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The Future Of Retail In The Age Of Amazon

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In Fast Company by Austin Carr.

As Jeff Bezos’s juggernaut continues to grow, forward-thinking competitors are finding creative ways to succeed—and be what Amazon can never be.

The Future Of Retail In The Age Of Amazon
[Illustration: Zohar Lazar]

The Mall of America’s terrazzo floors, glazed white like doughnut frosting, ribbon out in every direction, creating a vast mirror maze of consumerism with 520 glassy storefronts. Shoppers, who have escaped an endlessly gray Bloomington, Minnesota, sky on a Monday morning in October, drift through the largest mall in the United States like tourists at an Atlantic City buffet. A couple holding hands strolls into a Zales while buttery perfumes emanate from an Auntie Anne’s next door. Kids and some willing parents fling around on the SpongeBob SquarePants Rock Bottom Plunge roller coaster, one of 27 rides at the Nickelodeon-branded amusement park on-site. Distant echoes of saxophone Muzak clash with both elevator whirs and bubbly pop songs. Somewhere in this otherworldly commercial expanse are five Lids stores and four Sunglass Huts.

When the mall opened, in 1992, it represented the pinnacle of retail convenience and a mecca for young people to gather and spend. But the $650 million megamall was always “vaguely unreal . . . exuding the ambience of a monstrous hallucination,” as novelist David Guterson described it in a 1993 Harper’s article, calling it “monolithic and imposing.” Two years later, Jeff Bezos launched his online book marketplace, which quickly grew into a new type of Everything Store, one that fundamentally redefined the shopping experience and led some to argue that commercial centers like the Mall of America would become gaudy relics of an antiquated era.

Now, Wall Street analysts say, the retail apocalypse is upon us. Amazon dominates e-commerce and has gobbled up 5% of total U.S. retail sales. Some expect that the company will own half the online market within the next five years, a period during which, Credit Suisse predicts, a quarter of all malls will close. By the end of this year, more than 8,600 stores will have shuttered in 2017, the worst year on record.

But here’s the thing about the Mall of America: It’s fighting back. “I hear all this doom and gloom in the industry,” says the mall’s SVP of business development, Jill Renslow, with an upbeat, Midwestern delivery. “I’m like, ‘Folks! Keep your chin up! There’s so much opportunity!’ ” The mall completed a $325 million expansion in 2015, says Renslow, who started working there as an intern in the mid-1990s and has seen it endure recessions and upheaval before. A new 342-room JW Marriott has opened upstairs, and retailers like Zara and Anthropologie are being lured to the space. The mall is experimenting with new leasing models to attract pop-ups and younger players like Untuckit and Toms Shoes. Renslow, who is eager for people coming to Minneapolis for the 2018 Super Bowl this February to visit the mall and be surprised, doesn’t view Amazon as a competitor but as a partner; she recently worked with Amazon to install a set of pickup lockers at the mall. She believes retailers in general can “bring online shoppers to brick-and-mortar.” I ask her directly: Is physical retail dying? “Not at all!” she says.

Renslow isn’t feigning enthusiasm. Despite Wall Street’s pessimism, industry leaders sound downright bullish on the future of traditional retail. Why else, they argue, would Amazon spend $13.4 billion to buy Whole Foods? Sure, the competition is fiercer than ever, and icons such as Sears and JCPenney are dying. But they believe that the narrative has been oversimplified. “Amazon alone isn’t holding the knife,” says NYU Stern professor of marketing Scott Galloway, who studies the retail industry. Cultural tastes have changed. Malls grew too quickly, at twice the rate of the population, from 1970 to 2015. Many retailers succumbed to quarterly earnings pressures, invested in share buybacks rather than their stores, became saddled with private-equity debt, or failed to keep pace with digital trends. What we’re seeing now, industry executives say, is a rational, albeit painful, course correction. One study from retail-research firm IHL Group found that a mere 16 chains, including Radio­Shack and Payless, account for nearly half of all store closings, and that there will be a net increase of more than 4,000 stores in 2017 and 5,500-plus in 2018.

“Retail is under huge pressure, but the death of stores is greatly exaggerated,” says Galloway, who believes that while Amazon will continue to disrupt the market, an increasing number of competitors will discover new ways to respond. “In the age of Amazon, retailers must leverage assets that [Bezos] doesn’t have: When Amazon zigs, retailers must zag.”

This fall, Fast Company embarked on a journey to learn from those retailers that are flourishing in the age of Amazon. After all, more than 90% of retail sales still happen in the real world, and as relentless as Bezos is, it’s not likely he’ll swallow up all of brick-and-mortar on his own. The truth is that the bigger Amazon gets, the more opportunity it creates for fresh, local alternatives. The more Amazon pushes robot-powered efficiency, the more space there is for warm and individualized service. The more that people interact with Amazon through its AI-based assistant Alexa, the more they will crave the insight and personal connection of fellow humans.

“The idea that everybody needs to be terrified of Amazon is completely wrong,” says Brian Spaly, who cofounded two e-commerce-centric startups, Bonobos (menswear) and Trunk Club (a wardrobe-in-a-box service), which sold to Walmart and Nordstrom, respectively, for nine-figure sums. “Everybody needs to figure out what makes them special and use those weapons to compete.”

The faster Amazon delivers, the more cash it burns. Shipping losses soared to $7.2 billion in 2016 from $5 billion in 2015. [Illustration: Zohar Lazar]

SUCCESSFUL RETAILERS WILL FEATURE PRODUCTS THAT CUSTOMERS CAN’T GET ELSEWHERE

A 15-minute drive north from the Mall of America are the downtown Minneapolis headquarters of Target. The company’s $7 billion bet on its future is coming to life in a series of spacious rooms littered across several floors and filled with mannequins, racks of colorful apparel, and fashion magazines. It’s here that Target is designing its own goods, refocusing on the aesthetic sensibility that fueled its success in the early 2000s. “While others are shrinking their footprints, reducing head count, or trying to save their way to the next quarter, we think there’s opportunity for us to take more market share,” says CEO Brian Cornell, who launched the initiative last February.

On the fourth floor, at the studio for Cat & Jack, Target’s new children’s clothing line—which blew up in its first 12 months to become a $2.1 billion brand—mood boards display photos of smiling tots at a July Fourth block party and a family movie night. Julie Guggemos, Target’s SVP of product development, describes the spirit behind the design as “positivity, happiness, saving the world,” citing the adventurous tweens in Netflix’s Stranger Things as an inspiration for the team. “We listen to Mom and Dad, but we have these kids in mind when we’re designing,” says Guggemos, a 27-year Target veteran.

Guggemos and her team of 400-plus designers will be rolling out more than a dozen high-quality, affordable, Target-exclusive brands by the end of 2018. They have already introduced a boutiquey children’s decor line called Pillowfort, a modern furniture collection called Project 62, an athleisure apparel line for the post-yoga brunch crowd called JoyLab, and a dapper menswear brand called Goodfellow & Co, which even Esquire described as “elevated.” Guggemos has just come from a product review for a new line, slated to launch next year. “We’re designing everything from the bottom up, 100% original,” she says.

When consumers can get seemingly anything and everything online, what can Target offer that Amazon can’t? That question was top of mind for chief merchandising officer Mark Tritton when he joined the company from Nord­strom in 2016. Target had fallen into a trap of licensing outside brands like Cherokee, which makes children’s apparel; even its in-house kids’ label, Circo, felt dated. “I thought, Wow, this stuff isn’t right,” recalls Tritton. “It feels tired and disconnected.”

In other words, Target had strayed from what made it “Tar-zhay.” Two decades ago, the company had distinguished itself from other big-box retailers by teaming up with celebrated architect and designer Michael Graves to craft a collection of mass-market housewares, partnering with high-end fashion designers like Isaac Mizrahi for custom fashion lines, and nurturing emerging brands such as Method through forward-thinking curation. “There would be no retail if it weren’t for merchandising, so why isn’t anyone talking about it anymore?” wonders Rachel Shechtman, founder of Story, the novel Manhattan concept store, which reinvents itself regularly (and collaborated with Target in 2014). “Merch assortments designed by spreadsheets and algorithms” is what’s killing department stores, she says.

When I meet Target COO John Mulligan at Target’s flagship, which sits just a block away from the Cat & Jack studio, he’s eager to compare the store’s $10 million renovation with printed-out photos of the old layout, which hadn’t changed much since the flagship was built in 2001. “It was gondola hell, right?” Mulligan says, referring to the basic shelving units you see in stores. “Just rows and rows of stuff. No sight lines.” Mulligan shakes his head as he points to a depressing image of the in-store Pizza Hut that used to greet customers.

The layout has been reorganized around Target’s new brands, and the presentation is crisp and contemporary. (Inexplicably, the company didn’t have a visual merchandising department until just two years ago; Cornell has since poached talent from J.Crew and the Limited.) As Mulligan ushers me through the store, he beams at the displays, each of which will now be refreshed monthly, which is double the previous rate: There’s an autumn-themed collection from Cat & Jack; sporty JoyLab leggings designed in partnership with Clique, whose Who What Wear line has been a hit at Target since it launched in 2016; and modern dining chairs and walnut tables from Project 62. “Before, it was a dead zone back here,” he says of the home-essentials area. Other parts of the store feature bright new arrangements of exclusive products from e-commerce upstarts such as Harry’s and Casper, and even the fitting room looks more like what you’d find in a Club Monaco. As for the Hut? It’s been replaced by fresh groceries and a liquor and craft beer shop. Target will remodel an additional 1,000 stores in a similar fashion by 2020, while also rolling out more localized stores with smaller footprints.

The redesigned “Tar-zhays”—there are around 110 of them so far—have delivered up to a 4% jump in sales at each location, but the more promising return from this investment has come from the house brands themselves. Cat & Jack customers, for example, spend 50% more in surrounding kids’ retail areas, Mulligan says, adding that their total basket size is 23% higher than other customers’. Most significantly, Target’s consumer research has shown that its brands have become a “trip driver”: People come to the store for Cat & Jack as much as they do for essentials like laundry detergent or bread or milk. “Target has always won with a spirit of design that their competitors didn’t have. I don’t see any other move for them: They’re not going to beat Amazon on e-commerce,” says a high-level retail expert who has advised the company on strategy.

Indeed, Target’s digital efforts continue to lag. When Mulligan takes me to the back to show off the redesigned storeroom, I don’t see any floor-roaming robots or automated conveyer belts, despite the fact that Target has stated that it plans to use its more than 1,800 stores as fulfillment centers (80% of the U.S. population lives within 10 miles of a Target). Instead, I find just one store clerk manually taping cardboard boxes for in-store pickup. Later, when I arrive to retrieve a $14.99 Goodfellow Henley shirt I purchased via Target’s app, the cashier asks for my ID because the flagship store’s smartphone scanner is broken. When I test Target’s new curbside-pickup service to buy paper towels, it fails at three consecutive outlets within the Minneapolis area. Ultimately, I give up.

The company needs to improve e-commerce and store pickup, but its future success does not depend only on these services. “Target is going to have to win on stuff that nobody else has,” the high-level expert says. “And that’s great retail, right?”

SUCCESSFUL RETAILERS WILL DELIVER A SATISFYING EXPERIENCE

A time zone away, in the sixth-floor showroom of Warby Parker’s SoHo offices in New York, cofounders Neil Blumenthal and Dave Gilboa are squinting at a backless shelving unit displaying their designer glasses. Customers mill about just steps from the co-CEOs’ desks, a dynamic that helps them relentlessly monitor and surgically adapt Warby Parker’s high-touch experience. Blumenthal is eyeing a wood shelf, which is missing a centimeter-tall lip, so that if a customer slides a pair of $95 Chamberlains too far back, they’ll slip onto the floor. “This does not make me happy,” he grumbles. Addressing these tiny details has proven crucial to the eyewear brand’s success. If they’re not fixed, “we’ll hear about it, like, ‘Fucking shit is falling off [the shelf]!’ ” Blumenthal says, with an effervescent laugh. “I don’t know if it’s right for policing, but broken-window theory definitely applies to retail.”

The 37-year-olds, who on this sunny Friday morning are both wearing slim-fitting button-downs, black sneakers, and patterned glasses—imagine the Black Keys as merchant princes—visit a Warby Parker store each day, hunting “for anything that needs to be refreshed, anything that’s out of place,” Gilboa says. This could be off-kilter frames or neglected customers. As much as the two consider themselves disrupters of competitors like Luxottica (Warby Parker’s $10.5 billion rival, which owns everything from LensCrafters to Ray-Ban), they’re students of retail history and find inspiration in such leaders as hospitality guru Danny Meyer, Apple Store legend Ron Johnson, and Mickey Drexler, the merchandising titan famous for reviving Gap in the 1990s and J.Crew in the 2000s.

Drexler, an early Warby Parker investor and board member, taught them that good experiential design is about solving customer problems. Gilboa describes how Drexler would walk into stores, zoom by Warby’s managers, and head straight to associates to interrogate them for unvarnished feedback. “He’ll isolate them, ask each of them the same questions, and then triangulate: Is he hearing consistent or conflicting answers? Then he really digs in, surfacing nuggets of wisdom hidden even by stores with great numbers,” Gilboa remembers.

When Warby launched its first store, in SoHo in 2013, the mission was to eliminate everything annoying about buying glasses. Blumenthal hated the “little shit vanity mirrors” at optometry shops, while Gilboa couldn’t stand the merchandise locked away in glass cases and the awkward interactions with often-pretentious store associates. They wanted approachable store greeters, an ask-us-anything reference desk, and a warm aesthetic, which they modeled after Sweden’s Stockholm Public Library, complete with its dark-wood shelving. Anthony Sperduti, cofounder of design studio Partners & Spade, who helped Warby Parker conceive its early stores, says they needed to feel like an authentic extension of the e-commerce brand. The high-quality materials of its eyewear products, he says, are reflected in “the brass details, marble counters—this incredible weight, this classicism.” To transform an intimidating experience into a fun and social activity, Warby Parker added photo booths and full-length mirrors so groups can check themselves out together. “If you’re born online, you better have a really good reason to do brick-and-mortar,” Sperduti says. “You better come out swinging.”

Warby now operates more than 60 stores, and on this particular day, it’s opening three new locations simultaneously—in Milwaukee; Fort Worth, Texas; and Harvard Square. Analysts estimate that the company will generate around $250 million in 2017 revenue. As the operation grows, it only gets harder for Blumenthal and Gilboa to keep this experience fresh. Before committing to risky new territories, the company often tests low-cost pop-up shops, rather than get stuck in the kind of expensive, long-term leases that have suffocated many traditional retailers and led them to try to save costs by building out one-size-fits-all stores. The Warby Parker team has developed modular components so that each store shares an identity but there’s room for local flourishes. Vernors ginger ale, a Michigan favorite, is on tap at the Detroit store, honoring the 151-year-old soda maker that once operated a pharmacy at the same location. The Miami store, which opened in 2015, features floors painted to look like swimming lanes, so that photos taken from the ceiling-affixed cameras make customers in sunglasses look like they’re floating in a pool—images that shoppers can then share on social media.

Big retailers and digital-native consumer brands alike cite Warby Parker as an inspiration and seek to mimic, even reverse engineer, what they believe is the core of its hip but inviting store experience. But refashioning stores with a certain wood finish or outfitting employees in a distinctive smock doesn’t make you Warby Parker any more than painting your store white makes you Apple. Piling on frivolous attractions in an attempt at authenticity, as Brooks Brothers did by opening a Stumptown at one of its Manhattan locations, drives the Warby Parker team bonkers. “The way people are defining experience today is way off,” Blumenthal says. “The idea of adding coffee shops to every store is ridiculous,” because it’s driven not by solving a customer problem or introducing a novel experience tied in some way to a brand, but by a hackneyed attempt to boost foot traffic. Equally jarring to them is Amazon’s new Go store in Seattle, which Gilboa recently explored, in which an array of sensors and computer-vision technology enable the ultimate in grab-and-go shopping. “Play that [concept] forward and you can imagine this dystopian experience where you have no human interaction at all,” he says.

Warby Parker is just as maniacally focused on efficiency as Amazon: Its next big initiative is a $15 million optical lab, in upstate New York, which enables greater quality control and faster product delivery. But the company knows that its true value lies in its elevated and personal experience, and Blumenthal and Gilboa never want to stray too far from what Drexler taught them. “We want to reinvent, but we sure as shit don’t want to reinvent the wheel,” Blumenthal says. “Startups sometimes take it too far, like, ‘Oh, we’re an innovator! We’ll just ignore what [traditional] retailers have done!’ Ignore best practices, get crushed.”

The best retailers are embracing what makes them special to counteract Amazon’s quest to dominate commerce. [Illustration: Zohar Lazar]

SUCCESSFUL RETAILERS WILL CHALLENGE THE FUNDAMENTAL ASSUMPTIONS OF COMMERCE

What does the store of tomorrow look like? Amazon Go is certainly one experiment, and seemingly every big brand, from Mastercard to Sephora, is dreaming up its own vision of the future inside whiz-bang concept labs. Ask around the retail industry and you’ll hear endless, breathless predictions about the potential of in-store augmented reality, drone delivery, or bitcoin payments.

So far, these technologies have amounted to little more than gimmicky distractions. “Customers don’t want stupid disco balls with lasers and holograms,” says Healey Cypher, founder of Oak Labs, which, yes, makes an interactive “smart mirror,” but is more focused on customizing the dressing-room experience. Target, too, seems to have come to this realization. Earlier this year, the company shuttered its much-ballyhooed “store of the future” project built on glitzy tech. “Ultimately, we didn’t want to build a Jetsons-like store just because we can,” COO John Mulligan says.

Vibhu Norby and Phillip Raub, cofounders of B8ta, a San Francisco–based consumer-electronics retailer that has raised $19.5 million to reimagine brick-and-mortar, are thinking different. Rather than depend on a cut of sales from products, like Best Buy does, their company charges brands for the privilege of being featured in B8ta’s 10 stores. By selling only a limited selection of trendy gadgets, B8ta’s store associates act as ambassadors for the products—the true stars—educating consumers on their features and offering white-glove service.

Norby and Raub believe that all physical retailers—Amazon included—need to rethink the business entirely. Norby, B8ta’s CEO, argues that historic metrics for success are completely irrelevant today. Who cares about sales per square foot when products reach customers via Uber and Prime Now? Why do year-over-year same-store sales comps matter when 56% of customers test products in-store but buy online? “Designing stores for throughput is how we ended up with 10-by-10 walls of Tide at Safeway,” Norby says. Perhaps most radical is the new idea that retail can be unbundled from transaction. Bonobos’s “guideshops,” for example, offer fittings and fashion advice, with the assumption that customers will order their apparel online afterward. Decide to buy in-store? Bonobos will ship it for free. “I’m starting to see it more, where retailers are not expecting you to walk out with a bag of their stuff,” says Partners & Spade’s Sperduti.

Some of these ideas might strike industry veterans as heresy, but B8ta’s cofounders view it merely as a shift in thinking about how physical space can be monetized. On a recent Saturday afternoon at B8ta’s downtown Palo Alto location, store associates demonstrate Boosted electric skateboards out front on the sidewalk. Inside, the store has a relaxed vibe, with homey carpets and armchairs occupied by gadget-shoppers’ patient loved ones, though it takes obvious inspiration from Apple’s minimalist stores. Customers sipping bubble tea toy with unboxed gadgets set up on long tables—Oculus Rift VR headsets, August door locks, Onyx walkie-talkies—while B8ta staff politely chats them up. These associates are not pushy at all, because they’re not pressured to sell units. They’re happy to answer questions and are knowledgeable about everything from the Nebia ionizing shower (“It turns your droplets into even smaller droplets,” an employee explains) to the finer points of four different Bluetooth trackers. B8ta’s market advantage is its well-trained staff. The cofounders, who met at the smart-thermostat company Nest, know firsthand how difficult it is to get customers interested in, let alone grasp, the benefits of new hardware products.

For electronics brands, B8ta stores are an excellent (and relatively inexpensive) marketing portal, and an even better data tool. “The real magic happens behind the scenes,” says Raub, the company’s chief business officer, who previously worked at Gap and Nintendo. Every product featured in the store is wired to track how customers play with it. Store associates, called “B8ta testers,” also gather qualitative feedback on why a shopper did or didn’t buy a product. “Why did they look at it? What didn’t they like?” says Raub, listing off a couple of common data points, which he compares to how e-commerce players monitor checkout cart abandonment. “Now brands can know that customers may have liked a product, but gave up once, say, they found out it wasn’t compatible with Android.” In a world where consumer products often end up languishing on shelves at Best Buy or forgotten amid Amazon’s catalog of an estimated 350 million–plus items, this data is more valuable than the sale itself. Traditional retailers now want what B8ta can offer: In late October, the startup announced that 70 Lowe’s locations will add a smart-home-focused B8ta, and Macy’s will soon feature B8ta outposts in its flagship stores.

SUCCESSFUL RETAILERS WILL RESURRECT THE ART OF SELLING

During my reporting, I quizzed each person I spoke with about which stores get retail right. People picked one place more than any other: MartinPatrick3.

An extravagant, 17,000-square-foot cathedral of high-fashion menswear in Minneapolis, MartinPatrick3 looks like what would have happened if Willy Wonka had gone to Parsons School of Design. At once boundless and intimate, the store’s colorful rooms naturally transition to the next, each its own pristinely wrapped Christmas present. In one, a collection of hand-stitched bow ties lie near $5,500 Brunello Cucinelli suits, a shiny black Vespa, and a modern steel cocktail table by a local designer. Down the hall, a white-accented men’s grooming shop stocked with shaving creams and bottled fragrances practically glows. There’s an in-store tailor, a barber, a full-time jewelry designer, and sharply dressed store associates, all with bouquet-like pocket squares blooming from their blazers.

Eleven years ago, Greg Walsh, an upscale interior designer who also sold home furnishings from his studio in the city’s hip North Loop neighborhood, began showcasing men’s accessories he’d collected during his travels: cuff links, watches, wallets. Customers loved them. Walsh brought on his better half, Dana Swindler (they’re “partner partners,” as Swindler puts it, smiling), to build out a stand-alone store in 2008. “The rule was that nothing could have sizes,” Walsh says. “That totally went out the window,” he laughs, explaining that the scope quickly grew to include apparel and much more.

Local Heroes: Five independent retailers who get it right, through curation, service, and offering something you’ll never get at Amazon

 

 Avenue, Tucson, Arizona “Avenue is led by this incredible woman [Alexis Mosij] whose sense of design and taste is just unreal. You look at her store and you just want to live that life.” Healey Cypher, CEO, Oak Labs, a retail technology startup
1/5 Avenue, Tucson, Arizona “Avenue is led by this incredible woman [Alexis Mosij] whose sense of design and taste is just unreal. You look at her store and you just want to live that life.” Healey Cypher, CEO, Oak Labs, a retail technology startup

Walsh and Swindler approach retail drastically differently from any merchant I encountered. Each display in MartinPatrick3, no matter how exquisite, is designed to be ephemeral. “We’re constantly reinventing. We can completely remodel a room within 24 hours,” Walsh says. They pride themselves on always paying vendors within 30 days—uncommon in the industry—and rushing new products into store collections often within days. (“This would take nine months at Nordstrom,” Walsh remembers one vendor telling him.) Whereas the traditional rules of brick-and-mortar dictate that sales matter above all else, store associates at MartinPatrick3 are encouraged to dole out sincere fashion advice, and if it means counseling a guest away from a higher-priced item or directing him to competitors’ shops, so be it. The payback comes in the lasting relationships such honesty builds. The company hosts events for free—even weddings—which it sees as a natural arm of its service, particularly if it has helped outfit the groomsmen. (There are shelves stocked with prosecco in a cozy VIP lounge.) In April, Walsh and Swindler even took down their e-commerce site. “It’s been funny. People in the industry keep saying, ‘You did what?!’ ” Walsh says. “But we decided we’re all about brick-and-mortar—that’s what we do really well—so let’s focus all our energy there.”

The self-financed retailer is growing fast. Walsh and Swindler guide me through back doors into 4,000 additional square feet of empty, brick-walled warehouse space adjacent to the store. This unfinished part of the 131-year-old building they moved to in 2010 is what Walsh is targeting as the company’s fifth addition. Down the hall, in their design studio, where MartinPatrick3’s “board of directors”—Cole and Ella, finely groomed poodles—lounge about on a green-mohair dining settee, Swindler cracks open a thick three-ring binder full of store statistics. (Swindler, who previously ran an engineering firm, is as meticulous about data as Walsh is about design.) Revenue has jumped an average of 40% annually since the company’s founding, with some years reaching triple-digit growth. “We work our asses off,” Swindler says proudly.

The pair can’t quite articulate their secret, but they know other retailers don’t have it. Others move too slowly, they feel, and simply aren’t creative enough. “We started in the recession. We’re used to hustling,” Swindler says. “The retailers we meet, they don’t do anything all day! Their give-a-shit factor is way down; they’re not on the floor every day like we are. Now that they’re making less [money], what do they do? The same thing as before, over and over and over again.”

MartinPatrick3 (the name comes from the ones Walsh’s father almost bequeathed him) offers sophisticated taste, expert curation, and a concierge-like, almost old-fashioned level of service that’s increasingly hard to find. Yes, it’s a store mostly for the 1%, but there is much here that Amazon can’t copy, time-honored lessons of merchandising and customer attention.

Retailers don’t need to chase a futuristic version of themselves that they might never attain; they first need to remember what made them special in the first place. The answers are all here. The talent, too. If Wall Street is right and the industry continues to decline, then this will be what we lose: the art of selling. MartinPatrick3’s store manager once worked at Nordstrom. The self-described concierge, who welcomed me to the store, made helpful recommendations, and even offered to assist with dinner reservations while I was in town, is an expat of Neiman Marcus, another shrinking department store trying to find its footing in the age of Amazon. You don’t need to sell mid-four-figure Cucinelli suits to offer this level of hospitality—Warby Parker does it with $95 frames—you just have to care enough to treat customers with the consideration and cordiality they deserve.

I roam through MartinPatrick3 by myself for a while, and eventually end up at Marty’s, the in-store barbershop with a classic candy-cane pole out front. Christopher Hernandez, my stylist, is dressed in a black vest and a gray flat cap like a 1920s newsboy. He previously worked at the barbershop inside the downtown Minneapolis Macy’s. Last March, Macy’s shuttered the location. “Most of us have a background in some big department store that’s closed,” he says as he snips away. “We’re all orphans here.”

What To Do With Dead Malls?

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Just when you think you have a handle on the brick-and-mortar retail crisis, the prognosis gets worse. More than 8,600 stores will close their doors in 2017, according to Credit Suisse analysts—a number that exceeds store closures during 2008, when America was in recession. One quarter of all shopping malls are expected to shutter in the next five years, according to the same report.

This downward spiral has severe economic implications, although some are less apocalyptic than they seem at first. In fact, there’s some evidence that automation and e-commerce actually create more—and better-paying—jobs than they destroy.

But there’s one issue that no one has figured out how to solve: what to do with all those vacant stores. And America has more of them than anyone. Retail square feet per capita in the U.S. is more than six times that of Europe or Japan. As our physical stores continue to lose market share to e-commerce, more than one billion square feet of commercial real estate could be gathering dust by 2022. Because blight begets blight, that number could climb even higher.

If these predictions hold, America’s retail landscape could look a lot like the residential landscape of Detroit.

To find a solution, retailers need to face the failings that landed them here. Blaming Jeff Bezos doesn’t change the fact that many companies have spent years with their heads in the sand. Sales have been migrating online for almost two decades, and millennials prefer to splurge on experiences—tasting menus, concert tickets, trips to Iceland—rather than flat-screen TVs. Faced with a crisis, traditional retailers responded by iterating an outdated model. Chains like Sears and Kmart used loyalty programs as Band-Aid solutions. Guess and Payless played a discount game but couldn’t keep up with their online competition.

The industry as a whole needs to accept that the in-store sales of the past aren’t coming back. Consumers no longer spend their Saturday afternoons going shopping, and no promotions or window displays are going to change that. Consumers are looking for places to be—not things to buy—when they leave the house. What’s needed is a radical new approach to sales—one that may not include selling goods in store at all. Smart retailers arerepurposing physical stores to do what e-commerce can’t: offer a memorable, meaningful and multisensory experience. A reimagining of what retail can be is already under way. Only one thing is certain: That old retail mantra—“stack ’em high and let ’em fly”—now applies only to online order-fulfillment centers.

Three Disruptive Approaches to Physical Retail
Nothing to buy but plenty to see: Samsung 837.
Nothing to buy but plenty to see: Samsung 837. PHOTO: SAMSUNG
The Nothing-to-Buy-Here Approach

Samsung 837

New York City

You’ll find plenty of Samsung products at the company’s 55,000-square-foot space in New York City’s Meatpacking District. But the phones, tablets and TVs on display aren’t for sale. Instead of a store, 837 is a “full brand immersion” designed to push customer engagement rather than on-site purchases. In this paradigm, the store becomes a kind of 3-D billboard. “It’s about creating an authentic connection and moments where our technology meaningfully enhances the experience,” says Zach Overton, vice president of customer experience at Samsung and general manager of Samsung 837. In addition to product samples, you’ll find displays that flex the tech giant’s prowess, like an immersive image tunnel that pulls content from your Instagram account as you pass through.

The only thing available for purchase is food curated by Smorgasburg, Brooklyn’s locavore open-air market. For non-Samsung users—who represent the majority of visitors to 837—the message is simple: We’re cooler than Apple.

‘Palm Beach Parade,’ a mural by renowned artist Michael Craig-Martin, will transform the facade of an abandoned Macy’s at CityPlace.
‘Palm Beach Parade,’ a mural by renowned artist Michael Craig-Martin, will transform the facade of an abandoned Macy’s at CityPlace. ILLUSTRATION: RELATED COMPANIES
Culture is the New Anchor Tenant

CityPlace

West Palm Beach, Fla.

There was a time when anchor stores—Sears, Nordstrom, Toys “R” Us—were the beating hearts and financial engines of large shopping malls. But as the big chains have foundered, their sprawling, underperforming outposts havebecome anchors in a more literal sense. At the axis of a once-thriving shopping center in West Palm Beach sits a 110,000-square-foot former Macy’s location, abandoned by the struggling retailer earlier this year. An immersive arts experience is taking over the space in December. World-renowned visual artist Michael Craig Martin will transform the exterior of the entire building with his largest mural to date, and famed sound designer Stephen Vitiello is creating a sound installation that will live in and around the detritus left behind by brands that once called the space home. This experiment by the landlord, real-estate giant Related Cos., aims to transform the struggling shopping center by putting culture front and center—and relegating retail to a supporting act. “It’s all about driving different kinds of traffic to a project,” says Ken Himmel, the president and CEO of Related Urban. “Mixed-use retail developments centered on cultural offerings are outperforming every other type of retail offering by a long shot.”

Drinking before shopping at the Restoration Hardware Lifestyle Store in Chicago.
Drinking before shopping at the Restoration Hardware Lifestyle Store in Chicago. PHOTO: RESTORATION HARDWARE
Everything Under One Roof

Restoration Hardware Lifestyle Store

West Palm Beach, Fla. (coming in Nov.), Denver, Chicago and more

While most retailers are shrinking their physical footprints, Gary Friedman, the chairman and CEO of Restoration Hardware, is thinking big. In 2015, the brand took over the 70,000-square-foot Three Arts Club in Chicago—10 times the size of a normal Restoration Hardware. The space allows for expanded showrooms but also an expansive vision of the brand, including design ateliers, a wine-tasting room and a music venue. “The key to unlocking the value of our assortment has been to transform our retail stores into huge design galleries,” Friedman says.

“Our new galleries generate two to three times higher retail sales than the legacy galleries they replaced.” In November, Restoration Hardware will open a 74,000-square-foot gallery in West Palm Beach, which is turning into a hotbed of experimental retail. An RH-branded hotel concept is also in the works.

A survival plan for bricks-and-mortar Starbucks

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Food Business News

by Jeff Gelski

Starbucks Coffee store
The Starbucks stores need to remain a place where people go to seek out human interaction.

SEATTLE — Web sites, e-commerce and what he described as the Amazon effect could lead both large and small companies to close retail stores in the coming years, said Howard Schultz, chairman and chief executive officer for the Starbucks Coffee Co.

Howard Schultz, Starbucks
Howard Schultz, chairman and c.e.o. of Starbucks

“There is no doubt that over the next five years or so we are going to see a dramatic level of retailers not be able to sustain their level of core business as a traditional bricks-and-mortar retailer, and their omni-channel approach is not going to be sustainable to maintain their cost of their infrastructure, and as a result of that, there is going to be a tremendous amount of changes with regard to the retail landscape,” he said in a Nov. 3 earnings call.

Mr. Schultz said Starbucks stores have an advantage in that they maintain a special place in terms of a sense of community, an environment where people go to seek out human interaction. Starbucks could be in a unique position 5 to 10 years from now. Other retail stores closing could mean fewer stores competing for Starbucks’ customers, he said.

“I’m not talking about the coffee category,” Mr. Schultz said. “I am talking overall, but we are in the very, very early stages of a tremendous change in the bricks-and-mortar footprint of retailers domestically and internationally as a result of the sea-change in how people are buying things, and that is going to have I think a negative effect on all of retail, but we believe that it is going to have ultimately a positive effect on the position that we occupy and the environment that we create in our stores.”

Starbucks Roastery in Seattle
New Starbucks roastery stores will be designed to enhance the consumer experience.

New Starbucks roastery stores will be designed to enhance the consumer experience. The Seattle roastery, the only one in operation right now, delivered a comp sales increase of 24% in the fiscal year ended Oct. 2, Mr. Schultz said. A roastery in Shanghai, China, should begin operations next year.

“Opening in late 2017 on Nanjing Road among the busiest shopping destinations in the world, the Starbucks Shanghai roastery will be a stunning two-level, 30,000-square-foot experiential destination showcasing the newest coffee brewing methods and offering customers the finest assortment of exclusive micro-lot coffees from around the world in an immersive all-sensory experience emblematic of our Seattle roastery, respectfully curated through a unique lens that will make it highly impactful and relevant to our Chinese customers,” he said.

Starbucks plans to open roasteries in New York and Tokyo in 2018. A roastery should open in Europe in 2019, but Starbucks has yet to select a city.

Starbucks mobile ordering
Mobile orders now represent 6% of Starbucks transactions.

Starbucks has a digital presence as well. Mobile orders now represent 6% of transactions, said Kevin Johnson, president and chief operating officer.

“We are continuously improving the mobile order and pay experience with newly released functionality that presents our personalized offer directly on the front screen of the mobile app and allows the customer to save favorite stores, favorite customers’ beverages, and we have new features in the pipeline to be released shortly, including real-time personalized product suggestions and the ability to save favorite orders, and there is more coming,” he said.

Starbucks executives discussed results of the 2016 fiscal year in the Nov. 3 earnings call. Net earnings attributable to Starbucks in the year ended Oct. 2 were $2,817.7 million, equal to $1.90 per share on the common stock, which was up 2.2% from $2,757.4 million, or $1.82 per share, in the previous fiscal year. Consolidated net revenues grew 11% to $21,315.9 million from $19,162.7 million in the previous fiscal year. The 2016 fiscal year contained 53 weeks compared to 52 weeks for the previous fiscal year.

Hointer’s Vision Of The Future Of Retail Uses Robots To Put The Focus On Shopping Experience

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Posted by  in TechCrunch

Google Expands Apps Partner Programs With Tech Track, Opens Cloud Partner Program To More Businesses

At this year’s Dx3 digital business expo in Toronto, one of the highlights was a Seattle-based company called Hointer that’s aiming for nothing short of a complete revolution in the way we buy clothes in stores – and it’s using robots to make it happen.If you ask the average guy about their least favorite part of the shopping experience, a good chunk of them are probably going to cite having to deal with overeager sales staff. Customer service is one thing, but feeling harangued by people who go in for the hard sell is something else, and it’s hard sometimes to distinguish between the two.

There’s also the problem that the retail isn’t necessarily what one might call convenient or relaxing: fighting crowds, hunting through disorganized stock, waiting ages in line for check-out. Amazon is succeeding in taking away business from physical retailers, and it’s doing that mostly on the back of providing an experience that doesn’t require anyone to leave the comfort of their own homes.

The retailer's backend on Hointer

Hointer founder Nadia Shouraboura knows a thing or two about Amazon and its retail strategy: she was employee number ten at the Seattle-based tech company. Her new company is heavily tech-focused too, as it uses mobile software, a robotic backend and a development strategy of rapid software prototyping to bring everything together for an entirely new kind of in-store experience.

 “Tons of people come into our storefront in Seattle, and they tell us what they like, and what they don’t like, and they yell,” she explained in an interview, describing how Hointer’s own store works, where developers sit on the show floor and code, replacing traditional customer service reps. “Sometimes if a feature request is really simple, it’ll be in the store the next day, and customers will come back and see that the idea has been implemented. We’ll try 10 ideas a day, and 10 of them are usually dumb, but we try it and then we roll it back.”

The rapid prototyping approach has resulted in a mature sales platform that incorporates barcode scanning via a mobile app, to bring up product information and the ability to order direct from a mobile device, and have that stock waiting for you in a change room. You can order new sizes and reject items instantly, and also pay direct from your device in some versions. This can be handled via a robotic store backend, or done using human support staff, which is a more popular option in emerging markets where labor is cheaper. Even the robotics systems and SaaS solutions for the customer interaction and retail operation management only cost around $40,000 to $50,000 per year to install and get up and running, Hointer tells me.

What consumers expect of in-store shopping is a shifting beast, and stocking shelves with goods isn’t cutting it anymore. People want something not easily replicable via online tools with their modern shopping experience, and Hointer’s systems are designed to handle the basics and free up floor space and retailer time, so that they can focus on better addressing those things they can offer a customer that an online shopping cart can’t.

The impact of e-commerce continues to be felt.

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In the Sept. 3 issue of Fortune magazine they asked  “Where have all the shoppers gone?”. A clear cry to find out what is happening. It lists several reasons but one of them is the impact of e-commerce. The graph they included:

sho_graphic_b1

 

The e-commerce growth is significant but still from a small sales base of 6.4% of the total retail market. The point the article makes is that adaptation to the new world has been difficult. Almost all companies have on-line sales but few master it, resulting in missed growth. An interesting statistic from Green Street Advisors highlights the problem. Customers purchase on-line items of which about 15% are typically stocked in malls.

The solution: Some malls attack on-line threats by adding what the on-line world can not offer, a more personal interaction by adding gyms and wine bars. The mall still offers the convenience but they add new experiences that some shoppers may look for.

Another solution that seems to work is to be able to order on line and pick up at the store. Again, a combination that on-line only can not offer.

Customers continue to look for products and services but stores have to adapt to the way they buy or face extinctions.

 

 

 

Examples of companies on the frontiers of service.

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Extracted from September issue of Consumer Reports.

The do-it-yourself movement is revolutionizing the way consumers go about routine activities and tasks from banking to filing insurance claims. Here’s how some companies are putting it into practice.

Esurance

The insurance company’s mobile app speeds up the claims process by allowing customers to upload accident photos and get an automated estimate of the damage, often eliminating the wait for an adjuster to show up for an appointment.

Hyatt Hotels

Want to avoid waiting to check in or out? At some Hyatts, guests can bypass the line and go straight to an automated kiosk and complete the task with a credit-card swipe. They can also use the kiosk to ­request a room upgrade or add an amenity.

Walmart Scan & Go

In a test at 200 of the chain’s 4,200 stores, customers can use their Walmart-app-enabled smart phone to scan items as they cruise the aisles, put them in their cart, and pay in one step by scanning a QR code—a dotted square than can be read by smart-phone cameras—at the self-checkout.

Zipcar

The Avis-owned firm allows rentals lasting from an hour to seven days. You sign up to become a member and receive a Zipcard. You book online or via mobile app, walk to the designated car, and swipe your card across a reader on the windshield. The doors automatically open, and you turn on the engine and drive off.

Pods

The toughest part of moving is lugging all of those heavy and bulky belongings to the truck. With Pods, the company drops off a cargo container for the consumer to pack, then handles the grunt work of hauling the “pod” to your new home—on your schedule, not theirs.

Panera 2.0

Restaurant customers can place their orders online or by mobile phone up to five days in advance and pick up their order at a predetermined time without waiting. They can also place orders the same way from anywhere inside the bakery-café and have them delivered to the table.

US Airways

Airlines encourage customers to have as little interaction as possible with employees. Kiosks are undeniably handy to print e-tickets and boarding passes. But if you want a paper ticket, the company charges $50. And if you want a receipt for an e-ticket after the flight, you’ll pay $20 to do so by calling reservations.

PNC Bank Virtual Wallet

PNC designed its Virtual Wallet mobile money management account for Generation Y consumers who want to manage their spending and saving in real time. Account holders actually get charged for interacting with an employee. Each staff-assisted transaction costs $3.

City National, Cadence Bank ATMs

City National in Los Angeles has unveiled a new generation of cardless ATMs—you can remove cash via a secure mobile app. Cadence Bank, based in Alabama, has ATMs that go beyond simple transactions to offer video screens that allow virtual interaction with remote tellers.

10 tech trends every smart government should know about

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Key Points:

To be truly effective, governments can’t just look at themselves as governments any more. They need to become smart governments. According to technology research house Gartner the ones doing this well, integrate social, mobile, cloud and information into their day-today operations and strategic planning. They use the following approaches:

1. Personal mobile workplace

2. Mobile citizen engagement

3. Big data and actionable analytics

4. Cost effective open data

5. Citizen managed data

6. Hybrid IT and cloud

7. Internet of Things

8. Cross domain interoperability

9. BPM for case management

10. Gamification for engagement

__________________________________________________________________________________

 

By 
04.16.14

Digital future

If you’re in government, ignoring or cracking down on tech can come at a massive cost. While some have questioned the idea that social media was vital to the success of the Arab Spring, there can be no doubt that it was an important organizing tool. In the Ukraine meanwhile, the one of the first things the protesters who recently overthrew the government did was set up Wi-Fi so that they could continue communicating with the outside world.

Used properly though, social media can help those in government communicate effectively with the people they serve and even be used to address their issues. Beyond social, technology can also help change the way cities, towns, villages and even neighborhoods are run.

To be truly effective though, governments can’t just look at themselves as governments any more. They need to become smart governments. According to technology research house Gartner the ones doing this well, integrate social, mobile, cloud and information into their day-today operations and strategic planning.

“Smart government integrates information, communication and operational technologies to planning, management and operations across multiple domains, process areas and jurisdictions to generate sustainable public value,” says Andrea Di Maio, managing vice president at Gartner.

The research house has also identified 10 tech trends every government should be aware of:

1. Personal mobile workplace

Regardless of how well governments try to categorize the types of devices and applications people use, they will inevitably miss the fact that on any device, personal use will creep into professional use. Governments may have an illusion of control by either providing and managing those devices or issuing well-articulated policies to allow and manage employee-owned devices.

However, the reality is that government employees, like their corporate counterparts, depending on demographics, personal preferences and pressure to improve performance, can decide how much they want to use corporate information and applications versus personal information and applications.

2. Mobile citizen engagement

There’s growing government interest, says Gartner, in providing citizen-facing services using mobile devices. As well as leveraging social software functionalities. This interest is driven by a combination of pressure coming from the political leadership and from opportunities that new technologies present.

The suitability of government services to be delivered over a mobile channel depends on a combination of demographics, frequency and recurrence of use, immediacy and urgency of use, potential level of automation, relevance of location information for service delivery, and how compelling the use of the service is.

3. Big data and actionable analytics

Big data continues to present government with information management and processing issues that go beyond what their IT departments are capable of. Existing practices that selectively evaluate which data should be integrated are being challenged by the realization that all data can be integrated with technologies that are specifically developed to do so.

The adoption of big data concepts and initiatives in the public sector varies widely among jurisdictions and, to date, is limited to specific use cases such as fraud, waste and abuse detection; enhanced security capabilities; public health surveillance; healthcare management; or combining data from IT and operational technology (OT) applications to enhance security monitoring or increase situational awareness. Governments are searching for ways to use big data to gain business process efficiencies and reduce costs, but are having limited success.

4. Cost effective open data

Many tend to equate open data with public data, but Gartner subscribes to the idea that data can be defined as open when it is machine-readable and is accessible through an API. This can apply to potentially any data that needs to be processed: whether it be public, discoverable through Freedom of Information Act requests, or restricted for use by a particular government agency.

This leads to new ways of mashing up data coming from different sources as well as the ability to build new services and processes based on open data. Governments become both providers of open data to each other and to the public at large (the latter just for public data) and consumers of open data coming from other parts of government as well as from businesses, NGOs and citizen communities.

5. Citizen managed data

Citizen data vaults are services that provide people with the ability to access their data outside of a particular government transaction, allowing them much-finer-grained control over when and how data can be accessed, and by whom, within the relevant legal framework that they are subject to.

Citizen data vaults offer significant potential benefits in meeting Internet users’ evolving expectations, providing more transparent control of individual privacy rights on electronic data, easing the task of integrating different government services, and creating conditions for the creation of value-added services from commercial, nonprofit and peer-to-peer organizations (such as social networks).

On the other hand, there are significant challenges to overcome, including, data availability and reliability, credibility and security as well as the size and complexity of healthcare and other target areas.

6. Hybrid IT and cloud

Governments worldwide continue to pursue both public and private types of cloud services, but the focus is shifting from developing internal cloud services to allowing agencies to purchase commercially provided but governmentally restricted services. For example, government clouds from the likes of Google and Microsoft have shifted email service in a number of agencies from public to government clouds.

Meanwhile, more-open public clouds are being emphasized in several countries mostly for non-critical CRM-like applications. The main objectives pushing cloud adoption have been cost reduction, speed of procurement and deployment, and responsiveness to regulations and needs for cost cutting. The public cloud is also gaining momentum as governments seek savings via consolidated procurement.

7. Internet of Things

The internet is expanding beyond PCs and mobile devices into enterprise assets such as field equipment, and consumer items such as cars and televisions. Governments, as well as most enterprises and technology vendors, have yet to explore the possibilities of an expanded Internet and are not operationally or organizationally ready.

Smart city plans in several jurisdictions aim at exploring the ability to process huge masses of data coming from devices such as video cameras, parking sensors, air quality monitors and so forth to help local governments achieve goals in terms of increased public safety, improved environment, better quality of life.

8. Cross domain interoperability

Smart government initiatives depend on interoperable information — data obtained from external as well as internal sources — and networks that effectively integrate planning, performance analysis and business operations. Attempts to do this successfully have been mixed at best.

Programs aimed at pushing through an entire government structure have often failed to maintain momentum over budget cycles or changes in administration.

9. BPM for case management
There isn’t one market for case management because all cases are not the same. Gartner distinguishes two types of cases. In decision-centric cases, the purpose of the work effort is to make a decision about rights, entitlements, payments, enrollment, priorities, risk or some other high-impact outcome.

In investigative cases, the outcome is uncertain; the purpose of the work effort is to identify interaction patterns among data. When the case is created, it often has very little data and structure. As the investigation progresses, data is added and patterns begin to appear.

Fraud detection and criminal investigations are leading examples of this type. Both decision-centric and investigative cases have a heavy dependence on semi-structured and unstructured information.

10. Gamification for engagement

Gamification can be used by government to motivate interactions with citizens or to achieve more meaningful levels of engagement with employees. Humans are “hard-wired” to enjoy games and have a natural tendency to engage when interactions are framed in a game construct.

Gamification for government services, applications and processes can increase user interactivity and change behavior, resulting in greater engagement. Citizens or employees who can have fun are more likely to change behavior, for example, NASA Moonbase Alpha simulates lunar exploration to stimulate teamwork by using a variety of tools, including a lunar rover.

Governments planning to use gamification must however clearly understand the target audience they intend to engage, what behaviors they want to change, what motivates the audience and maintains their engagement, and how success will be measured.

3 ways advanced tech is transforming real estate marketing.

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It used to be that if you wanted to sell condos or a large commercial project, you designed a model unit with the best views, on the highest floor, decked out by talented interior designer and hired an aggressive broker to lure people in and close the deal.

But today, traditional marketing centers, collateral materials and other sales tactics are increasingly high tech – a significant change for commercial real estate, which has typically been a staid sector.

Some of the latest trends sound like science fiction, straight out of Minority Report, but they are real, and already in use in some of the most innovative projects around the globe.

Here are three of the most important ways that technology is reinventing the way real estate is sold:

1. Immersive Technology
Imagine a sales center that is an empty space: four white walls and nothing else. Tech savvy markets are creating virtual exhibits inside these spaces, some of which are temporary “pop-up locations.” Instead of investing in heavy build-out costs and lengthy construction schedules during a hot real estate market, virtual exhibits augment reality by simply handing a prospect an iPad, the view through which changes as they move through the space.

Other augmented reality tools include headgear (such as goggles or a helmet) like the ones Oculus Rift is popularizing, as well as gesture-based software – like that used in Xbox Kinect where a person’s voice or body movements can change what they see and hear on a screen. This same kinetic technology takes virtual reality to a new level, allowing potential consumers to walk through a space, try it out, swap out views or floor plans, explore it as if they were on foot – often in a space that does not exist outside of architectural renderings. This enhanced interactivity can help a prospect become more intellectually invested in a place and more comfortable making a big decision.

2. Projection Mapping
This technique projects images onto a facade at night to show a transformation. The building serves as a giant screen and can place the content in situ. While this concept has been used for some time as street art or for guerilla marketing, the 2012 Olympics in London blasted the idea to the world, using projected images of sprinter Usain Bolt on the House of Parliament. Ralph Lauren also used this technology during a recent fashion week to project runway images on the side of a building. Clothes aside, projection mapping could be a smart tool to show ground-floor retail transformation or a construction phasing in a real-world context.

3. Mobile Technology
A browser search has become secondary for many brands that no longer does content wait for a customer to come to them, they are now able to sense a presence and deploy content, targeting potential buyers using Big Data, geo-targeting, even RFID technology. One of the new features of iOS 7 (Apple’s latest operating system) is iBeacon, a sensor that alerts mobile devices that they are near certain places or objects. For example, a homebuyer might walk past a listing in a real estate office window. If that buyer stands there long enough, iBeacon can issue an alert asking if he or she would like to watch a short fly-through animation, or view a 360° panorama from the penthouse. In addition, walking through a gallery of 3D illustrations, the app offers to send all of the images in an email.

All of these technology trends are making physical marketing centers more engaging and exciting, prolonging their lives into a virtual and mobile experiences that are less expensive to build and more nimble as a project changes.

Rodrigo Lopez is Chief Creative Officer at Neoscape.

What a smart city of the future will look like? Learn 7 trends in urban living for 2014

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By in Popsop

Cities are gradually evolving into more personalized spaces, allowing citizens to organize their life in the most sustainable way. Originally being areas for masses, cities are shifting towards focusing on individuals—their intellectual and physical needs, their passions, social and environmental views and aspirations.

Within the past year, there have been two major trends in re-arranging urban life: on the one hand, cities tend to be eco-friendly and more comfortable; on the other hand, the urban environment integrates technology for communal living, thus gets more tech-oriented and somewhat futuristic.

Find some most vibrant trends in urban living that will gain momentum in 2014, below.

1. Expanded interiors revolutionize homes

Along with the opportunity to expand—from the professional and creative points of view,—cities also make its dwellers “shrink”—in terms of living space. In megalopolises, most people buy or rent smaller apartments comparing to the ones they would have in towns and villages, so they need smarter solutions to store goods and arrange furniture to accommodate various occasions. Nowadays, our homes can “breath,” deliver essential purification, help cook, etc.

urban_living_01

Left to right: 1. OpenDesk furniture, 2. the Apostrophy’s concept flat, 3. the Alreria project in France (click to enlarge)

  • Rethinking traditional furniture. The “Make small spaces big” message, the tagline of 2013’s IKEA campaign in the UK, epitomizes the endeavors of architects and designers. The Swedish retailer shared its “home with home for everything” tips on the dedicated page. The pop-up furniture trend has been growing this year with the fabric Level Wall Shelf that adjusts to the weight on it, Fusillo bookshelf that features adjustable wooden elements, and a bed by Italian furniture makers Espace Loggia that can elevate itself to the ceiling to provide extra space. Mirror furniture may also be a solution for small spaces—the pieces merge into the settings and don’t “overload” the interiors. Augmented reality pieces can add a story to the interiors, just like TexTales children’s bed sheets do. 3D-printing is also the part of interior design’s future—soon, we won’t need to select ready-made piece as we would probably be able to create them at home with a 3D-printer. ”Do-it-yourself” furniture kits come as a current alternative to the futuristic 3D printing. OpenDesk now allows to download digital files for free to be then fed into a CNC machine that produces raw pieces of wood to be finished and assembled into a ready-to-use furniture piece.
  • Restructuring the house. The traditional forms of the house or apartment are all yesterday—today designers are searching for the new ways of managing square meters of the walls, windows and ceiling. The Apostrophy’s concept is exploring the multi-levelness of the space—the living areas are separated by levels, and the floors allow to use the podiums for storage. The era of affordable mini-housing may be also coming or rather returning, as this trend used to flourish in Japan. The creators of Nomad Micro Home kits that are easily assembled and cost as little as $30,000, are now looking for external funding through the crowdfunding platform Indiegogo.
  • Going beyond the living space. The outside space means a lot. Smart architecture house projects are as important as smart interior designs. Turning the multi-unit house in a piece of art and a source of joy, the Alreria project in France featured multiple colored panels all across the social housing building to add more color to the sunlight going inside the apartments. The project aims to boost the mood of the residents with color therapy.

What to expect: The interior and exterior designs of the houses will revolutionize dramatically over the next few years with the launch of affordable 3D-printers. Most probably, furniture retailers, like IKEA, will make a step from selling pieces to be assembled at home to selling materials and files for producing pieces in 3D-printing machines on spot. We may probably get smarter adaptive sofas, moving ceilings and noise-absorbing blinds and wallpapers (the two last ideas have been already realized with Feltone and Form Us With Love wool wood hexagons).    

2. Internet of things serves domestic needs

Production is not the only area where the industry of furniture and home appliances will see dramatic change. Home objects, ranging from coffee tables to window panes, are likely to feature digital sensors, connected with desktops and tablets to add new functions to ordinary things.

urban_living_02

Lapka (upper left) ; EggMinder (upper right); Canary (lower left); Sprav (lower right) (click to enlarge)

  • Smart sensitive Internet-based features. Special devices are now created that measure and regulate the intensity of light and noise. For instance, the AirBoxLab device, which has the app and a cylinder sensor element, measures and reports on the temperature and relative humidity as well as on the levels of VOC, CO2, CO in the air. The Lapka kit is similar to the previous product—it works as a personal environmental monitor that measures and reports on radiation, nitrates in raw products, electromagnetic fields (EMF), as well as the temperature and relative humidity. It also compares the results with the guidelines for certain environments. The Sono device, that sticks to the window and helps turn the street noise in the flat into more pleasurable sounds, is designed to work without apps and is not web-connected yet. The device, which is in the concept stage at the moment, makes a window shake slightly in the way that drives down the vibrations of the ambient noise and adds nice sounds to create a relaxed atmosphere. Design student Tashia Tucker has suggested a range of applications that use the power of microorganisms in interiors. For instance, they can remove dirt and dust from the surfaces and also warn people of hazardous chemicals in the air.
  • Cooking & eating experience improved with tech. Sensors and applications can also help people eat healthier. EggMinder by Quirky and GE is a smart egg tray that keeps track of how many eggs left in the fridge, and also detects stale eggs—owners get this information on their smartphone. Range is an app that captures and processes information sent by special sticks, inserted into a variety of foods during cooking.
  • Security enhanced with tiny devices. Along with tidiness, quietness and perfectly cooked meals, we also want safety at home. Canary, the Wi-Fi connected multi-sensor, checks what’s going on in the rooms while the house owner is out through a wide-angle lens, sensitive microphone, accelerometer and motion detector (more traditional humidity and air condition sensors are also there). The device sends alert messages to the house’s owner if something seems to be going wrong in there. It pulled in about $2 million instead of requested $100,000 in just a month on Indiegogo. The Spotter by Quirky and GE, a sensor pack that analyzes a variety of physical conditions in the room—temperature, humidity, vibration, light and sound— can be programmed to deliver scheduled messages to a smartphone, reporting on the current state of appliances and other things in the room, to your mobile device.
  • Inspiring smart consumption. Smart homes are enabled to adjust heat, water and electricity consumption to our habits, and also warn us when we overconsume. The Netatmo thermostat is designed to control the heating system at home remotely through an app, setting the comfortable temperature according to the user’s activities and habits. Sprav, a wireless meter, gets attached to a tap to measure water and energy consumption during showers. The device provides visual and audio feedback to let users balance their water and energy consumption and reduce shower costs by 10-20% per year. Shared consumption may also come as a solution to home-related spending—in its “Families of the future” study Dragon Rouge predicts that in the coming decades single-parent families will also share living/dining and kitchen spaces (Tandem Tribes), all to reduce their environmental impact.

What to expect: Modern homes are getting more connected and enhanced with technology. There will be chairs that measure weight and send diet recommendations, scanners that detect freshness of the food, and more.

3. Tamed nature amid urban jungles

We’re entering the era of letting more nature into our lives with the help of technology. Home and on-building gardens, smart tiny farms, solar panels—this all is gaining momentum now.

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Left to right: 1. Window Socket, 2. Farm 432, 3. Sealeaf (click to enlarge)

  • Solar batteries for homes. IKEA UK has started selling solar panels to individuals this year. Solar energy can also be used at home for one-purpose tasks like charging a phone. This idea was implemented in Window Socket that gets mounted onto a window pane to accumulate solar energy. At 1, 000 mAh, it can provide 10 hours of power and it takes 5-8 hours to fully charge.
  • Home farms grow smart. While farming in a flat sounds like a dream that can never come true, insect mini-farms change the perspective. Being a great natural source of protein, insects are easy to grow at home as a nutritious alternative to veal and chicken. Farm 432 is a table-top prototype vessel for growing black soldier fly larvae, which contains up to 42% of protein. The LEPSIS terrarium lets breed grasshoppers at home for the same cooking purposes.
  • Smart gardening in the city. As most city gardens are restricted on space, the smart floating garden Sealeaf is grown in the sea instead of land. This is a modular hydroponic floating agricultural system developed for urban coastal aquatic areas. The unit collects rainwater, uses solar energy and regulates the environment of the plants that are grown in it. While horizontal surfaces are already used, vertical square meters are waiting to get “hacked.” On-wall gardens are gaining momentum now as a new way to use the city’s surfaces wisely—in 2013, Bosco Vericale in Milano, the first vertical forest, has entered the final stage of completion (it will be officially revealed in 2014) and London’s largest living wall was constructed on The Rubens Hotel wall, to name a few.

What to expect: Sustainable cities let the nature in. Home gardening and growing food at home will allow people to reconnect with nature and cut down expenses on food. Solar panels will be as ubiquitous as electric devices. Each empty space will get its permanent or pop-up gardens on the walls, beneath the ground, between floors—to purify the environment and make it feel more natural.

 4. Reimagining urban furniture

Streets are gradually unlocking big potential for expressing thoughts and channeling innovative ideas. With the popularity of pop-up street venues, multifunctional city-furniture or urban micro-gardens, the outdoor public environment is getting more comfortable, smarter and better organized.

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Left to right: 1. Seat-e, 2. WaterBench, 3. IBM outdoor ads (click to enlarge)

  • Always powered, always on. With so many electrical devices around us—from phones to electric vehicles,—essential charging pods should be seamlessly integrated into the urban canvas. There are more and more benches now that accumulate solar power to let people charge mobile phones—for instance, the Seat-e benches installed in Boston recently. The Street Charge solar-powered plates can be attached to any street sign to enable pedestrians charge their phones—the concept was tested in NYC from early summer through October, supported by AT&T that partnered with solar power company Goal Zero and Pensa Design, the developers of the concept. With electric car industry making waves now, the problem of charging arises—the HEVO Power manhole-cover-size pods could charge cars as they park. The concept plates are to be tested in NYC.
  • Sustainable urban furniture. Conventional benches for sitting or billboards for viewing are already yesterday—designers are offering new ways to make these pieces smarter. The rainwater collecting park bench, unveiled as part of the BMW Guggenheim Lab project, provides perfect seating while collecting rainwater to further irrigate smaller gardens.To inspire books and magazines sharing, Amsterdam-based design studio Pivot Creative developed red metal clips that get attached to traditional park benches so that it would be easier to place reading materials under them.
  • Outdoor ads evolve into smart installation for people’s comfort. IBM curved its traditional metal outdoor ads a bit to transform them into a bench, a shelter and a rampA billboard in Peru, designed by students of UTEC and Mayo DraftDCB, could extract water from the air—the world’s first billboard of this kind produced potable water by sourcing it from the atmospheric humidity. The project provided residents of Lima with up to 96 liters of clean drinking water out of air with humidity of 98%—the water was stored in reserve tanks in the bottom of the sign.

What to expect: Cities are now hacked and improved, responding to human needs with every single element. The city of the future will probably feature charging stations embedded in signs, bus shelters, walls and phone booths. There will also be smart bins that automatically sort waste, compress and even recycle it on the initial stage.

5. Lighting up the city

Energy-consuming city lighting is getting more sustainable with the use of renewable energy sources.

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Left to right: 1.Glowig plant, 2. Starpath, 3. LumiMotion (click to enlarge)

  • Making objects glow. Providing everyday objects with illuminating capabilities may come as an alternative to energy-powered city lighting. Making genetically-modified trees to act as illumination tools may be a solution. The “Glowing Plant” project uses synthetic biology to embed bio-luminescent genes extracted from fireflies and bacteria into plants to make them illuminate homes and streets.
  • Solar power for illuminating cities at night. The UK-based company ProTeq Lighting is introducing a new technology, Starpath, for creating self-illuminating paths—the coating of the paths absorbs sunlight during the day time and emits light when it goes dark.The unique Onyx Solar’s solar panel pavement installed at George Washington University captures “sun beams” to power LED lights beneath the pavement.
  • Lighting that adjusts to motion. Philips’ LumiMotion is an intelligent lamp that senses the activity around it and adjusts the lighting to a maximum level when there is motion within its area of reach, and takes the lighting down when it detects no activity. This helps save up to 80% energy costs, while providing 100% safety on the streets.

What to expect: The most promising trend here is the accumulating solar power to use it in the illumination systems—most of city lights of the future are sure to be based on this approach. Lights will also become smarter and glow bright only when an object, moving along the path, is detected—to save energy and ensure safety.

6. City exploration

With so many travel apps available today, city exploration turns into an engaging and benefitting experience. Developers are creating more ways to reward people for getting around the town, especially on foot, and unlocking new spaces.

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Left to right: 1.Walk [Your City] signs, 2. KLM maps, 3. GE Wonderground (click to enlarge)

  • Walk the city to be fit and know the area better. The special Walk [Your City] signs indicate how distant particular locations are, in minutes of walk. Pedestrian are encouraged to walk, not cycle or ride, to a place of interest to build a stronger sense of community and inspire city exploration. Nike released a map of London with walkable routes—people are encouraged to cover the distances and collect NikeFuel points at the same time. Hamburg is to create a green network that will cover 40% of the city area and allow to explore it by walking or cycling. The car-free lanes will be linked to parks and playgrounds and allow to get from the city center to suburbs in an eco-friendly way. The plan will be fully realized in 15 to 20 years.
  • Collective creativity for creating maps. KLM asked travelers to build personalized maps by inviting friends to add their favorite locations and landmarks to it. The airline company then printed out the map and sent it out to customers.
  • Gamification of the city exploration. GE launched its GE Wonderground project to encourage exploration of science-related facts about key locations in five major cities of the USA—Los Angeles, New York, Boston, Chicago and San Francisco. The online game invited to unlock discoveries about the locations, inspiring people to visit the cities after the game and see the tech wonders with their own eyes. Nathan Pyle created an album of valuable and fun animated tips for the newcomers to NYC.

What to expect: With so many technologies shaping cities now, they turn into real wonderlands offering immersive and engaging experiences. Walkability of urban areas will be one of the top priorities for city planning in the coming years.

7. Minimizing the impact of natural disasters

Tomorrow’s cities are to be improved not only with ergonomics and comfort in mind, they also must be disaster-proof. It comes down to constructing buildings resistant to natural disasters and smart urban planning, however, there are less complicated but still valuable smaller solutions to this problem.

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Left to right: 1. Google’s Project Loon, 2. EDV-01, 3. Town Square Initiative: New York (click to enlarge)

  • Connection 24/7/365. Being online is crucial during emergencies as many people can receive help from themed relief communities. Google introduced its Project Loon that uses high up balloons to give access to Wi-Fi to people in remote places in times of disasters or just in poor regions. The project is soon to enter the second phase after testing the baloons in certain parts of the globe. The Mipwr Dynamo iPhone case allows to charge the phone manually—it takes just one minute to power the device by pumping the push lever.
  • Temporal housing. Modular housing is believed to be a solution for those who want to get their new homes fast. Houses created in shipping containers may work here—the EDV-01 project is one of them. It is a self-contained two-storeyed shelter that needs no supplementary electricity and can be easily transported and used autonomously. It has a bathroom, cooking and sleeping space and has pre-installed solar panels, hydrogren fuel cells as well as a lithium battery for energy storage. Airbnb launched its “Disaster Response” service on its platform to connect hosts with people who need urgent accommodations.
  • Disaster-resistant urban planning.   The “Town Square Initiative: New York” city project developed by the global design firm Gensler re-imagine unused (leftover and filler) city space, creating resilient and sustainable communities that will also provide alternative energy in the times of natural disasters. These helpful hubs will be used for collecting solar power, rainwater, and for waste composting.

What to expect: To survive in natural disasters, cities will have to develop new ways of energy sourcing and distribution, to enhance draining systems and create purification systems for contaminated air, water or soil. The concepts of cheap modular homes for hurricane or earthquake victims will be developing in the coming years. They will focus on autonomous small dwelling units that have all the essentials a person may need during several weeks. Devices that purify, clean, 3D-print and restore things within this space will be a must.

In the coming years, urbanization will require building new generation of smart houses efficient in terms of space planning, sustainable materials and clean energy sources. Self-sustained dwelling, alternative food cultivated in the kitchen, autonomous power grids, water purification systems— all these areas will be further enhanced with technology. Rational use of the city space will also be trending—multi-level sites, self-illuminating pavements, city furniture accumulating sunlight and water will be the elements of the smart city of tomorrow.

AT&T retail chief explains ‘The Store of the Future”.

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RetailCustomerExperience.com

As consumers shift many of their purchases online, will physical retail stores even have a reason to exist? That’s the difficult question AT&T retail executives asked themselves two years ago as they began a process to redesign and reinvent all 2,300 company-owned retail store locations in North America. In August, AT&T customers in La Grange, Illinois, a suburb of Chicago, were the first to experience a new concept store AT&T leaders believe reflects the future of retail.

Prior to the store’s opening I spoke to Paul Roth, AT&T’s president of retail sales. “We began with a blank sheet of paper—literally,” Roth told me. Roth says that despite the huge increase in e-tailing (Forrester Research predicts that online retail sales will grow at a compounded annual rate of 10 percent through 2017), retail stores will continue to be relevant, but only if they serve vastly different purposes than they do today. “The future of retail is all about personalized service and education,” he predicts.

Roth believes AT&T’s new store design serves the purpose customers demand from a retail store location because it will offer the following the three components.

1. Highly personalized services. What customers in La Grange will not see is almost as important as what they will see. Cash registers? Gone. Counters and terminals? Gone. All of the store’s retail staff (consultants) will be equipped with tablets supported by a mobile point-of-sale system so customer transactions can occur anywhere in the store. Roth says instead of being ‘transactional,’ the communication and experience takes place side-by-side, creating a more personalized experience.

AT&T’s research found that consumers who want to buy a specific product and have it delivered to their home will simply do it online. But for those who enter a store, their purpose is to learn, to experience, and to speak to a person. It means the physical environment of a store must change to reduce the communication barriers between employee and customers.

For example, in the center of the newly designed AT&T stores, customers will find circular “learning tables.” These are set up around concept of “exploration, education, and interactivity.” You’ll notice in the photo below that the learning tables are round and not rectangular, removing barriers to facilitate a more intimate, personalized conversation. The tables also encourage education and interactivity. For example, let’s say a customer buys the new Nokia Lumia 1020 smartphone because they read positive reviews about the camera’s 41-megapixel sensor. The camera and the device come with many new features. With the exception of early adopters, however, the majority of consumers will want learn more about the phone’s capabilities. AT&T employees will be able to escort customers to learning tables to help them set up their phones and learn to use them.

2. Solutions, not transactions. AT&T’s research found that consumers go to the web to conduct ‘transactions;’ they go to a store to discover solutions to help them live, work, play, and learn. “In our prior merchandising scheme, we offered smartphones and accessories in different parts of the store. That’s not a solution. It’s a transaction. If we put them together to show how they work, now we have a solution,” says Roth.

I find this concept to be the most intriguing of the redesign. AT&T stores will have connected ‘experience zones,’ where a complete set of products will be displayed together. For example, in the music zone, a customer will see smartphones flanked by various speaker options in different colors, sizes, and styles. A customer can play music on a smartphone and move the sound from speaker to speaker. Other zones will showcase digital home automation and entertainment products. This is called “lifestyle merchandising” and, according to Roth, has been shown in pilot experiments to boost sales of products that consumers didn’t appreciate until they saw the product used as a complete solution. “Prior to putting it together as a complete lifestyle solution, consumers didn’t see the value. Now they can discover solutions they didn’t know existed,” says Roth.

3. Emotionally engaging experiences. Customers also told AT&T that want to be “rewarded” for a trip to a store. This means the physical design must be open, warm, and inviting. Customers visiting redesigned AT&T stores will find a colors and materials designed to a signal a high-tech experience (white tables with high gloss or matte finishes) combined with warm and comforting materials made of reclaimed teak wood. Interactive digital displays will replace printed brochures and in-store posters, which often take up to eight weeks to print, ship, and install. Displays will show targeted messages relevant to the local community and, in some areas, reflect a language popular in the region.

AT&T’s new store design will take some time to roll out. The company expects to redesign 15 to 20 stores by the end of the year with an accelerated rollout in 2014. The goal is to convert 100 percent of AT&T’s store portfolio to the new design.

 

Roth has an ambitious goal of making AT&T a premier retailer in the area of customer service. As evidence that he’s getting closer to meeting the goal, Roth cites J.D Power’s latest study, ranking AT&T as the best performing wireless provider for “overall customer service as measured across its retail stores, online, and call centers.”

AT&T’s experiment carries a valuable lesson for all business owners, whether or not they own a physical retail store. You see, Roth did not start with the question, “How do we sell more product?” Instead he asked a question far more profound: How do we want people to feel when they enter our store? According to Roth, “We want people to say to themselves, ‘It feels good to be here. I would like to spend time in this store. I will find something that I didn’t know existed, but which is relevant to me and my life.’” Enhancing the customer experience begins with asking the right questions. Only time will tell if AT&T’s redesign will be successful, but it’s off to a strong start because it began its reinvention process with the right questions.