Wearables: The Impact on Retail

July 20th, 2015 by Belinda McConnell | Mobile and Web

The wearables market is fast maturing with new entrants coming in, improvements in products available, and customer adoption on the rise. Forward-thinking retailers should think about incorporating this change in consumer behavior now and align their customer experience strategy so they are positioned to meet the needs of quickly evolving customer expectations.

Wearable adoption by consumers is opening up new and innovative ways for retailers to improve customer experience. In addition, the unique features of these devices (e.g. hands-free operations) make them great candidates for applications in the retail operations space. We envision two big impacts from wearables on the retail industry: improving the customer experience and transforming retail operations.

Improving the Customer Experience

In response to the popularity of wearables among key consumer groups, retailers are starting to place a greater emphasis on leveraging wearables to improve the customer experience.

1. In-Store Shopping Experience
One of the more impactful changes driven by wearable devices will be improvement to the in-store shopping experience. The potential of the smart watch has opened up a new spectrum of applications, which directly impacts retail—starting with payment. Leading thinkers in the industry are envisioning an environment where a customer can walk into a store, pick up what they want and simply walk out, without the need for checking out, facilitated by technologies such as RFID and mobile payments.

This may result in a future hands-free shopping experience in which the entire journey—from browse to buy—is completed through a wearable device. This means women are no longer digging through their purses to find their wallets or phones and men can leave theirs tucked away in pockets or briefcases. These small time savers could eventually create an expectation that anything from boarding a plane to buying a cup of coffee should be done with a tap on the wrist. When a customer’s favorite wearable app is not available, the corresponding experience will seem like grave inconvenience, as consumers grow to demand immediate and efficient experiences as the status quo.

A slightly less mature, but fast upcoming area of impact will be driven by line-of-sight wearables, which create the opportunity for retailers to provide customers with an improved visual in-store experience. Some potential initial applications are highlighting on-sale or popular products and providing navigation capabilities for customers looking for a product within a store.

2. Personalization and Real-time Marketing
Consumer’s wide-scale adoption of wearables has the potential to disrupt visual advertising, which could evolve from static to personalized messaging aimed at drawing higher foot traffic to retail stores.

Personalized marketing could be enhanced through visual messaging or targeted offers and coupons based on the data obtained from consumer wearable devices. The simplest application of real-time marketing will likely be to notify customers of ongoing relevant promotions on their wearable devices as they walk near or into a store.

Dynamic messaging could begin to utilize available data such as customer location within the store, products in line-of-sight, visually displayed barcodes and the like, to display customized messages and offers to shoppers.

Retailers are also experimenting with technology that allows them to determine customers’ profile information or purchase history by synchronizing with their wearable gadgets and then displaying customized messages based on their vicinity to visual displays.

Improvements in BLE wireless technology may allow retailers to synchronize with wearable devices and monitor a customer’s location within a store. Wearables open up a new frontier for valuable data collection that retailers can use for continuous customer service improvements.

Transforming Retail Operations

Judging from pilot rollouts of wearable technologies by large retailers, improvement in retail operations is taking a back seat to customer experience, but it still has very useful applications. Wearable technology is projected to drive potential operational savings of $1B per year by 2017 (Rivera, 2013). Much like how Fortune 500 companies have embraced enterprise mobile apps, wearables could present the next big enterprise opportunity in the retail industry.

As wearables become more robust, and specialized technology is developed for enterprise applications, the potential to transform operations across the value chain will increase significantly. This will spur adoption by enterprises, which will seek to gain a competitive edge by streamlining internal operations.

1. Streamlining Communication and In-store Collaboration
A crucial factor to run an efficient retail store is seamless communication among employees. Wearables are being used to streamline the way employees communicate within and beyond the store. One large retailer is utilizing a wearable computer that enables in-store and cross-store communication. The device also facilitates location triangulation of employees. In addition to providing a simple, hands-free communication medium, data collected from the device can be used for timework studies and better understanding employee interaction patterns.

2. Store Layout and Backend Efficiency
Another crucial factor for retail store efficiency is the effective use of space, such that customers can easily navigate the store and locate the products they are looking for.

Line-of-sight wearables or virtual reality devices have the potential to revolutionize layout planning, enabling planners to visualize merchandise set-up and optimize space utilization to maximize sales per square foot of selling space—for instance, a user could “see” how a showroom layout will look based on a blueprint uploaded into the device. With the increasing maturity of virtual reality devices, wearable devices may become the new normal for retailers to visualize store layouts. Store associates could also use wearable technology to efficiently locate products for customers in large stores.

On the backend, wearables provide employees with hands-free access to information such as assigned tasks and completed activities, so that they can be more efficient and planning can be optimized. Wearables can also provide easy access to interactive step-by step instructions for task completion and connectivity with remote team members and help-desks for support, leading to continuous improvement in back office and warehouse operations.

What retailers can do now

The wearables market is fast maturing with new entrants coming in, improvements in products available, and customer adoption on the rise. Forward-thinking retailers should think about incorporating this change in consumer behavior now and align their customer experience strategy so they are positioned to meet the needs of quickly evolving customer expectations.

As with any disruptive technology, the key to success is to fail fast, learn quickly, and continue to optimize. Investing in pilot programs and proof of concepts to test specific use-cases for the customer and the enterprise will help retailers gain valuable insights into the impact of wearables on their end user experience, their business processes, and the ability of their own ecosystem to integrate these technologies and what they’ll need to scale up. Retailers who start thinking about wearable technology now could capture market share from their competitors and drive large operational efficiencies in the near future.

Belinda McConnell is a Principal, Deloitte Consulting LLP, in Deloitte Digital’s commerce practice. This post is excerpted from the whitepaper, Wearables in Retail, led by McConnell and Kevin Hogan, Senior Manager, Deloitte Consulting LLP, and co-written by Laura Foti, Business Technology Analyst, Deloitte Consulting LLP and Gunangad Chowdhury, Senior Consultant, Deloitte Consulting LLP. For the full whitepaper, please contact bmcconnell@deloitte.com or kehogan@deloitte.com

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