From mannequins that can track the age, race and sex of retail customers, to fingerprint imaging that can activate bank cards, technological innovations are transforming the retail environment.

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Here are some of the highlights from Retail Week’s Innovation Review report.

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Download the report for free here

New technological innovations might promise to revolutionise retail, but which cutting-edge technologies are genuine game changers?

The Retail Week Innovation Review sets out to answer that question by examining the top 20 retail innovations of 2013 and asking a team of technology, IT and multichannel experts to deliver their verdict on the impact it will have on the retail market.

With the retail industry being constantly bombarded month after month with new innovations, it’s vital that retailers step back and take a long, hard look at each technological development and ask themselves which are worthy of investment. 

To help them do this, Retail Week has recruited leading analysts from Accenture Mobility, Experian Footfall, Gartner, Microsoft, and OC&C Strategy Consultants to form the innovation panel. These experts have been tasked with assessing the pros and cons of each technological innovation and assessing the potential it has to change the retail industry for good.

The top 20 retail innovations were chosen in conjunction with the Retail Week team and the innovation panel, and are reflective of the far-reaching innovations sweeping retail – affecting everything from the in-store environment and how consumers browse, interact with products, engage with brands, queue, pay and get rewarded, to mobile innovation, forecasting tools, data analytics and supply chain technology.

While the innovations in this report have not necessarily emerged in 2013, analysis of the top 20 is very much rooted in the here and now – how each technology has developed in the past 12 months and the impact itís had on the retail space this year. 

It’s important the Innovation Review is not blue-sky thinking – there’s very little value in analysing immature innovations that might never go further than the creatorís drawing board or fizzle out of retailers’ consciousness when the next bigger and better thing comes along. Instead it’s crucial Retail Week focuses on emerging technologies that are genuinely getting retailers talking and attracting investment. The following case studies focus on which retailers have adopted the innovation or embarked on trials in 2013; which sectors it’s affecting; and how it’s proving to be a game changer.

The pace of innovation is accelerating, driven both by retailer investment and consumer expectation. Being left behind in a world where increasingly sophisticated technology is the norm, not the exception, is no longer an option. Businesses that refused to embrace change were left behind years ago. Now the question on every retailer’s lips is which innovations are fundamentally altering the way consumers shop? Hopefully the Retail Week Innovation Review 2013 (available to download for free here) can answer that.

Top 20 retail innovations 2013

  • Augmented reality
  • Bluetooth beacons
  • Cloud-based communications
  • Connected fitting rooms
  • Data services
  • Digital wallets
  • Endless aisle interactive walls
  • Facial recognition
  • Field analytics
  • Fingerprinting
  • Interactive TV
  • Mobile loyalty schemes
  • Natural user interfaces 
  • PlayCaptcha
  • Queue management systems
  • Rapid scan systems
  • Virtual mirrors
  • Wearable computers
  • 3D printing
  • 3D shelf planning

For a sneak preview of three case studies from Retail Week’s Innovation Review, read on:

Bluetooth beacons

Individual beacons that can target specific parts of a store with different areas of content are transforming how retailers communicate with shoppers

  • A lot has been made of near-field communications, but Apple and PayPal are among the companies to have shunned that technology and backed Bluetooth.
  • Bluetooth technology has evolved significantly from a few years ago. Gone are the days of powerful transmitters broadcasting to a large area – in their place have come individual beacons that can target specific areas of a store with different offers or content.
  • It’s an inexpensive way to solve the long-existing problem of accurate indoor mapping, which is a huge boon for large stores. This could be anything from pushing different offers or information to customers based on what department they are in, to how long they have been lingering in one place, with ‘need some assistance?’ messages.
  • iBeacon, for instance, is a Bluetooth device that uses Bluetooth Low Energy technology – this involves a network of small plastic Bluetooth devices being placed in stores that communicate with smartphones and payment terminals in a similar way to wi-fi. The technology was included in Apple’s latest mobile operating system iOS 7 update in September. It is a significant step, also enabling hands-free payment.
  • PayPal is also backing Bluetooth with its new Beacon service, due to launch next year. Again, it will use small Bluetooth Low Energy beacons and users will have the option to set which stores they automatically get checked into, which ones will have automatic payments and which will require approval for payments.

The verdict

When Apple released iOS 7 in September, few people realised that they’d included a feature called iBeacon. And although a few months later most people still have never even heard the feature mentioned, it has left experts wondering if it’s going to change the way that we shop, order a coffee, or perhaps even more broadly, how we spend money. 

An iBeacon is a small, relatively cheap, Bluetooth 4.0 device that broadcasts some information over a certain range and has a long-lasting battery. Let’s break  that down – small means a bit smaller than a deck  of playing cards and cheap means a three-pack costs  £65 or so. It can be a standalone device (as described above), but a phone can also act as an iBeacon. The maximum effective range is about 200 ft and manufacturers claim battery life in the one-to-two- year range. Each of these metrics will improve drastically as the iBeacon market matures over the coming  month and years.

So, why is iBeacon so interesting for retailers? Its simplest use is for in-store messaging, such as sales, specials, end cap deals and coupons. These could be pushed to a phone rather than requiring the user to take out their phone, launch the store app, and wait for the new deals to download.

A slightly more complex use case is indoor positioning, which gets pretty precise when using an iBeacon network. This could well be a relatively cheap way to finally help customers get around a store and easily find the items they’re looking for.

An interesting but more complex use is contactless payment, which could be made more secure with integration of on-device security features such as fingerprint identification.

Combining these three uses together, there are some interesting scenarios: Walk into your favourite coffee shop and get a message that says: ‘Welcome back Brendan. The usual?’. Tapping ‘yes’ then lets the user pay for the drink and go straight to the collection point. The customer likes it because they skipped the long queue while still collecting frequent drinker points on their account. And the retailer likes it because they are saving time, effort and money while still collecting that valuable data about the customer and the transaction.

Brendan Mislin, Accenture Mobility

Fingerprinting

Whether it is the use of fingerprints to authenticate and secure POS terminals, activate cards or improve mobile browse and buy channels, this technology  is gaining traction in the retail space

  • Fingerprinting imaging can be optical or capacitative (like a touchscreen). In either case, the result is a map of the ridges on the fingertip. Software then looks for features such as direction changes and bifurcations (where one ridge splits into two), the pattern of which is unique in every person.
  • Recognition software can be attacked with fake images – prints, casts and severages. Many devices incorporate other checks, for example, looking for heat or a pulse, to get around this.
  • Between October 2012 and March 2013, French supermarket chain Auchan and DIY store Leroy Merlin ran a trial where 900 customers used their fingerprints instead of entering PINs. Almost 5,000 transactions were completed with an average of more than €50 (£42) – 94% of participants would be willing to continue to use fingerprint scanning. A widespread roll-out of such a technology is a substantial undertaking, with POS terminals needing additions or upgrades to include fingerprint scanning. The benefits are a perception of improved security over PIN and faster transactions. There are downsides, however, with public trust of third parties holding their fingerprints a potential problem.
  • Apple’s high-profile inclusion of a fingerprint reader as an authentication device on the iPhone 5 increases consumer awareness of the benefits – and fallability – of fingerprint scanning. Because the scanning takes place on your own device, Apple claims that your fingerprint data is never sent to Apple or stored centrally.
  • Biometric technology company SmartMetric recently revealed a fingerprint-activated EMV card (Europay, Mastercard and Visa) where a fingerprint reader is built into the card and is used to activate it. This adds a layer of security without needing retailers’ terminals to be upgraded or the user’s fingerprint data to leave the card. SmartMetric is in discussions with banking partners and expecting to do public trials this year and launch in the US, Asia and Europe in 2014.

The verdict

Firstly, while fingerprinting technology delivers a clear functional benefit, the emotional dimension is worth considering when predicting the adoption path that the technology may take. Consumers will be concerned about handing over their unique fingerprint details to a broad universe of players. Fears of privacy, hacking and counterfeits will temper adoption rates. Brands that successfully deploy this technology will need to be those that inspire enormous consumer trust.

Secondly, the type of scanners used are typically likely to degrade in time or start making mistakes when a finger is smudged with grease or sweat. Apple may have found a solution to this fingerprint-scanning problem and created the Touch ID sensors for the iPhone 5S – whether this is a sustained improvement in mobile authentication or whether the four-digit passcode is resurrected remains to be seen.

The technology will be most relevant for retailers whose business models are particularly reliant on the mobile phone as a browse and buy channel, but they will need to be businesses who have garnered sufficient consumer trust in order to reduce a small point of friction for its customers. Expect this technology to be less of a game-changer than one might originally anticipate.

Extending beyond the world of mobile authentication, retailers are also testing the use of fingerprints to authenticate POS terminals. However, the technology to make this happen cost effectively is not here and the benefits to the customer in terms of greater speed,  ease and security above codes may be outweighed by concerns around privacy and fear of identity thefts. The players in the banking and payments world also have to heavily back this switchover if it is to translate into a universal application.

Overall, for the consumer and key industry participants, the benefits of fingerprinting applied to the traditional POS terminal are unlikely to outweigh the investment and effort it would take to roll this out. It may however find a focused use in authentication of terminals by staff as the world of POS evolves from fixed to mobile.

Anita Balchandani, OC&C Strategy Consultants

Mobile loyalty schemes

Consumers are increasingly willing to receive promotional offers on their mobile devices. Retailers have responded by providing mobile loyalty apps and platforms to enable their loyal customers to receive multiple personalised offers

  • Consumers have more access to  loyalty schemes on their phones  than in their wallets, according to a survey by e-wallet technology provider CloudZync. The survey found shoppers access an average of six loyalty schemes through their mobile devices, compared with just four traditional loyalty cards  in their wallet.
  • Coffee shop Harris + Hoole has a loyalty app that enables customers to order ‘my usual’ at any branch through their phone. Harris + Hoole partnered with app designer Ribot, which developed a flat user interface style and integrated pull-down gesture  that customers use to check in. The  design embraces the physicality  of a traditional loyalty card.
  • The Shop Scan Save smartphone app, powered by Mobilize Systems, creates a unique saver ID on the smartphone and the Store Finder feature directs the user to the nearest of 22,500 participating stores with a PayPoint machine including Spar, Co-op, Costcutter, Londis, Nisa, as well as thousands of independent convenience stores. It enables customers to save up to £250 per year on their convenience store shopping. The scheme has more than 70,000 users and the deals are personalised and sent every fortnight to customers’ smartphones.
  • The emergence of mobile wallets is likely to take digital loyalty to the next level, providing the ability to recognise customers as they enter the store, offer real-time rewards as they search and browse and then deliver bonuses as they swipe the device.
  • Just how loyalty programmes become integrated into mobile wallets and consumers’ speed of adoption are big questions for the sector. But combined with other technology, such as near-field communication, mobile wallets could make the delivery and redemption of loyalty offers less confusing.

The verdict

When it comes to mobile loyalty applications, retailers should start with understanding how these applications can support the consumer service basics, such as having products in stock, making it easy to find items and making it easy to find product information. The ability to check stock availability, check and compare prices, read product reviews and receive promotions is also high on the list of things that consumers want to do with their mobile.

While Gartner consumer research indicates that customers are willing to receive promotional offers on their mobile devices, these need to be easy to redeem across the channels. There are a number of solutions available from mobile marketing vendors whose focus is mainly location-based marketing, or vendors whose mobile solutions allow customers to scan a QR code and pay from the mobile device to purchase that particular product or service. However, these are not yet generally built into a single platform and thus easy to redeem across retailers’ key trading channels.

Increased customer satisfaction will result from the ability to provide loyalty functionality in any channel, particularly mobile as the fastest growing channel and the one that provides the most access to retailer offers to the consumer. Retailers using mobile loyalty systems will have an enhanced ability to segment customers based on improved cross-channel visibility into consumer activity in those channels and consumers will, in turn, benefit from better targeted offers by retailers.

Retailers need to be cautious of the hype around context-aware, real-time offers that are delivered to consumers’ mobile devices. Gartner research continues to show that consumers are not readily interested in these types of personalised rewards. Retailers need to invest resources in educating customers on how they could benefit from context-aware offers to improve the overall shopping experience, as well as build loyalty from the small base of customers that may be interested.

Many retailers are exploring the possibility of building a multichannel loyalty system that is capable of handling any new channel. However, most investments remain directed at improving the channels that retailers already use to transact and interact with customers.

John Davison, Gartner

Download the free Innovation Review report

Download the report for free here