Bringing together the virtual and the real seems to be stuff of science fiction just a few years ago, but innovation in various fields have shown us that the future is indeed here, that we do have the capability to create and utilize technology in a way that was not possible just ten years ago. At the moment, nobody needs innovation more than traditional brick and mortar stores. Pressed from many sides, whether that be increasing consumer demands, decreasing profits, and the threat of online commerce, these traditional retailers need to find new ways to connect with their consumers.
disappointingly enough, not one of these ships has been invented
One retailer who seems to be in the right track in terms of innovation is Tesco. Acknowledged as the third largest retailer in the world, Tesco does most of its business in the UK, but has a presence in fourteen different countries. As large as they are, Tesco are not immune to the flagging fortune of the traditional brick and mortar store, if anything, their immense size makes them even more vulnerable to the effects brought by online shopping. Tesco found its rise to success by correctly managing margins, and always obsessing about being efficient.
Their first innovation is their effort in augmented reality, where consumers can actually create a three-dimensional model of the product they want to purchase and see how it mesh to the home. It is specifically used for Tesco’s online wing, and it becomes a point of differentiation for their website. The presence of something new becomes very intriguing for consumers, and it successfully translates Tesco’s strength as a brick and mortar store into an online setting.
this video feels both retro and futuristic at the same time
Another interesting concept is Tesco’s breakthrough in South Korea. In their effort to get a larger market share, Tesco started displaying ads of their shelves in South Korean train stations. Consumers can actually scan their desired item, purchase it right there, and get the products delivered to their homes. Since this type of innovation is unparalleled in the retail, Tesco enjoys a significant media attention, which it can utilize to further push its products.
waiting here makes me want to buy steak
Finding the meeting place of the virtual and the physical is a key development that is needed to grow retail into a new business model that consumers will be attracted to. 3D models are applied in various online shopping retailers, but not in the way that Tesco has envision it. Research has shown that this lowers the consumers perceived risk (Shim and Lee 2011), and lessens the barrier for the consumer to make the purchase. It has also been suggested that technologies such as 3D representation creates similar experiences that consumers might have in a traditional store, therefore blurring the boundaries of online and traditional setting (Dahan and Srinivasan 2000).
While Tesco is not out of the woods just yet, and it remains to be seen whether these innovations will be popular among consumers or not, signs are looking promising. Moves that might be audacious and impossible are needed to generate interest and still be relevant to the consumer.
References:
Dahan, E. and Srinivasan, V. 2000. The predictive power of internet-based product concept testing using visual depiction and animation. Journal of Retailing 17(2):99-109. Emerald. http://emerald.com (accessed March 29, 2012).
Shim, S.I. and Y. Lee. 2011. Consumers’ perceived risk reduction by 3D virtual model. International Journal of Retail and Distribution Management 39(12): 945-959. Emerald. http://emerald.com (accessed March 29, 2012).
The combination of innovation and technology used by Tesco creates an interesting environment for online and bricks and mortar shoppers, especially when it comes to grocery shoppy. I know many people who now do their grocery shopping online for the convenience, albeit with limitations.
ReplyDeleteEach person I know that does their grocery shopping online only buys grocery type items or pre-packaged. They won't purchase things like fruit and vegetables or meat because as they say, they don't know what type of quality they are going to get.
This is my exact reasoning for preferring bricks and mortar over the increasingly popular online shopping. I have been into the store, I have selected the item and know what I am getting when they package it up and I take it home.
Online shopping opens the consumer up to so many risks that they may or may not be aware of and often return policies are so different to that of stores. What if the dress you receive is completely different to that of what you added to the shopping cart one Tuesday night during an online shopping binge? Not only did you wait two weeks for the damn thing to arrive, it is not the right size, a different colour to the website and the embelishments are tacky and garrish rather than the sophisticated look they gave on your glowing screen? If you were in a store, you just wouldn't buy it. But now you are more often than not stuck with the item or have to work out a way to post it back to the supplier and sort out a refund or exchange after reading a lengthy and hard to understand returns policy on the website (if you can even find it again!).
It is obvious that retailers need to look at ways to be innovative and use technology to their advantage if they are hoping to stay afloat in these changing retail times. Maybe theyr could take a leaf out of Tesco's book and come up with some enticing ways to engage their customers.
I think there are some really good points that you've raised there Erika. First, I truly agree that not everything can be sold in an online environment, but it has to be said that the kind of products that can be sold online is always expanding, and e-retailers are trying to find ways that can describe the product better, and help push consumers to make that decision to buy.
ReplyDeleteInnovation is a tricky business, and as much as we try, probably more than half of the things that we put out there might not take off. Which is why these things that Tesco are trying out are quite impressive efforts.
But imagine it from the e-retailers point of view as well, as you've mentioned, consumers are so tailored to purchase things in a certain way, there are a lot of hurdles that they have to go through in order to entice customers. But because of this, I believe that they have a higher culture of innovation. This spirit is one that brick and mortar need to reclaim, because if they only do what they've always been doing, then it's just a matter of time until e-retailers overtake their business.