When was the last time you had a completely stress free shopping trip? A time when you found everything you wanted, in the perfect size, in the perfect colour. No waiting in changing room queues and certainly no return trips, with the hope of a full refund. The growing number of empty retail shells on our high streets and shopping centres function as a cold reminder that times have changed for consumerism. In July this year, the proportion of empty UK shops reached a record 10.3%. Moreover, 2017 saw a 200% increase in US store closures, according to retail think-tank Fung Global Retail & Technology; beating the previous all-time high of 6,163 store closings that took place during the 2008 financial crisis.
Brick and mortar stores are no longer meeting the demands of the consumer, allowing e-commerce sales to soar past the dilapidated store front. In 2019, e-commerce sales worldwide amounted to 3.52 trillion US dollars and are projected to grow to 6.54 trillion US dollars in 2022. However, all is not lost for our old friend, the high street. Retailers are beginning to invest in and leverage their IP to help combat the pressures of the failing retail sector. Cue McKinsey & Co, the global management company who have ventured into the dark realms of brick & mortar retail, opening their first ever store, Modern Retail Collective, at the Mall of America, Minneapolis.
From the moment they enter, shoppers at Modern Retail Collective will encounter various opportunities to engage with technology- from virtually trying on products in augmented reality mirrors to scanning field communication tags to rapidly access product information from their phones. The non-profit venture is designed to investigate which technologies compel customers to enter a store, spend more and stay longer. Brands will use the space and regularly rotate, each bringing a new array of retail tech. The first group of retailers include ThirdLove, an app that allows women to find their optimum bra size; and Jeweller Kendra Scott, who will use technology to allow a customer to use different stones to assemble a personalised product and virtually try it on. The company’s investment into AI software in an attempt to revitalise the high street, is a great example of how investing in IP can benefit not only a business but an entire sector. Time will tell if this strategy is enough to coax the consumers out of their online-shopping dens and back into the realms of brick and mortar retail.
After each ‘retailer refresh’, McKinsey & Co will analyse key customer data collected to measure the impact of new technologies on store operations in order to better understand how retailers can successfully navigate the emerging retail-technology landscape. By using rich data such as customer opinion databases to better predict the popularity of products in stores, gross revenue and profitability could be greatly improved. The injection of tech into retail comes in response to 82% of US shoppers reporting that they use their smartphones to make purchasing decisions. Moreover, the majority of millennials say they prefer the online retail experience and avoid stores altogether where they can. But maybe it’s not all doom and gloom on the shop floor. There is no doubt that the retail experience that consumers are looking for has changed in the last decade, but there is also no reason that our favourite brands can’t keep up with our burning desire for both technology and convenience.
McKinsey aren’t the first to acknowledge the role of technology in the future of retail. High Street fashion giant, Topshop, has integrated AR (augmented reality) mirrors, so customers no longer need to get physically undressed to try on clothes. Many online platforms including Amazon, JD.com and Zalando, already utilise AI enhancements to help generate precise product search results and display virtual storefronts tailored to individual shoppers, based on their unique characteristics and preferences. We are excited to see that two of our IP100 companies have joined this retail revolution; Metail and Mallzee Insights.
Imagine having your own personal shopper, showing you outfits, getting your feedback, and tailoring entire outfits towards your style, without you having to move from the comfort of your dressing gown. Well, the future is here. Mallzee Insights provides product testing and in-depth analytics on pre-release products of all sizes. The app works like a retail tinder, consumers react to new products and their preferences are recorded, allowing retailers to make better buying decisions and improve budgeting overall. This will not only help improve gross margins and profitability, but the reduction in textile waste has an undeniably positive impact on sustainability. Mallzee Insights currently holds the world’s largest database of product opinions. Having such a data-rich and substantial database is hugely valuable to retail giants- significantly boosting Mallzee’s IP asset value.
Window shopping? Time consuming. Picking things up just to put them down? Not anymore. Hopping about the changing room trying to squeeze your legs into that outfit that fits the mannequin so perfectly? Never again. Retailers can now offer the convenience of the online shopping experience alongside the necessity of trying on clothes. Enter the virtual dressing room. Our IP100 veteran, Metail, uses AI to enable customers to ‘try on’ clothes virtually, allowing them to see how clothing looks on their exact body type. Metail’s algorithms amount to critical IP assets, in the form of trade secrets. With the AI-retail market only just finding its feet, Metail is already creating and developing IP assets that will be greatly sought after by competitors. By trying on clothes and giving feedback electronically, not only are shoppers more likely to buy, but just like the efforts of Mallzee Insights, stock budgeting errors can be minimised.
So, perhaps there is still life in the old dog yet. With the amalgamation of the sharpest AI technology and the institution that is the high street fashion brand, perhaps the high street will once again be seen as a go-to retail hub. There is no doubt that technology and e-commerce is now vital to hook the millennial consumer, it’s the way in which this will be integrated that is uncertain. Metail and Mallzee Insights serve as an exemplar of the new e-commerce industry, and perhaps it won’t be long before the high street regains its former glory, thanks to artificial intelligence.
Image source: DistilInfoRetail
Author: Samantha Main, Marketing Assistant
Tel: +44 (0)141 353 3011