Can The Lab Save Retail?

It’s a good time to be a consumer. With new tech powering the many facets of shopping, consumers have more choices than ever before when it comes to making purchases. On the other side of the equation, for brick-and-mortar retailers, times are tense, if not dire.

While online shopping may not be considered the latest and greatest development anymore, it’s still growing at a nearly 30 percent rate annually, according to the latest OmniReadi Index research. Factor in subscription services and sites, which attracted more than 21 million consumers in 2016, and the future is a bit frightening for even the leading brick-and-mortar businesses.

In the face of this mounting tech competition, some of the biggest merchants around the world are turning to their own tech arsenal to help bring customers into their stores.

Walmart started 2017 with a series of announcements, including a redesigned app and new line-busting checkout systems. And at Neiman Marcus, whose financial filings indicate a shrinking footprint, the company is turning to Innovation Lab (iLab) to build technology that keeps it cutting edge.

The iLab, as Scott Emmons, head of Innovation for Neiman Marcus, describes, is where the retail giant’s tech arsenal is tested and readied for in-store rollout. In a recent interview, Emmons told PYMNTS that keeping online-shopping customers coming into stores means recreating the best parts of the eCommerce experience in the physical world.

“What we do in the lab is about taking the features and capabilities that we have in the online channels and [bringing] that into our stores,” he said.

From the Lab to the Store Floor

Anyone familiar with a laboratory is well-versed in the scientific process, which is often fraught with failure.

Emmons’ work at iLab is no different. He recounted to PYMNTS that even before Innovation Lab was created at Neiman Marcus, the company had several experiments that found varying degrees of success.

“There have been many setbacks, because that’s really just how innovation works. You try more things that don’t work than do,” he explained, citing the company’s attempts at a mobile wallet as an example. “We went down the path of building our own mobile wallet a couple of years ago, and we built a really great one using the tech that was available at the time that we started. It was ready and it was released out into the world as a QR code-based wallet, and that was just no longer relevant by the time we got it out the door, because touchless payments and other types of more friction-less wallets had started to appear.”

But, while learning from failure may be an important part of the omnichannel innovation process, Emmons said that the tech with the most impact is inevitably the one that makes it into the hands — or eyes — of consumers.

Take voice assistant technology, for instance. The company is currently working with the same engines that power popular consumer voice assistants, like Apple’s Siri, Amazon’s Alexa and Google’s Home, to design voice command features that streamline the in-store experience.

Using AI-powered, voice assistant devices, store associates can instantly check inventory to help consumers find items more quickly. The tech was designed to keep customers from leaving empty-handed, only to later find those products on Amazon or another eCommerce marketplace.

But the best example of successful omnichannel tech deployment, Emmons said, is the Memory Mirror, which he and his team have been working on for more than two years.

The mirror, built in collaboration with digital imaging software company Memomi, allows shoppers to see their virtual avatar modeling an outfit, which can then be downloaded or shared on social media.

Seeing the success of the pilot, Emmons helped adapt the product so it could be used for eyewear purchases last summer. It then later became a part of the beauty department and is expected to see a wider rollout later this year.

Emmons credits Memory Mirror’s success to enabling consumers to retain their favorite online shopping features in-store, while still rewarding the retailer behind the tech with a treasure trove of customer data that can be used to better target and serve the store’s customers.

“For the customer, they get this video tutorial … of them using and modeling these products that they can send out or share,” he said. “For the brand, it gives a video CRM record with all kinds of customer metadata that can be used down the road to help service that customer.

Turning to Tech

With so many choices for consumers, Neiman Marcus is far from the only brick-and-mortar giant feeling its belt tighten in recent years. The industry has seen a rapid rise in online sales in the past several years, with Amazon, perhaps brick-and-mortar retail’s biggest rival, outperforming even its own expectations in the first quarter of 2017.

That shift is causing pain for retailers, especially for smaller specialty chains. Popular fashion retailers that were growing just a few years ago, including Aeropostale and American Apparel, have filed for some form of bankruptcy protection. And sales have dropped quickly at major companies such as Gap Inc and Abercrombie & Fitch; even Neiman Marcus’ fellow department stores, like Macy’s and Nordstrom’s, are confronting a big drop in business.

To fight back against this new competition and boost sales, Emmons said that he and his team are focusing on building tech and devices that will help differentiate Neiman Marcus from the competition.

“Being the exclusive or only retailer offering a capability or feature can help drive foot traffic into stores, and we’ve seen that with things like the Memomi mirrors,” he said. “Especially for a luxury retailer like us, using this technology to deliver an awesome customer experience is what is going to lead to a return on investment.”

In the face of this mounting retail crisis, Emmons and his team’s turn to tech and innovation may just be the answer. According to recent industry research, consumers, particularly millennials who are accustomed to shopping on digital channels, expect merchants like supermarkets to offer technology that gives them more control over their shopping experiences. Emmons said that keeping pace with these increasingly high consumer expectations is a constant challenge for retailers in the modern age.

“It’s a constantly moving target, and you’re never done,” he said. “New capabilities and technology make it impossible to know what’s next. What we can do today is going to be outshined tomorrow by some new technology that we haven’t even thought of yet.”

Could it be then that retail’s future (and fate) may ultimately rest in the results of lab work?

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To download the Q1 2017 PYMNTS OmniReadi Index, powered by Vantiv, please click below.

About the Index

The PYMNTS.com OmniReadi Index, powered by Vantiv, was designed to quantify the consistency between the web and in-store shopping experience and determine if the mobile channel is helping, hurting or simply neutral to the overall situation.