After the NFR and the technological avalanche that has hit the retail sector, we need to innovate the way we operate on the market. There are various ideas and case studies
Digitalization and the advancement of related technologies are driving significant innovation in the retail sector. The pace of change has significantly accelerated during the Covid-19 crisis. For example, during the pandemic, purchasing volumes globally increased from February 2020 to April 2021 and the distribution sector experienced returns in sales but also in capitalization. Therefore, we see a wave of innovation in distributors’ business models to address rising customer expectations, technology adoption, supply chain integration, logistics challenges and digital marketing. Distributors who were prepared and had already adopted advanced digital business models before the pandemic dramatically widened the gap between leaders and laggards by increasing their market value. Therefore, the effects and advantages of digitalization in retailers’ business model are visible for three reasons. First, distributors sell products that are usually made by third-party suppliers, which means that having an optimized supply chain flow and management system is critical to their competitiveness. Secondly, retailers represent the final stage of the supply chain and are closely involved with end consumers; in other words, better interaction with customers through digitalization can lead to higher sales and performance. Third, one of the largest sectors in many economies is retail, given its large number of employees and value creation, among other parameters. This intermediary position in the supply chain makes digitalisation-driven innovation in the retail business model of considerable importance. Therefore, improving understanding of how digitalization enables business model innovation is relevant.
We define digitalization as “the use of digital technologies to innovate a business model and provide new revenue streams and value production opportunities in industrial ecosystems”. Therefore, the focus is on understanding the application and use of digitalisation rather than the introduction of new technologies. In the empirical context of the distribution sector, it is obvious that digitalization influences all dimensions of business models – value creation, value delivery and value capture – in numerous ways. For example, using AI to create value on content created in social media has enabled retailers to gain more accurate insight into customer behavior and consequently make better marketing decisions more quickly. Similarly, chatbots and robot-generated responses have ensured a quick and reasonably accurate response to customer questions as part of a new value delivery routine. Another example of providing value includes using virtual reality (VR) to enhance the customer experience. Finally, in value capture activities, we are seeing increased experimentation with cryptocurrency, blockchain and big data analytics that will have a lasting impact on retail revenue models in the short and long term. Advanced technologies, such as artificial intelligence, big data and IoT, have created opportunities and challenges that are not easily achievable by companies because they require not only small improvements in processes but also major improvements in the dimensions of the business model.
Field experiences
The world of retail is very active in experimenting with new technologies and relationship methods. A totally digital project is that of the Digital Twin of the shop windows for Mondadori Duomo. The objective is to create a digital twin of the environment in which Mondadori Duomo is inserted through on-field sensors that analyze and certify the impact of the point of sale on passers-by. Using Blimp’s head counters, visitor flows and shop window performance are analyzed in order to provide Mondadori with timely insights on which to base strategic decisions. Leaving Italian territory to arrive in the USA, we find a new automatic checkout project from Walmart which has integrated the “buy now, pay later” service from Affirm, a player in the payments sector. The service offers different repayment plans, including the interest-free option and monthly installments in three, six or twelve months. Another example is from the US organic supermarket chain Earth Fare, which invites customers to discover “better for you” brands by playing games. It works with Merryfield’s “Learn & Earn” rewards app, which uses rewards to introduce users to brands that offer sustainable and certified products. The app now provides the “micro-moments” feature, which rewards customers with points when they interact with quizzes, quick surveys and videos. The beauty sector is also particularly suited to digital innovation. An example is the L’Oréal Travel Retail Asia Pacific store, in collaboration with China Duty Free Group. This is a flagship store for Armani Beauty at the cdf Haikou International Duty Free shopping complex in Hainan. Visitors to the store are presented with Armani’s beauty collections on a red conveyor belt. Visitors to the Armani/Privé Emotion Lab can paint their emotions on an interactive screen with calligraphic brushes to discover Armani/Privé fragrances suited to their mood. With a QrCode they can access Armani Beauty’s “Face Maestro” digital makeup artist service.
SOME CASE HISTORY
Lloydsfarmacia app to integrate customer services
The LloydsFarmacia app | Benu is the app for customers of LloydsFarmacia and Benu pharmacies and today has more than 70,000 active installations. The “Booking and home delivery” service offers customers the possibility of picking up pharmaceutical products at the pharmacy or receiving them directly at home. In addition to this service, users can book services provided in the pharmacy and scheduled events; avoid the queue using “Skip the queue” to book your appointment on the desired day and time; monitor wait times and queue directly from the app and more.
The electronics retailer launches a connected sneaker
German electronics chain MediaMarktSaturn has launched a limited edition shoe model called “Mining Shoe” by fashion brand Leandro Lopes. The shoe is connected to the Lopes app via an integrated chip that counts steps and creates individual analytics for optimized workouts by transmitting activities wirelessly to the app, where they serve as currency in the Lopes Metaverse. Users can create a 3D avatar, find treasure or invite other players to take part in a sporting challenge and collect points which they can then exchange for bonuses and rewards in real life.
Web3-based customer loyalty solution
Payment card company Visa has launched a Web3-based loyalty solution called “Visa Web3 Loyalty Engagement Solution,” which allows brands to engage with consumers in new ways. This loyalty solution is powered by SmartMedia Technologies and provides brands with an enterprise platform that connects the Web2 and Web3 worlds and can be customized to create customer experiences and offers. Brands can engage customers through a digital wallet where they can redeem rewards for virtual, digital or real-world experiences.
Interactive display of ads with Ai assistant
Samsung has launched a pilot program in the United States to build customer loyalty at Chevron ExtraMile service stations. The company uses high-resolution digital displays for advertising and dynamic information such as “Sprinklr Social” for social media campaigns and “Ibm Weather” for weather-related content. Customers can interact with various digital content, including the AI-based virtual assistant “Sam the Sommelier”. Additionally, data on traffic volume and customer behavior is analyzed to optimize the shopping experience for customers.
Artificial intelligence against shoplifting
Dutch supermarkets Jumbo are taking action against shoplifting by using Ai technology to detect unusual behavior. These measures include increased camera surveillance and random checks at self-service checkouts. After passing the checks, customers have the opportunity to spin the “Jumbo Winwiel” and win products. The initiative aims to raise customer awareness on the topic of shoplifting and create a pleasant and safe shopping environment. Jumbo is committed to positioning itself as a customer-friendly supermarket and minimizing theft.
Ai technology detects unscanned goods
The American startup StopLift Checkout Vision Systems has developed ScanItAll technology that can detect and prevent shoplifting and employee theft in retail stores. ScanItAll uses artificial intelligence to analyze and match security video and POS data and can identify items that were not scanned at the self-checkout. ScanItAll can, for example, detect if someone doesn’t hold items right in front of the scanner, places unscanned goods in the cart, or covers the scanner while scanning the barcode.
Unified automatic checkout in the discount store
Shopreme is integrating self-checkout technologies into Aldi Nord stores in the Netherlands, including Scan & Go, self-service checkouts and exit terminals. The Scan & Go functionality has been integrated into the customer app to create an intuitive and efficient checkout experience. Customers can scan products with their smartphone while shopping and pay via payment options such as iDeal, debit card, credit card, Google Pay or Apple Pay. Age verification can also be completed quickly and efficiently via the app.
Concept store with pre-loved range
H&M has opened a new concept store in the characteristic SoHo neighborhood of New York located in Lower Manhattan, with a curated and trendy selection of women’s clothing. The store is equipped with smart mirrors and mobile checkouts. Smart mirrors in fitting rooms recognize customers’ products, including size and colour, and provide personalized recommendations. The store also works with RFID-enabled systems that allow for accurate inventory management. In its first “Pre-Loved” shop-in-shop, H&M will also offer trendy second-hand clothes completing the offer.
Smart mirrors for beauty experiences
The South Korean company Mirart has presented smart mirrors for hairdressers, clothing stores, opticians and beauty salons. Equipped with customized Ai beauty solutions, they allow individual customer care, the search for the desired style and its immediate implementation. From coloring to marketing, there are various features including Ar/Vr simulations, video views and shooting capabilities. Continuous coverage of all stages, from style discovery to customer service, improves the customer experience and fills waiting times with entertainment.
Engaging shopping experience for sporting goods
French sporting goods company Decathlon has launched a special app for Apple Vision Pro, Apple’s new virtual reality headset, which makes purchasing products more tangible. Instead of browsing the sporting goods selection the traditional way via a laptop or mobile device, the app allows customers to see and select their products in 3D. Additionally, the integration of 3D technology creates a more immersive shopping experience that allows customers to examine products more closely and takes their purchasing decisions to a new level.
Tags: Retail hunt business models
