally display over 500 of the most popular products. After introduction, Tesco sales increased 130 percent in three months, and the number of registered users increased 76 percent.[4]

What makes Tesco so successful? Why have they been able to achieve such high rates of adoption?

First and foremost, Tesco made the virtual retail experience seamless: customers use a Homeplus app on their smartphone, scan QR codes beneath desired items and, as long as they order before 1:00 p.m., receive the items on their doorstep. Tesco created an interface that minimized unnecessary steps and labor.

Perhaps more importantly, Tesco accurately identified the media and devices that their customers use: most everyone (in South Korea) has a smartphone, and they have likely (in South Korea) been exposed to QR codes (in fact 78.5 percent of the South Korean population between the ages of 12 to 59 owns a smartphone).[5] The “virtual grocery store” is an extension of technology that Tesco customers were familiar with.

So how does it work?

In theory, virtual retail grants customers and retailers flexibility: the digital value chain is not constrained by location, floor space, inventory or staff. But while these physical bottlenecks might be eliminated, virtual retail may be constrained by the limitations of available technology for use in the retail infrastructure. If customers do not have a seamless experience, if they are not given a digital experience that is fluid and intuitive, the shift to virtual retail will never happen.

The latest retail technologies – mobile point-of-sale (POS) and receipt printing, asset tracking (e.g., RFID), and unified communications (walkie-talkies, PDAs) – are happening over Wi-Fi. Considering that virtual displays and interfaces are media-rich, wireless is the only infrastructure that will reasonably support the desired customer experience. Also, if retailers want to take full advantage of the dynamic nature of virtual retail, they will ensure that these transactions are occurring over immediate, secure and unfailing connections.

It goes without saying that these virtual environments will benefit from the control that wireless networking affords. Most Wi-Fi infrastructure vendors today offer application intelligence that allows retailers to prioritize appropriate applications, such as shopping apps, on the wireless network to improve the customer experience and support business objectives.

Though virtual stores may conjure up images of George Jetson, keep in mind that any practical, personal convenience is possible in the near term, short of personal flying vehicles! In short, this is the direction of the retail industry. Retailers who take advantage of these advancements will see increases in both revenue and customer satisfaction – but they must implement the infrastructure to support them. Secure, high-performance wireless networks over which customers can make their purchases will only add to the ease and appeal of virtual stores. It’s easy to embrace the glamorous idea of virtual stores, but it is vital to increase the decidedly less glamorous backend support to make the virtual store run.

[1] “Peapod Expands Virtual Grocery Shopping to Chicago,” Dale Buss, brandchannel, May 10, 2012

[2] “adiVerse – Virtual Footwear Wall with Adidas and Intel,” Intel, 2010

[3] “Virtual Footwear Wall,” Adidas, 2013

[4] “Tesco builds virtual shops for Korean commuters,” The Telegraph, June 2011

[5] “Smart Device User Penetration Explodes in South Korea,” eMarketer, February 2013

This was posted in Bdaily's Members' News section by Xirrus .