Welcome to the store of the future, where IBM Corp., Microsoft, Cisco and a host of technology partners are spending billions on applications to capture the proverbial "moment of truth" when buying decision are actually made-and that's opening vibrant new in-store frontiers for marketers. Many of the innovations will debut in live demonstrations at the "X06 Store of the Future" to be unveiled at the National Retail Federation conference this week in New York.
"The advertising possibilities are legion," said Mark Campanella, global director-marketing at IBM, which is showcasing everything from Web-enabled personal-shopping assistants to so-dubbed intelligent shopping carts in X06. "The store today is just a lot of static marketing and atmospheric stuff on top of a lot of shelving. It's not a sense-and-respond type of environment."
Not so the store of the future, which provides a custom marketing environment and potentially greater return on investment. "Offering choice to the consumer is very different than offering eyeballs to advertisers at the highest bidder," he said. "At the end of the day it shouldn't be about who will pay the most, but what the consumer wants. And the consumers want defined choices." For example, a marketer of an arrabiata spaghetti sauce could reach out only to shoppers with a taste for the spicy.
This one-on-one element is also employed in Experticity's kiosk that allows a consumer to interact live via a video-enabled screen with an "expert" at a help desk, perhaps in another city. President-CEO Jeff Erwin said that instead of each retail store staffing an expert on say, printer ink, the retailer could have one expert at a call center handle questions from dozens of customers at a time. There's a marketing application here, too, with an operator pushing a promotion for Epson ink direct to the consumer on the kiosk screen.
Much of the new technology being showcased in X06 must wait for widespread adoption of RFID tags-for now relegated to the back-end of store operations for things like inventory replenishment and supply-chain management.
Industry experts agree it's going to have to wait until the average costs becomes negligible, down from a low of 7¢ per RFID tag today. Then there are the concerns of privacy advocates. And finally, the challenge of getting a host of technology companies to work together to make it easy for retailers to link and connect their various software and hardware.
"It was difficult to get them to play nice together," said Richard Russo, president-creative director at retail design firm Hybridia Design, which was the lead designer for the X06 store.
Advertising isn't the only motivation driving the adoption of new technology: Shoplifting costs retailers an estimated $31 billion annually and is a driver in the adoption of RFID. But there is a desire to enhance customer loyalty to a store brand and longstanding retailing strategies as old school as cross-selling.
Retailers are eager to adopt new technologies because of the opportunity to grab more than just slotting fees and trade dollars from manufacturers. "They already get trade dollars, but they are trying to go after the billions in consumer ad dollars, too," said Jon Hauptman, VP of Willard Bishop Consulting, a Chicago firm focused on the grocery industry.
"I can think of my company as a media company now," said Evan Anthony, VP-marketing and advertising at the nation's No. 2 grocery-store chain Kroger, when he announced the launch of an in-store broadcasting network in its 2,500 stores late last year.