RTG August Newsletter

Published quarterly by The Retail Technology Group August, 2018

From the Principal’s Office

There is a lot of Technology coming into the retail marketplace. At times, it seems that it is happening too quickly and that there is too much to absorb or understand fully.

We thought we would take those technology innovations and provide a brief description along with our vision of the rate of adoption of each. The team collaborated in providing content and form to this list. Call us if you are contemplating evaluating and implementing one or more of these.

Bob Amster – Principal, RTG

We thought about the plethora of technology available to the retail industry and about what specific technology retailers will embrace and implement in the foreseeable future. We go on to make a few predictions. If we missed some, we apologize in advance.

As we have been espousing for some time, some technology is appropriate for some product categories, but not for all categories, and for some store formats and not for others.

Some technology is capital intensive and some – especially in SaaS models – is affordable to most retailers and thus provides small and medium-size businesses the opportunity to sort of ‘play with the big boys’ in certain spaces.

In no particular order, this is what we see:

Artificial Intelligence (AI) – Is becoming and will continue to be an important component of day-to-day business. There are multiple applications of AI (about 10 different branches) beginning with Interactive Voice Response (IVR), to merchandise assortment planning, to marketing campaigns, and many others in between. As AI solutions/modules become more affordable, they will surely be adopted by more retailers. Don’t be fooled. Only a handful of wealthy or daring retailers are actually implementing AI today.

Augmented Reality (AR) – While the physical world is three-dimensional, most data are trapped on 2-D screens and pages, AR technology superimposes digital data and images on real objects. By putting information directly into the context in which we’ll apply it, AR speeds our ability to absorb and act on it. AR enables a new information-delivery paradigm. AR has its place in furniture, home improvement, beauty aids, and even fashion apparel. It is being adopted and implemented already by leaders with deep pockets, but it has a way to go before the hundreds of other retailers will venture into it.

Virtual Reality (VR) – AR’s well-known cousin, virtual reality, is a complementary but distinct technology. While AR superimposes digital on the physical world, VR replaces physical reality with a computer-generated environment. The applications for VR in retail are fewer than that of AR. VR will take more than 5 years to find itself being implemented across the industry.

Autonomous Vehicle Technology for Delivery – self-driven vehicles, intelligent in that delivery stops can be downloaded to trucks, delivery cars, drones. This is being tested now in grocery and a few others, but it’s only a test. Many regulatory and other challenges to overcome such as safety, overcrowding of roads, security, and accuracy. Don’t look for your local supermarket to start delivering by drone in the next 3-5 years.

Location-Based Services (LBS) – This is the ability to locate and reach customers via smartphones, beacons, intelligent video (facial recognition) and works on various frequencies such as Wi-Fi, Cellular, Satellite, LFI, BLE, etc. Increasing in usage now, these services will proliferate the industry over the next 5-10 years,

HOST-TO-POST integration of omni-channel retailing software. Many retail software solution providers are selling a single solution that claims to include merchandise-and-inventory management (HOST), ecommerce, through to POS (POST). Many start-up retailers want to have it all, too. Unfortunately, most solutions – while they are offered as integrated, are only interfaced behind the scenes, and those are not the same. Caveat emptor! Over the next three years, all the so-called ERP solutions (who came up with that stupid name, anyway?) promise to be fully integrated.

Mobile payment options – Extended to work with on-line-purchase transactions, will become de rigueur payment methods. Already, some ecommerce Web sites offer mobile payment methods such as Apple Pay. All the online customer needs to do, is to select the payment method on the screen, and the smartphone prompts the customer to authorize the payment. Presto! You’re done! Mobile payment methods are already growing in popularity and will be ubiquitous in the next year or two.

Blockchain – Safely guarded audit trail of all transactions from inception to conclusion. In retail, think about purchase of raw materials all the way through until unit XXXX is sold at the POS, including all the transactions associated with Purchase Order Management between retailer and supplier. Also think about the acceptance of cryptocurrency. The HOST-TO-POST systems mentioned above, should be gearing up to support blockchain-type transactions because conceptually, it is popular, and the retail industry will adopt it in the next 5-7 years.

Store of the Future (SOF) – How will the store of the future look in each of the retail segments? We counted 31 technologies that are available for the Store Of the Future but they’re not all for every business. Some of the notable technologies are discussed briefly below:

    • 3-D Printing in store – usage is limited to certain product categories, but it can mean a high degree of personalization in real time (or ‘please come back in an hour’)
    • Appointment scheduling & concierge services – Think Apple’s Genius Bar, Cosmetics make-overs, home-improvement stores, bespoke apparel, pet grooming, high-end electronics.
    • Biometrics (e.g. Facial and Fingerprint Recognition) – security, authentication, CRM/Loyalty, tracking, access. This is likely to replace key-entered PINs because recognition is faster than keying and less prone to fraud on stolen mobile devices.
    • Bots (Software) and Robotics (Mechanical/hardware and software) provide repetitive service-related tasks interfacing with customers and associates, as well as performing a variety of autonomous operational and service functions. Large fulfillment houses are already using this new technology to pick sort and pack product for order fulfillment. Bots work now but can be annoying and there should always be an ‘escape’ method, so customers can speak to ‘human units.’ It will be three to five years before warehouse robotics becomes more affordable to a much wider retail base. Robots in a store: use is limited to shelf replenishment and gimmicks but will be Starbucks baristas in the future.
    • Digital & Holographic signage/displays – strategically placed in the store to deliver a brand/life-style message, specific promotional offers, entertainment, music, etc. The devices can be installed fairly easily but their adoption will vary between retail segments.
    • Interactive Displays – these displays can recognize a product in the hand of the customer and provide content and options (size and color) around the product. They are also touch screens with which customers can interact for a multitude of in-store (or in-mall) functions. These device types are already being deployed and will enjoy acceptance in a vast number of retailers and malls, beginning with the upscale/luxury market and working its way into the middle market over the next 3 years.
    • Do IT Yourself (DIY) Video Kiosks – This is a very important feature for hard-goods retailers, especially DIY furniture and home-improvement. More adoption of this technology is a sure thing in the short term (2-3 years).
    • In-store Wi-Fi (private and public) – This can be considered table stakes by now. If a retailer does not have in-store Wi-Fi, and with sufficient throughput, it will not only disappoint today’s digitally-native customer, but it will lack the infrastructure to add-on broadband-dependent in-store applications.
    • Interactive fitting-room mirror – This is the interactive real-time image of the customer ‘dressed’ in the retailer’s styles of varying color and size. This is definitely a shopping experience enhancer. Imagine, seeing yourself in a color that the store doesn’t have in stock, and the retailer’s systems enable you to order it before you even left the dressing-room and have it delivered to your destination of choice! Look for more apparel retailers to adopt and implement this technology in the next 2-4 years.
    • RFID – This technology uniquely identifies each unit of a product and electronically communicates with RFID readers (fixed or mobile) that capture that ID. It has application in inventory management, with the interactive mirror, and in loss prevention. This is the most underrated of technologies in retail. It is taking way longer than it should for the entire industry to embrace RFID, but it will happen unless a better, cheaper, faster technology comes along in the meantime.
    • Contactless/cashless payments – Put your smartphone next to a Credit Authorization terminal and have your payment approved in 2-5 seconds, signature free. The approval time on something like Apple Pay is 1-2 seconds (printing 2-3 feet of receipts like in supermarkets or Staples takes about 15-20 seconds). No reason why every retailer should not want to accept contactless payments, but possibly for the cost of replacing C/A terminals. In a couple of years there will be no excuse. Receipt printers will also have to be faster, or retailers will have to print shorter receipts, or will have to push for emailed receipts. This is in the deployment stage now.
    • Scan-and-go/Self-check-out (SCO) – there are many variations of this technology; cashier-less/cashier supported, multiple cameras capable of product recognition, human movement; weight-sensitive shelves; app driven with mobile payment capability. This technology is generally capital intensive and predominantly recommended for supermarkets. The less-expensive versions will gain traction. The others will be adopted only by the big chains until the cost comes down or a different alternative becomes available. Unlike the automotive and other industries, retail does not like capital-intensive solutions.

Visual Retailing – a three-dimensional, digital representation of the visual merchandising (store layout with product assortment on the proper fixtures), electronically deployed to stores for execution, it can support compliance monitoring. Upstream compatibility for timely product life-cycle management (PLM). Slow to take hold so far, there is great value in this technology on more than one front. It is affordable, but it has been passed on by those seeking to implement the shiny new objects in retail tech. Particularly useful in specialty apparel, it is also applicable to other product categories.

Voice-activated communications – Theatro’s wearable store-associate communications device has a multiplicity of use cases in retail. It is being adopted by a significant number of very-well-know and large retailers here and abroad. Hands-free/heads-up voice-activated communications tool for the hourly employees. Look for this and clones to become widely used in the next 2 years.

VoIP phone communications in stores – This one is a no-brainer. Just piggyback on the Wi-Fi network mentioned above and reduce phone costs dramatically. Any retailer can do it.

What are we seeing?

Consolidation, M&A

The headlines in the trade publications are full of bankruptcies, and threats of bankruptcy. We think that heavy debt burden and some poor planning are the major reasons for the bankruptcies.

Emerging Technology

Rather than listing those here, we urge you to take a look at the article central to this newsletter.

What’s new with us?

We continue to work with an airport-based retail chain in a communications cost-reduction initiative. Lots of money to be saved.

We are engaged with a private-equity firm to conduct an assessment of the IT function at a regional specialized retailer poised to grow their concept as a result of this investment.

Visit our Web site!

Obtain more information about us at www.RetailTechnologyGroup.com.

If You Have a Need

and would like to discuss it with us, please contact us at the number below. We would be happy to review with you how we can help you.

The Retail Technology Group:


is located at:

761 Rock Rimmon Road

Stamford, CT 06903-1216

Telephone 203-329-2621