The Store of the Future

  • Written By: Ann Grackin
  • Published: February 12 2004


We just got back from the National Retail Federation show in NYC—home of big retailing. The big hit of the show was the Metro Group's Store of the Future. The budget for this extravaganza—it appears to have been underwritten by some of the biggest technology firms in the world. What was fascinating was the implementation of what we call multi-dimensional management—bringing together the customer dimensions to product and supply chain. (We have included a white paper you can read about all The Store of the Future gadgets and benefits of all the whiz-bang technology.) We spoke to Thomas Block of Henkel (the owners of Dial and other brands) from Dsseldorf. He walked me through the most valuable smallsmartfast enabling innovation called a Personal Sales Assistant, or PSA. What's great about this is that it actually, first and foremost, adds value to the customer (see our article on how RFID can be sold' to the consumer. Have you ever strained and stared at the fine print on cold medicines, hair care products, etc., wondering which is right for you? Most consumers buy these low cost items, then throw them away if they don't kill you, or when they don't work, moving to another brand. When in reality, they might have just bought the wrong product. The PSA can walk you through the product features, or let you tell it what your needs are, and have it select the right products for you to choose from. Like most Americans, if you have bathroom closets filled with shampoos you don't like, and other such products, this type of technology is a win. The brand company gets to sell' their product to you and your hit rate of actually buying the right item goes up!

Now, Thomas Block is not a tech wizard, he says. He is a customer focused person. He talked to us about moving up from brand to category management—thinking about ways to better serve the customers' needs—everything from presentation of productions and departments, to merchandizing at the store level layout, to PSAs. Most of this he has implemented with a network of Henkel merchandizing and category teams all over the world. And, what is impressive is that these approaches also drive up value—selling more products—for the firms who make the effort.

One thing you have to realize about retail—it's not a zero sum game. Rich selections with great displays increase business. None of us ever went to a store and bought more than we went there for, right?

The look of the place was great, too. Not a crowded maze of unintelligible input, which should be a lesson to merchants everywhere.

The Rest of the Show

Self-checkout is the crowning glory of retail—creating the magnum opus of retail—payment of information. Smart cards and RFID untie the customer with item level intelligence, and give retailers and the whole chain profound data about what is—and what is not—selling. Over time, the impacts to make midcourse corrections on daily replenishments through the broader issues like product design will be profound. The investments to get to these types of environments are quite large, as in ten to twenty billions or more, just for the POS systems, so these changes will take awhile to occur.

Some of the future displays, though designed visually well, were not very likely to see a mass adoption, like ringing you up as you put products in your tote or shopping cart. However, you can see things like what is your total spend so far—great for budget shoppers—as well as huge up sell opportunities for the merchants.

Big Application Plays

Infinite aisles — Many retailers who are tired of butting heads directly with Wal-Mart and Home Depot and who are trying to differentiate based on customer service will love Yantra's solution. By making special orders quick and painless for the consumer, their system helps ensure no customer walks out of the store empty-handed.

Pricing systems and better intelligence on the customer is the big emerging application play here. In the short run, this kind of analysis will be in the offices and meetings of merchandizing and salesbut over time. The smallsmartfast progression will allow the store, through PDAs or some kind of loyalty card, to id the shopper as soon as they arrive, analyzing what's there for them—upgrades, matching socks, new offerings that fit in with the profile of the shopper. There were several application vendors like Unica and Evant, having stellar growth, who are zeroing in on apps that support the merchant—from customer views to the product analysis and replenishment view.

Network applications in the supply chain—specifically inbound logistics—as a partnership between the shipper and the retailer, continue to grow. We saw more case study successes, a bigger presence by the transportation network providers. One Network and Log-Net, both growing by serving the end-to-end supply chain, also enables the ability to drill from orders down into the item level.

The big disappointment was the RFID story. Of course, every one had an inbound/outbound display. Watch my reader beep as the product goes by. That was a big yawn. The vendors failed to make a case for the road map of value that RFID can provide. Maybe they don't think they have to, and can ride on the coat tails of the Wal-Mart mandate.

And the Future Store is...

People. The biggest concern people have with all this new technology is the people. A few of us were joking about a law that would require so many people per square foot of retail space. Already, even in upscale stores like Bloomingdales, you can't find anyone to wait on you! But Thomas Block, with all the cool processes and PSAs Henkel is rolling out, thinks success is still about the people. The cool store and category designs were not done by design or optimization software, but by understanding shopper behavior, observing, and gaining trust between the retailer and the manufacturer and the customer. Thomas observed, though, that of course retail jobs, not being the highest paid positions in the world, have retention problems. So, technology that educates and assists the consumer is a win—for both consumer, sales associates and the enterprise.

In the end, great ideas and success will come from dedicated and creative thinkers who push their ideas with passion and translate them into processes.

This article is from Parallax View, ChainLink Research's online magazine, read by over 150,000 supply chain and IT professionals each month. Thought-provoking and actionable articles from ChainLink's analysts, top industry executives, researchers, and fellow practitioners. To view the entire magazine, click here.

About the Author

For more than two decades, Ann Grackin, Chief Executive Officer, has been on the frontlines of the Supply Chain Management technology and eCommerce frontier, leading global strategy and technology implementations in the high technology, semiconductor, automotive, textile, and apparel industries.

ChainLink Research is a bold new supply chain research organization dedicated to helping executives improve business performance and competitiveness.

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