Smart Carts and Smart Tags - How Technology Is Disrupting Retail

STEVE HENDERSHOT

Brick-and-mortar retail isn’t going away, but it is changing. The brands that emerge from this era of disruption will be those that learn how to leverage technology both to make the in-store experience more efficient and compelling and also integrate it with what’s offered online.

SIMON MOLNAR

It could be a case of if they don’t change the way they think and if they don’t innovate that they end up getting left behind. Because we’re seeing more and more and more retailers coming out with really innovative, new solutions, new customer experiences in ways that none of us had ever thought of before.

NARRATOR

The world is changing fast. And every day, project professionals are turning ideas into reality—delivering value to their organizations and society as a whole. On Projectified^®, we’ll help you stay on top of the trends and see what’s ahead for The Project Economy—and your career.

STEVE HENDERSHOT

This is Projectified^®. I’m Steve Hendershot.

For years, people thought about technology and retail stores as opposing forces: in one corner, your neighborhood brick-and-mortar shop, and in the other corner, the internet. But it turns out to be both/and: It’s the omnichannel shopper who has emerged as the focal point for retailers, according to McKinsey research. These are the customers who buy online but want to pick up their goods in a store—or vice versa. Between 60 and 70 percent of consumers have become omnichannel shoppers, and for brands, the new challenge is creating a customer experience that is both consistent and efficient across channels, and that infuses the in-store environment with the tech needed to make it happen. 

That means bold projects, and today we’ll meet a couple of the leaders behind such efforts. You heard in the intro from Simon Molnar, founder of Flagship, an Australian company that uses trackers attached to garment tags to produce insights into the products generating the greatest interest within a store. We’ll come back to Simon in our second segment. First, though, we’ll meet Saad Siddiqui, COO of Seattle retail technology startup Veeve, which uses cameras, sensors and cloud-based point-of-sale tech to enable a shopping experience that eliminates the checkout line.

MUSICAL TRANSITION

STEVE HENDERSHOT

What was the inspiration for Veeve? Was this sparked by a technological discovery, a market insight or both?

SAAD SIDDIQUI

Prior to Veeve, I spent time at Amazon, where I was responsible for new-country expansion. During that time, I was fortunate enough to be beta testing with a group of folks who were trialing out the Just Walk Out technology that Amazon was launching. There were a couple of other folks that were part of that same beta testing group, and they actually got together. It was fantastic from a tech perspective, from a customer experience perspective. You have cameras all over the ceilings; they’re able to tell what you’re picking up, what you’re putting back and allow you to shop seamlessly in a store. But they got to thinking that this is great for Amazon—Amazon has the resources—but what about existing retailers? How are they going to compete in this environment and with Amazon moving at pace and launching these new retail technologies? How are they going to maintain that level of competition, especially in the grocery world and in the physical store world? What if we developed similar tech, but encapsulated it within the form factor of a shopping cart and gave customers the access to actually shop all over the store, pick up items, add them to your cart, see them on a screen, see the full total that you will potentially end up paying at the end of your shopping journey?

STEVE HENDERSHOT

So you walked out of Amazon with a product idea to add digital tracking and checkout to a physical shopping cart and with some notion of who might want it. How did you then approach the development project in terms of getting feedback both from end users and from prospective customers?

SAAD SIDDIQUI

The retailer demand is essentially for an experience that allows them to service their customers in a much more seamless and frictionless manner when they’re shopping in-store. So that’s the fundamental premise here. The form factor is a function of you get direct feedback from the customer in terms of their preference on how they want to shop. So the way we approached actually establishing a product-market fit was where Veeve went out to very small retailers in the local Seattle market and offered this as a pilot experience not even to actually generate any revenue, but actually just test with customers. Allow customers to use it, have folks on site to help them understand how to use it, but then most importantly, get customer feedback and get direct from the customer’s mouth the preferences: what they like, what they don’t like about the product, why it’s easier or more difficult, what will it take for them to actually use the product?

STEVE HENDERSHOT

Would your dev team be on-site? Basically, what did that feedback process look like? And then, what did you hear, and how does Veeve look different as a result?

SAAD SIDDIQUI

So for us, it was to be on-site to offer the cart to customers, explain to them how to use it, and then as they were using it, observe and help them where they were running into issues using the cart itself. But obviously, since these pilots were for a beta product itself which was not fully baked out, was not fully stabilized, we needed dev support on hand in real time. And so we created mechanisms where myself, the CEO and the product manager would have our tech team sitting remotely, and if there were any technical issues, they’d be able to resolve those in real time.

But our focus was primarily on the user and the customer experience. Those are the sorts of things that really helped us improve the design, the aesthetics and the ergonomics, if you will, of the product itself. What you have here now through a smart cart is online access in a physical environment where there’s a touchscreen that’s 10 inches, 11 inches, and the customer at any moment in time can see what they’re adding, what they’re removing from their cart, as well as get all of their digital promotions and discounts for that store that they’re shopping in at the same time, on the cart, whenever they scan in a product. The beauty of this is that we’re fully integrated with the retailers’ back ends, in terms of their loyalty [programs], their pricing, their tax engines, their catalog. So all of that information is just like you have it when you’re shopping online on any other retailer—you get the same experience shopping on the cart in the store.

STEVE HENDERSHOT

There are a lot of risks to consider here, especially from the retailer—that some consumers might be overwhelmed at the sight of a Veeve smart cart, or that a smart cart could get bounced off of Wi-Fi and transactions could slip through the cracks, or just that consumers might buy less if they could see their running total. How did you manage all of that, both in terms of your own mitigations and also based on user feedback?

SAAD SIDDIQUI

We have a very established and tight feedback loop process, both from a technology as well as from an experience perspective. While customers are shopping in the stores, we’re able to track what’s going into the cart, what’s coming out of the cart, how are items getting scanned in, and that’s through telemetry and our ability to see the customer transactions and the sessions as they move through the store. Now, obviously, there’s no PII [personally identifiable information] data here because the customer is just logged in with their phone number, whether it’s a Safeway phone number or a Kroger phone number. So that’s how they’re getting all of their loyalty and their promotions and deals when they’re shopping on the cart.

We’re able to actually take all of that data that’s coming through the customer session itself, as well as the customer feedback. We bring that together in-house on a weekly basis, and we analyze that data. We analyze both the experience as well as the technology, the sort of issues in terms of where are the potential breakpoints or bugs or issues that customers could face, and how do we address those? And just as importantly, how do we continue to improve the usage and the experience itself? It’s specifically a weekly cadence, and we iteratively improve. Because we’re a startup and in most technology—if not all technology—companies, you have rolling sprints and rolling backlogs. That’s where we’re able to prioritize what are the key things that customers are telling us that they want improved, and what are the things from a technology and stability perspective that we want to improve on an iterative basis?

STEVE HENDERSHOT

You’re asking retailers to make a paradigm shift here, embracing Veeve as this fusion of shopping cart and checkout lane. How do you navigate that?

SAAD SIDDIQUI

We don’t think it’s actually a substantial shift from a retailer perspective because if you look across grocery stores, you can see more and more self-checkout stations rather than cash registers. So retailers are already moving toward that self-service technology and making those investments. We are just another form factor and [a] just as convenient, if not more convenient, way to shop where you could potentially, as you replace registers with self-checkout stations, you replace your regular shopping carts with smart carts. But the key here then is cost. We need to make sure that this technology is obviously state of the art, but also compelling enough and affordable enough for any retailer, large or small. The software can be as fancy and as complicated internally on the back end as we want, but in terms of the hardware and the peripherals, et cetera, those shouldn’t be prohibitive or custom-built to actually jack up the cost of actually implementing these.

STEVE HENDERSHOT

Now you’re beginning to scale up, which means the focus shifts to implementation projects. What are the keys to ensuring that this next phase is a success?

SAAD SIDDIQUI

For us, the core focus here is to create what we call a turnkey solution. This cannot be a complex implementation for any retailer or for any customer to use in stores, so our focus is one-day deployments. When the carts from our warehouse are shipped to this store location, when they land at the store, a store associate can turn them on, connect them to Wi-Fi, and they’re good to go. And post-deployment maintenance—the cart is so modular that there should never, ever be a reason to replace an entire cart. If there’s any part of the cart that’s malfunctioning, it can be very easily just replaced with a new part within 20 minutes. So those are the sort of things in terms of scale that we’ve thought through, and these pilots have helped us understand and realize that this needs to be a really easy, simple, consumer-facing technology just like your iPhone. When you get it for the first time and you turn it on and it walks you through a setup, that’s how you set up these carts, and they’re good to go.

STEVE HENDERSHOT

There are so many next-gen technologies working together to make this possible. What, to you, is the most exciting element of the tech or got you most excited as you were putting it all together?

SAAD SIDDIQUI

Just the limitless opportunities it presents to customers in a physical environment that is suddenly online. Just to give you an example, you now have a customer who’s shopping in-store with a 10-inch tablet in front of them. They’re online from the perspective of every time they add in a product, that shows up on their cart screen. The retailer now has the ability to know where the customer is in the store, what aisle, what shelf, what product went in, and based on that, you’re able to provide the customer with real-time deals or marketing or advertising. The real beauty of this is a customer at point of sale in a physical environment now is a captive audience for a retailer, and so the possibilities there are just limitless from an advertising perspective, from a promotion and sales perspective. It really is something that’s game-changing and revolutionizing for the physical store environment.

MUSICAL TRANSITION

STEVE HENDERSHOT

Veeve’s smart carts definitely look Space Age. If you’re shopping in the same aisle as one, you’re not going to miss it. But other bits of emerging retail tech are not as obvious to the consumer, such as the smart garment tags used by Sydney-based Flagship. Founder and CEO Simon Molnar grew up in retail—his parents are jewelers, and before his brother Nick founded the retail-focused fintech company Afterpay, the two took their parents’ jewelry business online. Now, Simon is leading Flagship and spoke with Projectified®’s Hannah LaBelle about the tech, which aims to give brick-and-mortar stores data on which products are attracting shoppers’ attention. This, in turn, helps staff make decisions about store layouts, merchandising and customers’ overall in-store experience.

MUSICAL TRANSITION

HANNAH LABELLE

Simon, tell me about Flagship. You’re working to give retailers this real-time data on products, like how long an item stays in a specific location on the shop floor or how often it’s taken to a fitting room and then purchased or put back. How does the tech work?

SIMON MOLNAR

We use a battery-less Bluetooth sticker that’s attached to the tag of the item. This sticker is essentially a tiny computer, which draws power from sensors that are installed in a store, which will then send a signal back to those sensors once that little, tiny computer is fully charged to tell us where that item is in the store. So what that means is anywhere that item moves in the store, it’s constantly being charged, constantly sending a signal and, in turn, gives us a huge amount of information based on its current location: any movement of the item, the length of time it spends in any part of the store. So we are really able to deep dive into that information to give retailers some really valuable insights.

We collect the data, we process the data, and then we provide that back to retailers in the form of a dashboard, but also in the form of suggested action items that the retailer has the option of implementing. I come from a data background, and I’ve learned that you can give people the most amazing data in the world, but if there isn’t someone on the other end of that data that can actually comprehend and make sense of it, then it’s wasted. So for us, the key is not only to give retailers the raw data but also the insight into what to do with the data.

HANNAH LABELLE

So how does this data benefit in-store teams and the companies themselves? And how does the tech and data impact a customer’s experience?

SIMON MOLNAR

The benefit varies based on the user of our technology. So for the in-store teams, they no longer need to worry about a lot of their manual, time-consuming tasks. They don’t need to worry about stock counting. They don’t need to security-tag their items. For the buyers, for the merchandisers, for the heads of retail, for general managers, they now have a tool to help them make better decisions. So the big thing for us is to create those operational efficiencies; remove manual, mundane tasks; and ultimately provide, in turn, a better customer experience.

There’s nothing worse for a customer than when they go into a store, they want an item, it’s not in stock. The staff member in the store tells them that that item in the size they’re after is available in another store, sending the customer to that store, and then when they get there, that item is no longer there. It’s that visibility, but also that confidence in knowing that what they are saying is actually accurate, and the information provided to the customer is accurate.

HANNAH LABELLE

You’re running a pilot in the Edit Collection store, which was created by the Australian Fashion Council, Afterpay and Vicinity Centres. It’s hosting different designers for a few months at a time to sell their clothing in a physical store, and it features a couple of different technologies, including the Flagship tags as well as smart mirrors. How are staff and customers responding to the in-store tech?

SIMON MOLNAR

For the customer, they get really excited by something new and this new technology. For us, it’s not about creating new technology for the sake of creating new technology. We are a technology created by retail for retail, and we created this technology because we saw that this was a problem that we, as retailers, were having. We weren’t coming in trying to solve for something that we thought was a problem. We’re solving for something that we knew was a problem, and when you provide something that adds material value to a customer, they tend to become highly engaged.

But where we’re seeing the most excitement is from the staff in the store. The more I speak to them and the more I say to them, “We now have this tool that allows you to do X,” they get so excited by the fact that they no longer have to waste so much time and that they can do what they really enjoy doing and that’s servicing a customer.

HANNAH LABELLE

As more tech comes into stores, there is a security and privacy component. Edit Collection has these smart tags as well as smart mirrors in the fitting rooms, so how is the team handling that aspect?

SIMON MOLNAR

The smart mirrors have transitioned to be smart screens. They’re not mirrors, per se. They’re a customer aid tool, so there’s no camera, there’s no privacy issues from that perspective. If anything, it adds to the privacy because customers no longer need to do that awkward, kind of half-dressed poke out of the change room asking for a different size. They’re able to request items and interact with staff within the privacy of their fitting room. So from that perspective, it actually aids the customer experience. And the great thing about our technology more broadly is that we track items, not people. So we don’t care about what the individual does; we care about what the item does.

HANNAH LABELLE

How are you gathering feedback from staff members and customers? And how will that inform future launches?

SIMON MOLNAR

A lot of it is anecdotal, but the great thing for us as well is we get the data points from the usage. We can see when the staff are interacting with the technology, when the customers are interacting with the technology. So we can use that to kind of form our own KPIs, to understand how we’re performing. And it is one of our KPIs to understand how much are people actually using our service, because if we are providing this technology and no one’s using it, then it’s wasted. So, that usage becomes our metric of success.

But also, by speaking to them, by going into the store, what I noticed as a retailer was that you have so many people trying to innovate e-commerce and bricks and mortar gets neglected. A lot of people shy away from bricks-and-mortar tech. They move toward digital tech because digital is easy. It’s easy to implement. It’s easy to deploy. It’s easy to just drop a line of code on a website, and you’re up and running. Whereas for us, we have the physical installation component. We have to physically have someone in the store setting it up. So that for some people that might be a barrier and that might be something that they see as a hindrance to scale, but for us, we see that as an opportunity to interact with the people that we’re trying to serve. And by interacting with them, we’re able to really understand what they want, what their pain points are, and by understanding their pain points, we can work out how to create a technology to best serve them.

MUSICAL TRANSITION

STEVE HENDERSHOT

Just a few years ago, the talk was that shopping in person was under fire from technology. Now, however, it’s technology that’s poised to bring brick-and-mortar stores into the new era of retail, thanks to innovative projects that are changing what’s possible when we shop.

NARRATOR

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