The Rise of AI in Fashion: How Artificial Intelligence is Transforming Design and Retail

27

September

2024

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AI in Fashion Design

Artificial Intelligence is transforming the fashion industry leading to innovations in both design and retail activities. AI revolutionizes how designers create, how trends are predicted and how retailers manage their stock and interact with consumers with the analysis of large datasets and automated processes (Luce, 2018). In this blog, we’ll explore how AI is being applied across various stages of the fashion ecosystem, from creative design to personalized shopping experiences.

Using AI, designers blend technology and creativity. Machine learning alogrithms allow designers to analyze historical trends, consumer preferences and data to generate new or innovative designs. Fashion houses like Alexander McQueen have begun to incorporate AI into their design processes. This allows for experimenting with new styles and materials (Renee, 2023). In addition, AI contributes to sustainable fashion by helping brands reduce waste and optimize material choices, and production processes.

Trend Forecasting with AI

Predicting fashion trends has traditionally been a complex and instinct-driven process, but AI is providing brands with more accurate and data-driven insights. Machine learning algorithms scan social media platforms, online influencers, and sales patterns to identify emerging trends. Companies like Heuritech use AI to analyze millions of images on Instagram to predict future fashion trends months ahead of time (Poncelin, 2024). Brands react more quickly to consumer demands, reduce overproduction and meet better the market expectations due to the advanced forecasting.

AI-Driven Inventory Management

Inventory management is another area where AI is making a significant impact. AI systems can process vast amounts of sales data, seasonal trends, and even weather forecasts in order to help retailers optimize stock levels. AI helps brands maintain the right balance between supply and demand so that the chances of overstocking or stockouts are significantly reduced. Major fashion retailers like Zara and H&M have embraced AI to manage their inventories which leads to more efficient supply chains and less waste (Ünal et al., 2023). Therefore, retailers can ensure that popular items remain available while minimizing markdowns and unsold inventory.

Personalized Shopping Experiences

AI is enhancing the shopping experience by providing personalized recommendations and services tailored to individual customers. Retailers like ASOS and Stitch Fix use AI-powered recommendation engines and virtual stylists to analyze customer preferences and browsing behaviors. That way they deliver product suggestions uniquely suited to each shopper’s style (Fix, 2023). This personalization simultaneously improves customer satisfaction and helps retailers build stronger customer loyalty and increase sales.

AI is transforming the fashion industry by bringing innovation to design, trend forecasting, inventory management, and retail experiences. Brands that adopt AI technologies are staying ahead of consumer demands and improving efficiency and sustainability. As AI continues to advance, its role in fashion will only expand and lead to shaping the future of the industry in innovative ways.

References:

  1. Luce, L. (2018). Artificial Intelligence for Fashion: How AI is Revolutionizing the Fashion Industry. https://link.springer.com/content/pdf/10.1007/978-1-4842-3931-5.pdf
  2. Renee, K. (2023, December 15). How Artificial Intelligence is Revolutionizing the Fashion Industry. RYN. https://www.therynapp.com/post/how-artificial-intelligence-is-revolutionizing-the-fashion-industry
  3. Poncelin, C. (2024, June 28). How Heuritech forecasts fashion trends thanks to AI. Heuritech. https://heuritech.com/articles/how-heuritech-forecasts-fashion-trends-thanks-to-artificial-intelligence/
  4. Ünal, Ö. A., Erkayman, B., & Usanmaz, B. (2023). Applications of Artificial Intelligence in Inventory Management: A Systematic Review of the literature. Archives of Computational Methods in Engineering. https://doi.org/10.1007/s11831-022-09879-5
  5. Fix, S. (2023, June 29). How We’re Revolutionizing Personal Styling with Generative AI – Stitch Fix Newsroom. Stitch Fix Newsroom. https://newsroom.stitchfix.com/blog/how-were-revolutionizing-personal-styling-with-generative-ai/

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From eCommerce to vCommerce

7

October

2021

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Whoever has been faced with buying a desk for their newly (involuntary) home office during the global COVID-19 pandemic might have encountered IKEA’s Augmented Reality solution – the IKEA Place App. It allows “people to virtually place true-to-scale models of IKEA furniture in their own homes” (IKEA, 2019). The application has already been around for four years, but its relevance increased significantly for many customers when stores were forced to close during the pandemic.

As traditional ways of exploring and testing products physically were or still are not possible anymore, Augmented Reality (AR) and Virtual Reality (VR) solutions provide an immersive opportunity of discovering them virtually. Thus, the COVID-19 crisis did not only accelerate the shift from offline to online shopping but also boosted the relevance of AR and VR in the retail industry.  In the highly competitive retail landscape, companies should explore this powerful tool enabling them to differentiate themselves and connect with their customers.

The possibilities of applications are vast, for on- as well as offline shopping. Mostly AR and VR solutions are used to create a unique customer experience. With the help of AR, companies can for example facilitate in-store navigation to easily direct customers to the product they are searching for. In addition, virtual try-on solutions are particularly suitable for the fashion and beauty industry and have been put into practice by several firms such as Sephora and Gucci. Next to offering an immersive customer experience, both technologies have the potential to provide substantial revenue impact. According to Shopify, interactions with products having AR content showed a 94% higher conversion rate compared to products without such content. Furthermore, lower return rates can be expected from products that have been previously tried on or tested virtually.

The pandemic has accelerated the adoption of AR and VR by companies as well as customers but will their applications become really an inherent part of our shopping strolls? Or is the increased use of AR and VR for retail business rather temporary? Feel free to comment on your experience with AR and VR while shopping and whether you believe it will become an essential part of retailers’ strategy.

References:

https://about.ikea.com/en/newsroom/2019/09/24/ikea-sparks-home-furnishing-ideas-and-inspiration-through-artificial-intelligence

https://hbr.org/2020/10/how-ar-is-redefining-retail-in-the-pandemic?registration=success

https://www.warc.com/newsandopinion/opinion/how-augmented-reality-is-set-to-transform-retail/3967

https://www.xcubelabs.com/blog/10-applications-of-ar-vr-that-can-transform-your-retail-sales-completely-find-out-how/

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Think Twice Before You Order Online

20

September

2021

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More and more people are buying products online. With the COVID-19 pandemic, this trend only increased. Online retail sales in 2020 increased with 32,4% compared to 2019 [1]. Statista estimated that in 2021, more than 2.1 billion people worldwide are shopping online [2]. E-commerce has a lot of advantages for both consumers and retailers. Retailers can reach more consumers and those consumers have the convenience of ordering products without leaving their homes. But how does online shopping affect the environment?

If you look at the basic principles, online shopping is more environmentally friendly than buying products in a store. The main reason for this is that individuals don’t have to drive to stores to get their products [3], but that they are being delivered by vans which can optimize their routes for other customers. Next to that, less physical stores also mean less energy needed to power those buildings.

However, online shopping is not all rainbows and sunshine. The last years, retailers have focused on improving their last-mile delivery – the journey from the store or distribution center to the customer. Free shipping or same day delivery are being offered by more and more retailers nowadays. This rat race to make online shopping as convenient as possible, has a negative environmental impact. Customers order fewer items per online transaction leading to more shipment movements. Also, multi-item orders are often split because they have to be shipped from multiple stores or distribution centers and shipping via e-commerce requires additional packing [3]. Returns make things even worse. More than 30% of products bought online are returned, compared to just 9% in physical stores [4]. This new style of shopping not only leads to more parcels that need to be shipped back, but it also causes unnecessary waste of unused and undamaged products. Reports show that over 25% of returns are destroyed immediately, especially within the clothing industry [5]. Amazon destroys millions of items in their UK warehouses each year [6]. It’s often cheaper for companies to just destroy the returns instead of sorting out what’s wrong and repacking them, but the environment is paying the price.

Of course, you can still order products online. And if you keep some simple things in mind you can still have a smaller environmental impact compared to physical shopping. Below you can find some of these remarks, but feel free to add additional ones in the comments!

  • If you can buy your product in a physical store which you can reach walking or cycling, just go to the store.
  • If you’re unsure if the size is correct or if you want to keep the product, go to a physical store and find out.
  • Try to bundle your (future) purchases in one order.

References

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Grab and Go stores, but then literally

20

September

2021

5/5 (1)
Author: Jesper Goudswaard, 20/09/2021

Nowadays, almost every major supermarket chain offers the opportunity to pay at self-service checkouts.  Self-service checkouts use less space than registers, have reduced wait times compared to cashier lanes, and need fewer staff members to be controlled. A downside is an increase in shoplifting (Schmidt-Jacobsen, n.d.). Unfortunately, there is no alternative that offers at least the same convenience with almost zero shoplifting.. or is there?

You may have heard of it already, but Amazon has already opened 28 stores with so-called ‘Just walk out’ technology (Statista, 2021). They are called Amazon Go or Amazon Go Grocery stores. By scanning a QR code in the Amazon app on your phone, you get access to the store. Whenever you take an item from the shelf, the app automatically adds the item to your virtual shopping cart. When the customer changes their mind and puts the item back, the app will update the virtual shopping cart automatically. After you have gathered all the desired products, you can just leave the store and you will be billed for the products that you have taken via the app (Cheng, 2019).

So, how does this ‘Just walk out’ technology work? Amazon is using a combination of deep learning, computer vision, and sensor fusion. To get a better understanding of these technologies, I will explain each technology briefly. Deep learning is the creation of machines that use techniques inspired by the human brain’s ability to learn (Mandal, Mehta & Mishra, 2017). It is used to recognize objects, in Amazon’s occasion customers and products. However, just deep learning alone will not recognize anything that happens in the store. That is when computer vision comes into play. It mimics the human vision to look, discover, and method images (Mandal et al., 2017). This is done with the help of hundreds of sensors in the store that register every movement. Sensor fusion is the technology that tracks the movement of customers when cameras cannot register the movement, for example, because the visual input is blocked by another customer. This is done by the combination of accelerometers and gyroscopes in the customer’s mobile phone that together registers the location (Mandal et al., 2017). This technology is so accurate that shoplifting is almost impossible. Apart from that, even when a customer puts an item back on the wrong shelf, the technology will register that action and the customer will not be charged for that product (Cheng, 2019).

However, as disruptive as this concept might look, Amazon has not yet reached the 3000 stores they intended to have by 2021 (Statt, 2018). One possible explanation is the costs of the technology. According to Focal Systems (2019), the system will not prove a break-even in a large-format grocery store compared to operating the front-end with cashiers until after 2040. For now, Amazon should therefore stick with smaller stores.

What do you think about the technology and do you think we will see this much more often in the near future? Let me know in the comments.

References: https://www.researchgate.net/publication/315380585_JUST_WALK_OUT_TECHNOLOGY

https://www.theverge.com/2018/9/19/17880530/amazon-go-cashier-less-stores-new-locations-2021

https://sprintingretail.com/blog/retail-self-checkout-systems/

https://www.forbes.com/sites/andriacheng/2019/01/13/why-amazon-go-may-soon-change-the-way-we-want-to-shop/?sh=7e652bb56709

https://www.pocket-lint.com/gadgets/news/amazon/139650-what-is-amazon-go-where-is-it-and-how-does-it-work

https://www.statista.com/statistics/1155873/amazon-store-openings-number/

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How the pandemic is transforming the global luxury sector

5

October

2020

No ratings yet. Due to the rapid spread of the Coronavirus many luxury retailers and wholesalers had to close doors during the lockdowns. The implications for the industry are brutal: In the best-case scenario global luxury sales will decline by 18%. However, the worst-case scenario ranges around 35% (Bain & Company, 2020). This implicates a loss of around $50 billion to $100 billion for the industry, which has been growing around 3% (CAGR) annually (PRnewswire, 2020). In a market where only around 10% of sales are made online, the impact of the pandemic was particularly dire. The dependency on wholesalers and physical shopping experiences are only some of the challenges that the industry faces now. The reluctance and inability of the large chinese customer-base to travel is particularly problematic, as they make up 35% of global demand and half of chinese customers make their purchases abroad. While these tough environmental conditions certainly imply bankruptcy for many beloved luxury brands, they also embrace creative flexibility (McKinsey & Company, 2020). As many luxury retailers were forced to close physical doors, many opened new virtual sales channels. The following will highlight some of the most promising and creative digital sales strategies luxury companies have adopted amid the pandemic.

 

The main goal of many new digital strategies was to reproduce the luxury sector’s most important feature: personal and emotional experiences. Many brands such as Louis Vuitton and Gucci launched livestream selling experiences, where goods are presented and customers have the opportunity to interact directly with a salesperson. Furthermore, many companies focused on serving the top 1% customers, sending free samples to their most valuable customers and arranging personal video chat meetings to showcase the products (Lazazzera, 2020). Recreating personal experiences and delivering valuable content online will definitely be a key criteria in defining which brands will sustain the new challenges (McKinsey & Company, 2020).

 

The global watch industry has been hit especially hard from the pandemic’s impact. As only 5% of sales happen online, many luxury watch brands became creative. For instance, Omega and Zenith launched new social media campaigns to stay in touch with their communities. The fondation de la Haut Horlogerie, which is an organiser of watch fairs, built a new digital platform to host online watch fairs. According to them, it was a huge success with more than 44,00 visitors on the first four days. While the digital pattern of these new strategies is striking, many also engaged philanthropic pursues, such as giving away watches for front-line workers and volunteers in the pandemic (Lazazzera, 2020).

 

How do you think brands will overcome customer’s hesitancy to buy luxury goods amid the pandemic?

Sources: 

 

Bain & Company, 2020, Global personal luxury goods market set to contract between 20 – 35 percent in 2020. Retrieved from: https://www.bain.com/about/media-center/press-releases/2020/spring-luxury-report/

 

Milena Lazazzera, 2020, How virtual stores became a reality in the world of luxury Financial Times. Retrieved from: https://www.ft.com/content/ca6bb85f-9af7-4df7-a606-828ceeea5a97

 

Alicia Esposito, 2020, How Luxury Brands Are Responding To COVID Tension With Innovation. Retrieved from: https://retailtouchpoints.com/topics/retail-innovation/how-luxury-brands-are-responding-to-covid-tension-with-innovation

 

McKinsey & Company 2020, The State of Fashion 2020. Retrieved from: https://www.mckinsey.com/industries/retail/our-insights/the-state-of-fashion-2020-navigating-uncertainty

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Urban 5G, and the return of physical

9

September

2020

4.75/5 (4) 5G is front-page news. While the debates in countries and continents are ongoing for whether Huawei should be banned from building the 5G networks (Keane, n.d.), the negativity essentially distracts businesses from its opportunities. No matter which company will install the network, being it Huawei, Ericsson or Nokia, 5G will certainly soon be widespread, and companies should already consider its opportunities. Larger companies already anticipate on the benefits of 5G, as in the case of autonomous driving, of which 5G is a key requirement (Form et al., n.d.), and where a large advertising and entertainment market is predicted (Iansiti et al., 2018). How are 5G advances expected to change daily life, and can companies tap into its fruitful benefits?

5G connects
5G is expected the shape and reshape many industries. Key to these advances is the faster and reliable connectivity that 5G offers. IoT devices can communicate with each other in an astounding fashion. I have mentioned autonomous driving in the introduction, but there are many more examples of 5G’s influence, such as logistics – using robotics in combination with 5G – and even agriculture (Reisinger, 2020). However, unless you work in farming or in a warehouse, you will not notice much of it, besides faster delivery and cheaper vegetables.

The most significant felt developments will most likely be in transport, cities and retail experiences. With regards to transportation, an interconnected network of traffic and public transport will be fueled by 5G. For instance, think of an interconnected system, where traffic lights are connected to cars, adjusting to traffic, where data about parking spots are monitored and shared in real-time, and where public transport (e.g. subways, trams) is interconnected for more effective public transit (Intel Corporation, n.d.a). With these efficiencies, it is expected that, because of 5G, 250M of commuting hours will be saved by 2035 (Lanctot et al., 2017).

With regards to retail, new in-store experiences, in-store analytics and supply chain efficiencies will boost the Smart Retail Market’s size to approximately $58.23 billion by 2025 (Grand View Research, 2018). Consumers will experience personalized shopping in physical locations. AI, powered by 5G efficiencies, can detect customer moods and therefore detect the need for assistance. Further, shopping can be personalized, by connecting to personal data – in combination with smart signage – in order to provide targeted offers and discounts. Further possibilities range from 5G powered autonomous stores, delivery efficiencies and connected pop-up shops (Intel Corporation, n.d.b).

Opportunities
A few hub firms – such as Google, Apple and Amazon – will most likely take advantage of the 5G possibilities early on, and try to expand their platforms even more. Therefore, integrating your business with these platforms and gaining exposure will be increasingly important. For instance, in the case you can order your self-driving car to the nearest best-option restaurant via Google or you commute via Apple and would like to have lunch, being the top option is going to be more important than ever.

With 5G, it is possible to provide consumers a personalized experience at a physical store or location. At the moment, this experience is only available in the online space. Retail companies in a variety of industries as well as developers could tap into this opportunity by start thinking of ways to personalize stores and connect digital with physical. For instance, cameras, in combination with face recognition software, could monitor customers’ responses to certain products, which triggers real-time personal recommendations with the use of the 5G network.

For this to happen, retailers and manufacturers should re-investigate their data potential. The presence and usefulness of consumer data can increasingly influence the competitiveness of an enterprise in the physical sphere. Collecting and leveraging it early can provide a head-start. Therefore, a strong online presence now is going to be fundamental for the ‘new’ physical presence in the near future.

Going physical
Certainly, more aspects of life will be influenced by the appearance of 5G. The online sphere will be more and better connected, leading to better services on that front, just like 4G has done. However, 5G is going to be different than 4G, in the sense that the physical world will be influenced to a much larger extent. The interconnectivity of 5G will provide efficiencies and an enormous data potential that ranges from better commute to personalized physical shopping. Companies should be aware of these opportunities by gaining exposure, gathering data early on, and developing ways to connect physical with digital.

References
Form, A., Born, M., Freyberg, A. and Scheck, F. (n.d.). 5G: a key requirement for autonomous driving—really? [online] Kearney. Available at: https://www.kearney.com/communications-media-technology/article/?/a/5g-a-key-requirement-for-autonomous-driving-really- [Accessed 9 Sep. 2020].

Grand View Research (2018). Smart Retail Market Size Worth $58.23 Billion By 2025. [online] Grand View Research. Available at: https://www.grandviewresearch.com/press-release/global-smart-retail-market [Accessed 9 Sep. 2020].

Iansiti, M., & Lakhani, K. R. 2018. Managing our hub economy. Harvard Business Review, 96(1), 17-17.

Intel Corporation (n.d.a). Intel Infographic: 5G Smart Cities. [online] Intel. Available at: https://www.intel.com/content/www/us/en/wireless-network/5g-smart-cities-infographic.html [Accessed 9 Sep. 2020a].

Intel Corporation (n.d.b). This Is 5G Revolutionizing Retail On Intel. [online] Intel. Available at: https://www.intel.com/content/www/us/en/wireless-network/5g-technology/5g-retail.html [Accessed 9 Sep. 2020b].

Keane, S. (n.d.). Huawei ban timeline: India will reportedly phase Huawei gear out as border tensions rise. [online] CNET. Available at: https://www.cnet.com/news/huawei-ban-full-timeline-us-restrictions-china-trump-executive-order-android-google-ban/ [Accessed 9 Sep. 2020].

Lanctot, R., Ambrosio, C., Cohen, H. and Riches, I. (2017). Accelerating The Future: The Economic Impact Of The Emerging Passenger Economy. [online] Strategy Analytics. Strategy Analytics. Available at: https://newsroom.intel.com/newsroom/wp-content/uploads/sites/11/2017/05/passenger-economy.pdf [Accessed 9 Sep. 2020].

Reisinger, D. (2020). How 5G promises to revolutionize farming. [online] Fortune. Available at: https://fortune.com/2020/02/28/5g-farming/.

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NIke’s SNKRS App: Driving Sales via Digital Community

18

October

2019

No ratings yet. After the recent decline in sales of Nike, the company decided to change its strategy by focussing its distribution on direct-to-consumer channels (Karwatka, 2018). This has proven to be a successful strategy as digital commerce sales went up 35% for 2019 fiscal year (Nike News, 2019). By establishing a direct relationship with the customers, and building emotional consumer experiences, Nike creates a loyal customer base that drives up the sales.  

At the moment, Nike owns several distribution channels: physical stores, its website, and apps – Nike+ and SNKRS. SNKRS app represents a digital platform centered around sneakers community. It is not just another digital store, but a platform that offers insider access and content about the latest sneakers. According to Ron Faris, CEO of s23nyc, the studio behind the SNKRS app, the digital community consists of 20% of Hyperbeasts, people that are extremely knowledgeable and fanatical about the community, and 80% of Styleseekers who are interested to learn more (The Next Web, 2018). And the key to driving a digital community and creating a powerful social network is to make those that have the most knowledge to share with those who have the least. 

In the case of SNKRS,  it offers consumers a platform to share their enthusiasm for Nike shoes, and creates immersive experiences for a chance to access limited edition styles. It creates a digital community of people that are crazy about sneakers, and uses this community to share and drive sales and engagement better than any advertising campaign as it allows to scale up without much investment. 

In order to energize such a community and create virality, the app is based upon three components: product, story and experience (The Next Web, 2018). By providing its key product, high-end shoes that are surrounded by a folklore story through a special and unique experience, it can make customers very emotional, enticing them to share and grow the community by means of which the product sells through. 

For sneaker community, the experience of buying sneakers as is important as sneakers themselves (The Next Web, 2018). Thus, another component of SNKRS’ strategy is gamification of the purchasing process. The company uses technology, in particular augmented reality, to revolutionize the buying experience by creating a sense of competitiveness fuelled by the adrenaline. For example, SNKRS Stash is campaign that allows users to purchase limited edition sneakers only from a certain location in their city (Karwatka, 2019). With this feature, online shopping can reach another level as virtually everyone and everything can become a Nike store: a poster in a metro, a menu in a restaurant or a concert of a celebrity. 

Thus, Nike is redefining online shopping by engaging with customers directly and creating emotional experiences through the use of technology. 

 

References:

Karwatka, T. (2018). Nike just shaped the future of retail with mobile-first commerce. [online] Divante.com. Available at: https://divante.com/blog/nike-just-shaped-future-retail-mobile-first-commerce/ [Accessed 17 Oct. 2019].

Nike News. (2019). NIKE, Inc. Reports Fiscal 2019 Fourth Quarter and Full Year Results. [online] Available at: https://news.nike.com/news/nike-inc-reports-fiscal-2019-fourth-quarter-and-full-year-results [Accessed 17 Oct. 2019].

The Next Web. (2018). Ron Faris (Nike) on The future of retail and digital community | TNW Conference 2018. [online] Available at: https://www.youtube.com/watch?v=JXLwzm2292U [Accessed 17 Oct. 2019]

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The Future of Retail – Nike just did it.

11

September

2019

5/5 (1) A lot of talk has been around the typical stationary trade and brick-and-mortar stores losing more and more relevance in our increasingly digital lives. Not only has online retail, including giants like Amazon and Alibaba, made our day-to-day living easier and more convenient but today’s generation’s preferences are so fast-paced that it is said to be a challenge for companies to keep up and to constantly satisfy our needs.

Still, innovative store concepts are on the rise, potentially proving these thoughts wrong. How can in-store shopping still be a success, even though it is thought to be much more time consuming for all the oh-so-busy customers? The answer is: Experiential Retail.
Nike realised this and went to market quickly. In line with its young and dynamic brand appearance, it opened its House of Innovation 000. First in Shanghai, then in NYC – 68,000 square feet of real-time store evolution. Nike found that 80% of their customers still want a physical experience: to go in store, feel and see the product in live. What this basically means nowadays is flawless integration, customisation and synched profiles. Nike uses technology to build the most seamless, high-speed customer experience.
Ever went to a store to try on something you saw online that was not available in store? Reserve your Nike outfit from home via the App and try it on in the store.
Do you also often wonder what the mannequin is wearing and where to find it? ‘Shop The Look’ lets you scan a QR-code next to the mannequin, shows what it is wearing, what sizes are available and also enables you to have it sent to your fitting room.
Sick of the mainstream sneaker? Fully customise your shoe from start to finish at their ‘Customisation Lab’.
Can’t be bothered to stand in line to pay? ‘Nike Instant Checkout’ let’s you scan the products with your phone and pay online.
Looking to run a marathon? Visit the ‘Nike Expert Studio’ and get an in-depth consultation session.

Nike is attempting to convert its store to more of an offline platform (in so far possible) and so, to soften the distinction between digital and physical retail. This leads to full connection over all of its five floors which means Nike can give new visitors direct live insights into what is trending and what customers are trying on most right now. Doing so, it can still target potential customers who are rather short on time due to their busy lives and who do not come to the store with an entertainment  purpose to fully exploit all its opportunities offered – which could literally cost you hours.
Will retail be able to completely integrate both digital and physical in the future? Gartner predicts that, by 2020, more than 40% of data analytics projects will relate to customer experience. Looking at companies like Farfetch, Vans, Ikea, Space Ninety 8, there is no doubt that there is a real change in retail happening – and by saying that I do not mean the retail apocalypse.

http://https://www.youtube.com/watch?v=52nLywJeMRU

 

Literature:

7 Case Studies That Prove Experiential Retail Is The Future

YouTube – Inside Nike’s New Futuristic Store

50 Retail Innovation Stats That Prove The Power Of Customer Experience

Retail Case-study: Nike’s House of Innovation

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Albert Heijn, the Dutch Amazon Go?

24

September

2018

No ratings yet. Today, 24th of September 2018, Albert Heijn, the largest supermarket chain in The Netherlands, enabled cashier- and cash free shopping in two of their stores. With a ‘tap-to-go’ card or Android app their customers can scan the barcodes of the products they would like to buy. After 10 minutes the purchased amount will be withdrawn automatically from their linked bank account. This means the customer doesn’t need to wait in line for a cashier or spend time paying at a self-scan machine, thus will spend less time in the store.

This concept makes all of us think about the Amazon Go concept, but the technique Amazon uses is completely different compared to Albert Heijn’s solution. Amazon Go uses cameras with computer vision to scan which items has been taken from the shelf by which customer. The computer vision system is trained with deep learning technology, which enables the cameras to recognize the distinguishable patterns in products and people. Interestingly enough, the cameras also see when a customer puts a product back on the shelves, whilst not using facial recognition. When I first read about Amazon Go a few years ago, I thought that this futuristic idea would disrupt the retail industry and their industry leaders. Fortunately, I am proud to see that ‘our own’ Albert Heijn responded on time with a different technology, whilst still reaching the goal of consumer convenience.

Now, as a Business Information Management student, it is interesting to see what opportunities come with this way of cashier- and cash free shopping. I will start with the following possibility: if customers scan their products while standing before a shelf, the retailer could better understand customer in-store behaviour and monitor consumer traffic. This enables retailers to not only offer personalized discounts or promotions based on product preference, but even based on in-store behaviour. In the future, they could offer an extra discount for a product you just put back on the shelf or use in-store promotion screens who recognize your tap-to-go card and adjust their promotion to your preferences and the shelf you are standing at.

I am sure that Amazon and Albert Heijn didn’t use the only technologies who could enable cashier-and cash free shopping. Also, I believe that there are way more possibilities enabled by cashier-and cash free shopping. Let me know in the comments which technologies and opportunities you would relate to cashier-and cash free shopping!

Sources:

https://nos.nl/artikel/2251836-zonder-af-te-rekenen-de-supermarkt-uit-ah-begint-met-kassaloos-winkelen.html

https://dzone.com/articles/impact-of-big-data-analytics-in-retail-industry-te

https://www2.deloitte.com/content/dam/Deloitte/in/Documents/CIP/in-cip-disruptions-in-retail-noexp.pdf

https://www.wired.co.uk/article/amazon-go-seattle-uk-store-how-does-work

https://www.zdnet.com/article/amazon-go-heres-a-look-at-the-impact-on-human-jobs-retail-innovation-amazons-bottom-line/

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How Picnic is challenging the Dutch Groceries landscape

17

September

2018

5/5 (2) picnic_amsterdam_duitsland_719_433_84_s_c1

Picnic is a Dutch online retailer which started its operations in 2015. Picnic is unique in the Dutch retail market since it doesn’t own any physical stores. Picnic operates on your smartphone via its app, it is known for delivering its products to consumers via a small electronic trolley. Thanks to its data-driven business model Picnic is able to deliver its products fast, at a low price and moreover; free of delivery costs (Staalduine, 2016)

 

In 2017 Picnic tripled their revenue to €100 million, and for 2018 they expect to earn €300 million and so tripling their revenue for the second time in a row (Distrifood, 2018). This enormous expansion doesn’t go by unnoticed by their competitors. The Dutch retail market is dominated by Picnic’s two main competitors: Albert Heijn and Jumbo, together they account for 52% of the market (Vermijs, 2017). Both competitors launched a groceries home delivery service of their own, utilizing all their scale advantages to battle Picnic’s rise. For now, they seem to succeed, Jumbo has an online revenue of €140 million and Albert Heijn €400 million (this includes the online revenue of their sister companies Etos and Gall & Gall).

Looking at Europe’s leader and pioneer in home-delivered groceries the United Kingdom, the future looks bright for Picnic. In the UK 5% of the total groceries purchases are home delivered, in the Netherlands this is still only 1,6% so there is still a lot of room to grow (Staalduine, 2016). And growing is exactly what Picnic will keep on doing, at the moment it’s growing even faster than its supply chain can keep up with, in Utrecht for example they have a waiting list of over 1.500 people. Moreover, Picnic is all about thinking big, they recently announced their first international expansion towards Germany, starting operations in the Ruhr valley coming year. Picnic has proven to offer a unique value for its customers, and therefore I believe we will be seeing a lot more of it in the coming years

References:

Garstenveld P. (2017, 21 september). AH Online naar €400 miljoen omzet. Geraadpleegd op 17 september 2018, van https://privacy.vakmedianet.nl/distrifood/?ref=https://www.distrifood.nl/branche-bedrijf/nieuws/2017/09/ah-en-jumbo-in-top-20-twinkle-100-2-101112000

Garstenveld, P. (2018, 4 januari). Muller: ‘Picnic in 2018 naar €300 miljoen’. Geraadpleegd op 17 september 2018, van https://www.distrifood.nl/formules/nieuws/2018/01/muller-picnic-2018-naar-e300-miljoen-101114824?vakmedianet-approve-cookies=1

RetailNews. (2012, 24 januari). ‘Forse veranderingen in retaillandschap’. Geraadpleegd op 17 september 2018, van https://retailtrends.nl/news/28537/forse-veranderingen-in-retaillandschap+

Staalduine, J. O. S. E. P. H. I. N. E. (2016, 30 augustus). Een hoog wagentje als handelsmerk. NRC. Geraadpleegd van https://www.nrc.nl/nieuws/2016/08/30/een-hoog-wagentje-als-handelsmerk-4060425-a1518656

Vermijs, R. (2018, 1 mei). Investigating Dutch grocery trends over the past decade. Geraadpleegd op 17 september 2018, van https://blog.picnic.nl/investigating-dutch-grocery-trends-over-the-past-decade-1d2c63dc3ab9?gi=5151d13590b0

 

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