jul17-21-hbr-andersson-marketing
Kenneth Andersson for HBR

Historically, shopping has been a sensory experience. Store associates served as personal shoppers, helping customers pick out items. Shoppers gauged quality by the look and feel of a product. They asked for sales associates’ opinions when they tried on clothes. It was as much an emotional experience as it was a physical, tactile one.

That traditional “personal touch” shopping experience is hard to replicate online. As more companies struggle to find their niche with the modern consumer, they’re turning to new technologies to recreate this sensory experience. What’s emerging is what I call the “StoreHouse” — a hybrid model that merges the physical benefits of a real-world store with the convenience of home. To embrace this market shift, retailers will need to experiment with a range of technologies and strategies across marketing, supply chain, and merchandising. Here’s how some brands are already doing this:

Making the bedroom the new fitting room

When eyeglass maker Warby Parker launched in 2010, its founders had $2,500 seed funding and impressive business school pedigrees. Thanks to a well-timed Vogue feature and a refreshing concept — try on affordable glasses virtually or at home, with free shipping and returns — the company scooped up its Series A through D funding rounds and earned a $1.2 billion valuation within five years.

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Others have latched onto customers’ desire for choice. Rent the Runway lets women browse dresses online and then borrow one style for a few days, including a free second size. Amazon recently announced a new service, Prime Wardrobe, that allows customers to select 3-15 items and try the clothes for up to seven days, with free shipping and returns for the items they choose not to keep.

Brands like these know that savvy consumers want both the convenience of online shopping and the experimentation they get in an offline store. I call this trend “bracketing” — buying multiple versions of an item to see which they prefer, intending to return the rest — essentially turning the bedroom into the fitting room. In the future, more brands will follow Amazon, Warby Parker, and Rent the Runway’s examples and embrace bracketing as an opportunity to build trust by ensuring that customers find the right products.

Shopping virtually with augmented reality

Unlike eyeglasses and clothes, some goods are difficult to try and then return. In categories like furniture and beauty, retailers are experimenting with other ways to offer sensory experiences. IKEA just launched an AR-powered app that lets consumers visualize virtual furniture placed in their homes. Sephora, a 50-year-old industry veteran, makes it easy for customers to shop from anywhere with its popular Virtual Artist app. With the app, you can try out more than 1,000 cheek colors using uploaded photos, augmented reality, and artificial intelligence.

If a customer can buy furniture without leaving her home, or test out blush without staining her cheeks, imagine what else is possible. What if you could shop for an engagement ring by uploading a photo of your partner’s hand, or measure and place artwork in your living room using your smartphone? There’s huge potential to replicate important real world shopping experiences using augmented reality.

Improving customer experiences with logistics

Discovering and trying on products is only part of the retail experience; retailers need to offer delivery options that fit into consumers’ lives. Customers want the dining set they picked using IKEA’S AR app to arrive home without extra hassle, as convenient as a ordering an Uber. They want options, too. If Rent the Runway can’t deliver your dress in time for your friend’s wedding, can you pick it up locally instead?

The complexity that comes with this new retail paradigm, in which every home is a storefront, requires an increased level of sophistication in backend operations. Brands that don’t think strategically about shipping and last-mile delivery will pay the price — literally. It’s estimated that shipping a container of Tide Pods laundry detergent from Atlanta to Oklahoma City costs companies approximately $11.44 — more than the cleaner itself.

In the future, smart inventory management and supply chain analytics can fix this. Say a furniture store wants to ship a dresser from Chicago to Los Angeles, which requires five days at a $50 shipping cost. Supply chain visibility may reveal that a Santa Monica store just received that dresser and can deliver it today for $25 instead. An efficient, communicative delivery model creates the same effect a smiling store associate does when preparing a customer’s package — a pleasant experience that drives loyalty.

In the last twenty years, the internet has become the front door to every retail store. Now, that entry point is briskly shifting to mobile devices, and even further with voice-activated personal assistants and other connected devices. New technologies are helping innovative brands to ease the transition as consumers forgo the shopping mall in favor of bringing the store experience into their homes. Retailers that don’t find a way to create a happy marriage between the showroom experience you’d expect in a store and the convenience of personal shopping at home will be left behind.

Original Article