Department store Neiman Marcus is claiming a stake of the $25bn Hudson Yards development opening in lower Manhattan in NYC this week with a megastore that merges traditional and omnichannel retail.
The space, which takes up five out of seven floors of the retail complex, is the retailer’s latest play at engaging with a new luxury consumer that is not only seeking products, but experiences and education alongside.
On the lower floor, for example, the retailer is hosting a kitchen for live demonstrations, while Neiman Marcus Live is a space on the middle floor that can hold up to 100 people for events like talks and Q&As with fashion designers and industry pioneers. The store also features a bar, named Stanley, which overlooks the Thomas Heatherwick-designed Vessel structure, a larger-than-life center piece for the Hudson Yards complex.
Technology is being blended into the space in order to give the luxury customer a one-to-one, tailored interaction with sales staff.
The Current Global’s CTO, Scott Emmons, who is the former head of the Neiman Marcus iLab, and was responsible for the technology execution in the new store before his departure, said: “We applied creative approaches and partnerships so that the consumer-facing technology was both useful to the shopper, and fit naturally into a very luxurious retail environment.”
This includes a smart fitting room where customers can ‘check in’ upon entering, which will then act as a communication tool between shopper and sales associate. The customer can request new items, different sizing and even signal they are ready to check out through a personal screen, which is then communicated to the associate’s mobile POS system.
The fitting room experience was designed to easily be updated with new capabilities in the future, such as self-checkout or recommendation technologies, as well as enhance the ever-important role of the associate.
“Technology in this instance, is being used to not only deliver an optimal customer experience but act as a digital exoskeleton to supercharge the capabilities of the sales associates,” Emmons added.
It’s for this reason he believes this store is an example of what retail needs to look like in the future. “New York is one of the toughest places in the world to be a retailer and stand out from very capable competitors. Technology is not the only answer but when combined with the visual aspects, the right merchandise, experiential aspects and so forth, it can put you over the top.”
“This is how we think about things at the Current Global – removing technology from its vacuum and into the wider context of creative innovation in order to meet pressing consumer demands. At the end of the day, traditional retail must be weaved together with modern tech to enable customers to be seen and treated like individuals, and not market segments. Technology for the sake of it will never respond to basic human needs of having emotional connections when purchasing luxury.
“At a time when so many department stores are failing, what Neiman Marcus has pulled off is an inspiring example of what luxury retail should be. It’s a combination of great experience, great staffing, great environment and the right tech.”
How are you thinking about retail innovation? We’re all about finding you the perfect partners to do so. The Current Global is a consultancy transforming how fashion, beauty and consumer retail brands intersect with technology. We deliver innovative integrations and experiences, powered by a network of top technologies and startups. Get in touch to learn more.
Alibaba Group’s president J Michael Evans is very clear on the differences between the Chinese retailer and arguably its biggest competitor, Amazon, as outlined at NRF’s Big Show in New York.
The biggest differentiator is the way in which it operates as a marketplace, and not a retailer, he says. This is an important distinction because it means the group does not compete with brands, but rather helps them better connect directly to the consumer by handling logistics and sharing data. At present, there are over 10 million sellers on the platform, from brands and retailers to SMEs (smaller and medium-sized companies).
Secondly is Alibaba’s impressive scale: it has 600 million consumers and delivers 70 million packages a day, while its last Single’s Day sale sold over $31 billion in product. The company also has the world’s biggest IPO in history at $25 billion.
Clientele is also predominantly younger than its American counterpart, with 80% of its consumers being under the age of 35, while 40% are younger than 25. This has a strong influence in how Alibaba creates experiences that merge digital and physical, with mobile behavior always being front of mind.
The last difference, Evans emphasises is that the company is building bridges between its online business and the offline market, particularly in China through its New Retail concept. “The future of retail is all retail,” he says, and how to integrate it all properly. The concept is being implemented across eight different categories and sees the entire digitisation of the retail value chain, for the benefit of both the merchant and the consumer. The consumer, he says, is easier to please because they don’t care if they’re online or offline – they just want to shop. The merchant piece is more complicated however, because it involves many factors that need to be better linked together, such as inventory, payments and fulfilment. The concept can be best seen at play at Hema grocery stores in China, which include technologies such as facial recognition and dynamic pricing.
During the conversation, Evans also touched on advice for brands or retailers who want to enter China. “The market requires patience,” he explains, saying that its growing middle class, largely led by the young consumer, likes understanding what a brand is selling and whether it fits their lifestyle. Simply coming into the country and wanting to sell product quickly will not work, he says. “If you see China as long term, with the largest consumer group in the world, then this is a great market for you.”
How are you thinking about retail innovation? We’re all about finding you the perfect partners to do so. TheCurrent Global is a consultancy transforming how fashion, beauty and consumer retail brands intersect with technology. We deliver innovative integrations and experiences, powered by a network of top technologies and startups. Get in touch to learn more.
Chanel’s newly-opened flagship in Paris will serve as a testing ground for the label’s digital initiatives, aiming to create an increasingly omnichannel retail experience.
This is part of an innovation partnership with Farfetch announced earlier this year, which will see the luxury brand develop new clienteling tools both online and in-store. Called Augmented Retail, the vision will use data and other digital capabilities to create a personalized shopping experience, according to Farfetch founder and CEO José Neves.
Speaking on the partnership in February, he said:“It is truly an honour to be partnering with Chanel to accelerate the development of technology-driven initiatives which will ensure they remain at the forefront of retail excellence and elevate the already unparalleled level of luxury experience for its clients that Chanel is renowned for.”
Among the digital features set to be rolled out over the next six months is the launch of a dedicated Chanel app, which will focus on giving its most loyal shoppers more access to the brand, as well as a more tailored shopping experience.
Beyond tech enhancements, the five-storey space has a heavy focus on its VIP customers, with the two top floors dedicated to exclusive experiences, such as enjoying private meals and even taking a shower.
Luxury brands and retailers are increasingly dedicating shopfloor space to providing its most engaged customers with experiences that go beyond shopping. Earlier this year, online retailer Matchesfashion.com opened its first physical space at a townhouse in London, featuring floors with the sole purpose of hosting events such as book signings, podcast recordings, exhibitions and exercise classes.
How are you thinking about retail innovation? We’re all about finding you the perfect partners to do so. TheCurrent is a consultancy transforming how fashion, beauty and consumer retail brands intersect with technology. We deliver innovative integrations and experiences, powered by a network of top technologies and startups. Get in touch to learn more.
Chinese e-commerce giant Alibaba has partnered with Guess to pilot an artificial intelligence-enabled store of the future concept, where the technology will improve and further personalize the shopping experience.
Located on the campus grounds of the Hong Kong Polytechnic University for one weekend in July, the concept store is showcasing Alibaba’s FashionAI technology that is built around the e-commerce platform Taobao.
“By partnering with Alibaba, a dominant technology leader, we are changing the retail experience as our customers also evolve,” said José Blanco, CEO of Greater China for Guess. “It is important that we continuously invest in new technology and platforms. This entire project came together in just five months thanks to a strong partnership between our two companies.”
Upon entering the store, users can check in with their Taobao QR codes or via facial recognition. All items are RFID-enabled, and when picked up, show up in a smart mirror. The mirror also suggests outfits to complete the look either based on the user’s previous purchases or entirely new items, while directing shoppers to where such suggested items can be found in the store.
Shoppers can also use the smart mirrors to add items they would like to try on to a virtual shopping cart, while staff populate the fitting room with their choices. When entering the fitting room, shoppers have their Taobao code scanned, which triggers a dedicated smart mirror. Interestingly if shoppers cannot find what they are looking for at the Guess-branded store, they can add clothing from other Taobao virtual stores via tablets, thus shopping cross-brand. To complete purchase, they must use the Taobao virtual shopping cart.
The store also works as an opportunity for Alibaba to refine the FashionAI concept, while better understanding how the resulting data can help brands be smarter about ordering and maintaining inventory.
“Guess and Alibaba share the same vision to understand customer behaviors through technologies, ” said Zhuoran Zhuang, vice president of the Alibaba Group. “With Guess’ retail expertise, we are able to train and refine our FashionAI system, and marry technology with fashion in a way that’s never been done before. We are looking forward to deepening our partnership to innovate personalized services offered in retail shops.”
E-commerce brands are increasingly investigating how the technology that they have refined online can be leveraged in the brick and mortar experience to give demanding consumers the same level of personalized service. In April 2017, Farfetch revealed its store of the future concept, which we delved into in further detail with the project’s managing director Sandrine Deveaux for TheCurrent Innovators podcast in June. The retailer has since announced pilot programmes at Browns in London and Thom Browne in NYC, as well as a long-term partnership with Chanel.
Alibaba is trialling a ‘happiness meter’ in its new Futuremart store at its Hangzhou, China HQ, which gives shoppers discounts depending on their mood.
The feature works with the facial recognition payment technology the retail giant has been developing over the past couple of years at participating retailers.
Upon entering the store, customers must check in by both having their faces read, and scanning a QR code with their Alipay, Taobao or Tmall apps, to allow them to shop. Upon leaving, they then have their faces scanned one more time, which in turn will use the “Happy Go” feature to reward discounts for those who are smiling.
Alibaba has been making strides in developing consumer-facing facial recognition technology, famously launching its first smile-to-pay feature at a KFC restaurant in the same Chinese city in 2017.
The strategy also involves major investments in two out of the three facial recognition startups in China, all of which are valued at over $1 billion. This month, it led a $600 million investment round on SenseTime, a Hong Kong-based company whose software is used by businesses, and SNOW, a popular Snapchat-type of app that uses SenseTime to power augmented reality visuals. Its most important client however is the Chinese government, which deploys the technology in public spaces and compares ‘live’ faces against an existing database.
As noted earlier this month, Asia has leapfrogged the West in terms of technologically-enhanced retail experiences, partly due to the Asian consumer’s ease of adoption of technologies, particularly in China. In the US, Amazon Go’s just-walk-out technology was initially met with some skepticism, noted during this year’s Shoptalk by Gianna Puerini, VP of Amazon Go, who said consumers are having to learn the behavior of not having a traditional checkout experience.
As pilot concepts develop both in the East and West, it will be interesting to watch this space to see which will eventually be deployed at mass scale in order to enhance the physical experience.
US retailer Fred Segal has partnered with Mastercard to open an interactive Sunset Strip-themed pop-up shop in Los Angeles, which includes a shoppable window to allow customers to shop anytime, day or night.
The immersive experience aims to capture the history of the Sunset Strip and offer stories, insights and memories from influential local minds. It has been dubbed a “Rock ‘n Roll Holy Land” and blends a vintage shopping experience with digital technology.
The shoppable window enables shoppers to interact with merchandise from MadeWorn, an LA based brand specializing in American craftsmanship. Visitors can place items – such as merchandise from bands including KISS and Def Leppard – in their cart and make purchases directly from their phones using a unique link that is sent to them by text. Purchases are then delivered directly to their homes.
In store, shoppers are able to shop from a carefully curated selection of products from historic neon signs to photographs and other vintage treasures. Over 300 vintage and custom garments are also available to shop in time for the music festival season.
The store is the first in a series of activations blending interactive and in store shopping that Mastercard will collaborate with Fred Segal on. The aim of the partnership is to deliver an experiential environment where connected devices and digital technology bring a seamless, customizable experience to consumers.
“Fred Segal is a retailer known for offering its customers an innovative and differentiated shopping experience. It makes them an ideal collaborator to bring to life the latest in experiential retail technology, like our shoppable store front windows,” says Sherri Haymond, executive vice president of digital partnerships at Mastercard.
She continues: “Today, people want to step into store and do more than just shop; they want it to be a destination that seamlessly blends the digital technology that is a core part of their day to day life with their physical environment.”
Mastercard is additionally developing different ways to enable interactive shopping experiences through brand partnerships. For instance, it is currently working with Snapchat to offer shopping capabilities to their cardholders by connecting Snapcodes directly to retail moments.
Zara is set to launch an AR experience that will enable in-store customers to hold their phones up and see models come to life on their screens. Launching on April 18, the feature will be available on Zara’s shopping app and be triggered when shoppers are located at one of its 120 flagships globally.
Pictures released by the retailer show that in-store AR prompts will be featured on window and mannequin displays, encouraging shoppers to hold their phones up with phrases such as “Shop the Look”. The functionality will also allow customers at home to hover their phones over Zara delivery packages to reveal visuals.
The initiative is part of a large drive to place Zara at the heart of the digital revolution in retail. In January, the retailer’s owner, Inditex, revealed its future-facing plan to tackle consumers’ ever-changing demands under a “four pillars of retail” strategy, one of which is focused on technology and enabling consumers to move seamlessly across platforms.
This preceded the launch of Zara’s tech-enabled pop-up in London, as well as the announcement that the retailer will start using automated kiosks in-store and robots behind the scenes in order to accelerate the click & collect process.
Chanel and Farfetch have signed a multiyear innovation partnership that will see the companies collaborate to develop a series of digital initiatives in-store and online.
The companies have been working together for several months on merging Farfetch’s expertise in digital innovation with Chanel’s expertise in luxury retailing to create enhanced customer experiences in this Store of the Future bid.
José Neves, founder and CEO of Farfetch, calls the company’s future vision “Augmented Retail”, in which the physical boutique experience and the advantages of online and digital competitor come together. Speaking of the Chanel partnership, he says: “It is truly an honour to be partnering with Chanel to accelerate the development of technology-driven initiatives which will ensure they remain at the forefront of retail excellence and elevate the already unparalleled level of luxury experience for its clients that Chanel is renowned for.”
The vision provides in-store experiences that are personalized to the customer with the use of data and other digital initiatives. Farfetch’s launch of its Store of the Future division in early 2017 promised to enable the “offline cookie” for retailers, by connecting customers in the physical space with data relevant to their own behaviors thanks to a universal login system. It has been working in beta with Browns East since, and is soon to launch in Thom Browne in New York also.
With this partnership, Chanel will customise their own version of the Farfetch Store of the Future operating system, the specific terms and details of which are undisclosed. The first example of it will launch in a France-based boutique later in 2018.
Bruno Pavlovsky, Chanel’s fashion president, says: “We are very enthusiastic about this Innovation Partnership and look forward to implementing the first steps of our projects together. We want to offer our clients the opportunity to further experience the brand values and to feel something which is authentic and unique to Chanel. We strongly believe that digital will never replace the feeling of being in a fitting room and trying on a Chanel piece. We are confident that Farfetch’s innovative technology will help us develop an even more outstanding customer journey by combining a great e-service offering with a genuine Chanel boutique experience.”
As part of the partnership Chanel has invested in Farfetch, joining its existing list of shareholders.
H&M’s failure to adapt to the digital age is beginning to show, as its dismal results for the year ending November 2017, announced last week, highlighted.
Once the darling in the fast fashion world, the company at large just posted its biggest profit drop in six years – down 14% in the year ending November 2017, to 20.6 billion SEK ($2.6 billion).
While the group is made up of eight (soon to be nine) brands, including COS, & Other Stories, Monki and more, the H&M brand itself still contributes circa 90% of revenues. Getting this original part of the business right, then, is crucial for the long-term health of the company.
“The fashion industry is changing fast. At the heart of the transformation is digitalisation and it is driving the need to transform and rethink faster and faster,” said CEO Karl-Johan Persson in an investor call earlier this year.
Although the brand has attempted to catch-up with its competition by shifting to online (it now offers e-commerce in 43 out of its 69 markets), deep-rooted supply chain issues have made integration with its offline stores difficult. Last year Goldman Sachs reported that H&M had lead times twice as long as its biggest competitor, Inditex, which owns Zara. It’s also facing ever-stiffer competition from the likes of ASOS, Boohoo.com, Zalando and more.
Add to that the fact it has just announced that while it is opening 390 new stores this year, it is closing 170, resulting in 220 net new; a dramatic fall from it’s previous standing. All of that left the company’s stock price at its lowest in a decade earlier this month.
In a bid to update and reassure investors on its strategy for recovery, the company hosted its first Capital Markets Day in Stockholm yesterday. Speaking to the audience, Persson explained both the company’s failings and its understanding of the changing retail and consumer landscape.
“We know the industry is undergoing a huge shift – the catalyst for this transformation is technology. It’s not just one technology, but a set that includes artificial intelligence (AI), augmented reality (AR), robotics and more,” he said. “There are changing consumer behaviours as a result – they are expecting more and more. They expect a more tailored offering in how we set up our stores, in how we communicate with [them]. They want a hassle free shopping experience, and the ability to shop anywhere and anytime. And they want even better designs at higher quality and better prices.”
He added: “We know what our mistakes are, and how to improve them.” At the heart of this – in addition to fixing issues around the assortment and excess inventory – is a bid to make the shopping experience both online and offline, more inspiring, relevant and convenient.
A big focus at the core of H&M’s announced plans is a focus on reducing friction. Leading this charge is investment in three new automation warehouses that will mean next-day delivery for 90% of the European population over the next 12 months.
Delivery anytime, anywhere is an important demand from always-on customers, Daniel Claesson, head of business development at H&M, explained. The company next aims to launch same-day delivery to key cities in Europe next year.
It has also recently introduced free shipping and returns to its loyalty customers, or Club Members. On top of that, from a convenience perspective, comes a new option to choose specific timeslots for when deliveries will arrive, as well as to opt to return in store.
The company is also upgrading its payments capability, thinking about local preferences to make it easier to pay both in-store and online relevant to the market. One example is how it recently introduced a ‘Buy now, pay later’ option online in eight markets, with plans to roll it out further to new territories, as well as in-store, ahead.
As part of its focus on improving efficiencies in its supply chain, H&M is particularly driving visibility and thus accuracy around stock. By next year, it expects 80% of its stores to be powered by RFID. In addition, it’s in the process of upgrading eight of its most mature online markets to a new platform that will enable better integration. All of its online markets will be on the new platform a year from now.
Off the back of that, it’s able to offer all manner of new discovery and easy-shopping options for customers. Find a Store, for instance, shows them whether an online item is in stock at a physical store nearby. Scan and Buy, meanwhile, allows the customer to scan an in-store label and find out its availability beyond that store – both online and offline.
The team already offers personalized recommendations in the online store, and will now be bringing that into the physical store too, also thanks to RFID. “In-store mode” in its app enables shoppers to explore product suited to them and their preferences in that particular store, in real-time. The brand has also launched visual search, enabling users to search via images in its app.
In addition, the store experience itself is due to get an overhaul in a bid to enable more emotional connections with consumers, Claesson said. The team is already testing the idea of a flagship of the future, with numerous “add-on services”, as a result. It intends to further learn from these in 2018 and then scale the project up in 2019. The details of what this looks like were not yet revealed.
Relevancy and personalization
“Five billion visits and 800 million transactions – that is an asset in a data-driven world,” Claesson remarked in relation to the company’s focus on advanced analytics and AI.
That capability will bring value to everything from product development, to all levels of the supply chain and to the customer experience, he explained. One of the key failures for the brand in 2017 surrounded issues in the assortment and its allocation – through data, or its quantification allocation process, the team will place more relevant product in each and every store. This is in pilot stage in two stores already.
Brands need to be local and personalized, Claesson highlighted. For brick-and-mortar, this means curated assortments relevant to each location, responding to granular customer needs. “Personalization is about turning our store, into your store,” he said. Advanced analytics is what makes a true one-to-one experience possible, he added.
The brand is also making strides with its digital communications – last year it tested personalized emails, targeted offers and push notifications. “[Eventually], the customer experience will be personalized in everything, from presentation to checkout and delivery options,” Claesson said.