MOBILITY

Toys ‘R’ Us testing AR to make stores digital playgrounds

BY Marianne Wilson

Toys "R" Us is doubling down on its new brand positioning, “Today We Play.”

The retailer announced it has begun testing an augmented reality app, called Play Chaser, in 23 stores nationwide, with a chainwide roll-out planned for Oct. 21. Developed in partnership with PlayFusion, the free app allows users to activate different AR mini games and play experiences on their smart device while in Toys "R" Us stores.

To see the app in action, click here.

To unlock the games, customers download the app and then scan the Play Chaser signage points that are located on Toys "R" Us' store shelves. More than 10 experiences are offered, including a virtual basketball hoop that kids can shoot at solo or alongside friends in-store. Some games even have leaderboards that show where players rank amongst each other in their local store and nationally.

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Five Common—and Costly—Omnichannel Mistakes

Brick-and-mortar retailers collectively have staked their claim online, accounting for at least half of U.S. e-commerce sales. The trouble is, most of them are losing money at it.

The answer to that dilemma for retailers is to assemble a smoothly operating omnichannel network of stores, distribution centers and suppliers, each optimally placed so that any item can be whisked from inventory to wherever a customer wants it in minimal time and at least cost. It’s a daunting challenge — so much so that we at CBRE found that less than 20% of retailers we’ve surveyed are delivering omnichannel service profitably.

Mastering the fine points of omnichannel distribution comes only with years of practice and deep analysis of reams of consumer data. But, before that, the fundamental steps come in avoiding the most common and costly mistakes made by retailers when building their networks. Let’s examine a few, as well as strategies to avoid them.

Mistake 1: Poorly balancing cost and service

Same-day delivery is expensive, especially if the customer isn’t paying much, if anything, for it. Then again, today’s customers usually aren’t willing to wait a week or more for their order to arrive by cheaper means. Striking the right balance is key for profitability and growth.

Consider these steps to start: Map out what will be required of your business going forward re-examine your existing network, its challenges and its advantages map out your optimized network and apply your future business requirements and variables to that baseline. That should provide a sense of the tipping points for your cost-service balance.

Additionally, your cost-service balance can be reinforced with a strong focus on hiring, training and recruiting of store and warehouse employees who understand the bigger picture of how consumers want to shop across channels.

Mistake 2: Making every store an e-commerce-equipped store

Shipping e-commerce orders from stores can hasten delivery and limit costs. Similarly, encouraging customers to pick up their online orders in stores can cut delivery costs. That’s why it’s tempting to enable every store with these capabilities.

The catch, though, is that both programs can be expensive if introduced in stores lacking enough demand to support them.

Handling online orders from stores requires investment such as installing specialized systems for managing orders between stores and online and providing materials, personnel and adequate backroom space for packing and shipping. In many cases, only high-volume stores can support that investment.

Additionally, stores with the greatest range of inventory are the most cost-effective option for handling multi-SKU orders, which ideally are bundled into a single shipment to the customer rather than multiple parcels from different locations.

Mistake 3: Ignoring the unknown

E-commerce and retail in general have evolved so rapidly that previous benchmarks and expectations no longer apply. Planning an omnichannel network must include a degree of flexibility to best handle unanticipated and potentially costly changes.

Those changes go beyond advancements in logistics technology and shifting customer tastes. Retailers also must draft contingency plans for how to adjust if one or more of the major online players moves into their niche.

Techniques in planning for the unknown include examining your business by various segments, such as product types, SKU velocity and cube size, which can reveal which SKUs are relatively predictable in order flow and which are constantly changing. Cookie-cutter approaches then can be applied to the predictable SKUs, while more creative strategies must be devised for the irregular SKUs.

Mistake 4: Mismanaging comingled SKUs

Storing and delivering both e-commerce merchandise and store-bound merchandise from the same distribution center should save time and money — in theory.

In practice, a lot of effort, time and warehouse space gets wasted if a warehouse’s inventory flow isn’t carefully mapped out with ideal locations for both single-item orders popular in e-commerce and for bulk pallets often destined for stores.

Some retailers address this issue by clustering their single-item, e-commerce SKUs in their own easily-accessible section of the warehouse. However, that approach can cause issues with inventory management, especially if that fast-pick, e-commerce stock gets suddenly depleted and must be replenished from the warehouse’s store-bound inventory.

Solutions can include installing warehouse-management systems that allow for sharing inventory between e-commerce and retail operations as well as the ability to pick single units from the same rack for all channels. These approaches sometimes require additional space.

Mistake 5: Underestimating automation

Automation brings substantial upfront costs. But long-term returns in terms of efficiency, shorter order cycle time and cost savings are possible. That’s why the biggest names in retail are spending massive sums to test and implement robotics and other automation technology in their distribution centers.

Granted, substantial order volume is needed to justify automation in many cases, and volume fluctuates throughout the year. Some retailers address this by using their automation throughout the year to handle e-commerce orders and then opportunistically during peak season to help with orders from other channels.

Determining what format and level of automation is best for each retailer requires thorough analysis of variables such as volume profiles, trends, SKU affinities, SKU velocities, each product’s cubic volume for packing, and on-hand profiles, among others.


Brandon Famous and Adam Mullen are co-leaders of CBRE’s omnichannel real estate practice.

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Omnichannel personalization

BY Deena M. Amato-McCoy

With more customer-specific information filtering into retail enterprises, brands are primed to deliver more personalized, seamless experiences. Such efforts not only drive repeat visits and purchases, but also “help retailers to differentiate themselves in the marketplace, and get closer to the customer,” said Tom Moore, industry lead of retail and hospitality at Zebra Technologies.

Indeed, 38% of companies reported that personalization is a top digital customer experience priority, according to the “2017 Digital Commerce Benchmark Survey,” from Boston Retail Partners (BRP). For many retailers, this requires new solutions that will help them engage with customers throughout the shopping journey. With so many options available, retail leaders are opting for solutions “that can solve problems in new ways,” William Fong, co-founder and CTO of Boxed, an online retailer that sells everyday essentials in bulk, told Chain Store Age.

The technologies listed below are shaping the retail landscape and are among the most coveted solutions in retailers’ personalization toolboxes.

&bull Artificial intelligence. A computing component that uses data to make “machines” intelligent, AI is taking the customer experience to a new level. In addition to automatically tracking customers’s purchase and preferences, AI can streamline how brands upsell with more relevancy. It’s also a conduit to merging the physical and online touchpoints.

“AI can provide the foundational information needed to understand the shopper’s entire omnichannel journey and deliver a better in-store experience,” said Will Decker, VP of retail innovation at Plug and Play Tech Center. “AI supports a more interesting understanding of the community and how we can engage them at scale.”

Boxed is leveraging AI to support a new automated replenishment service based on machine learning — connecting with customers through AI data. Called Smart Stock Up, the program relies on machine learning to understand shoppers’ most used items, and when they will need more.

“It also pushes out an email that reveals a list of merchandise that we think they are running low on,” Wong explained. “If they agree, customers click on a link that directs them to our site. Here, they can add the merchandise to their cart, and either continue shopping or proceed directly to checkout.” The service launched in August.

&bull Augmented reality. A technology that overlays computer-generated imagery on pictures and videos of the real world — from showrooms or sales floors to rooms in a shopper’s home — AR enables brands to deliver a personalized retail experience. While the technology is still evolving, early adopters are thirsty for more: 80% of shoppers want to use AR to design a room or physical space, browse virtual or physical showrooms and view how furniture and d&eacutecor looks in their personal space, according to a study from L.E.K. Consulting.

Saks Fifth Avenue is among the most recent retailers experimenting with AR technology. Putting a new twist on the salon experience, Saks is using AR to enable clients to virtually try on products available in the salon’s inventory and test lipsticks from a try-on bar cart. Following a consultation with their stylist, the hairdresser completes purchase transactions from an iPad.

&bull Virtual reality. A concept similar to AR, VR also uses 3-D images. Rather than interacting with images in the real world, VR immerses consumers in a totally digital environment where they can perform a task such as shopping or even receive job training. A good example of how brands are using VR to allow consumers to engage with brands on a personal level is the new VR shopping app launched by Swarovski for its line of crystal home accessories, Atelier Swarovski. The jewelry brand teamed up with MasterCard on an app that allows consumers to virtually browse and purchase items in the collection using Masterpass, Mastercard’s digital payment service, without ever leaving the VR experience.

Consumers place their smartphone into a VR headset to enter the experience, which lets them walk through a virtual home to browse designs. They can learn about the stories behind each piece, read descriptions and see the pricing. To make a purchase, they focus their gaze on the Masterpass button that appears at the bottom of the product description.

On the training side, Walmart is adding VR as a training tool at its 200 Walmart Academy training centers in the United States. Each location will have an Oculus Rift headset and gaming system that hosts a collection of VR training content.

“Five years ago, implementing this technology at this scale and context would have been significantly expensive and prohibitive,” said E. Blake Jackson, a Walmart spokesman. “With more developers and content producers entering the space, and the cost of hardware and software dropping, VR is more attainable at such a large scale.”

Regardless of the solution that retailers commit to, the goal is “to deliver a positive, personalized experience digitally as well as in-store,” said Doug Oathout, VP of strategic partnerships at Black Box. “These solutions are the key to gaining intelligence about customers and personalizing the experience.”

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