#SFSNYC VIDEO: Smartphones Will Make the Connected Store a Reality

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Left to right: Storyline Development principal Evan Neufeuld and Estimote co-founder and SVP Steve Cheney
Left to right: Storyline Development principal Evan Neufeld and Estimote co-founder and SVP Steve Cheney

The death of the store has been a common theme in recent years as ecommerce, led by online superstores like Amazon, continues to advance. Implementing technology in retail environments as means of “saving” brick-and-mortar stores has been a parallel theme.

Although consumers are buying more online every year, and using their smartphones more in the purchase process, the reality is retail stores aren’t going away. Ecommerce accounted for just over seven percent of total US retail sales at the end of Q2, according to figures compiled by the U.S. Department of Commerce. Online retail may be driving down prices and eating into margins, but it’s too soon to sound the death knell for physical stores. They still feature strongly in the commerce landscape.

Moreover, despite shoppers’ increased in-store use of smartphones, showrooming is proving to be less of a detriment to brick-and-mortar retail than once feared. A recent xAd study found 60 percent of in-store shoppers convert in-store, vs. 21 percent on their smartphones and just 14 percent later on the desktop.

Smartphones’ increasingly central role in the shopping process, from research to purchase, makes them the logical link between connected shoppers and connected stores. That was a key takeaway from the future of retail panel at last month’s Street Fight Summit led by Storyline Development principal Evan Neufeld and featuring Gwen Morrison, co-CEO of The Store, the retail practice of global advertising giant WPP, and Steve Cheney, co-founder and SVP at Estimote, a company offering beacons and stickers compatible with both Apple’s iBeacon and Google’s Eddystone formats.

The chief question around connected stores, noted Morrison, concerns the benefit to the shopper. She cited the proliferation of large screens in retail environments over the past decade as an example of media oversaturation without delivering sufficient value. Shoppers preferred the screen in their hand to the screens on the walls, sending a clear message that the connected store can’t be about technology for technology’s sake. Added Morrison: “How can we be invisible while also providing some kind of benefit, whether that’s value-seeking, location-finding, or exploring?”

Of beacons, Cheney said “the technology is ready for prime time,” noting cost does not constitute a major implementation hurdle, even for small merchants. Rather, the challenge lies in the execution of the marketing campaigns that utilize in-store technology. As we witnessed with QR codes, that’s usually where things fall down. Then again, smartphones and Wi-Fi networks are far more pervasive now than when QR codes first launched into the market, and consumers have grown accustomed to using their phones to get offers, coupons, and ads across the path to purchase.

Still, the use of in-store technology, whether by the consumer or retailer or both, requires a rethinking of the role of the store in the purchase process. In the best case, Morrison said, technology enables the store to become a place of discovery and experience, not just a place for distribution. “The bigger picture for the future of retail is thinking about the convergence between content and commerce and making the experience more contextually relevant,” she added. “If you project out to 2020, when a much larger portion of the global population will have smartphones and in many places will be dependent on them as an access point to the internet, that starts to really recast how we think about content and communication and what’s contextually relevant.”

As is the case with many things, consumers will play an important role in determining the future of retail. Merchants that want to capture their attention and their wallets will need to follow their cues and be nimble about deploying both technology and the necessary marketing around it.

Noah Elkin is Street Fight’s managing editor.