How consumers are holding back retail tech advances

The in-person shopping experience, from finding the right product in the store to trying on clothes in a fitting room to paying a cash register, is far more archaic than it needs to be.

"The fact that you have to take a product up to a desk and hand them a piece of plastic or cash, that's from the day one of retail from 1850," Scott Bauer, a partner at PricewaterhouseCoopers and an author of the firm's Total Retail report, says.

"You can buy your cup of coffee at the major coffee house and not have to whip out your plastic," he adds. "You can pay with your phone. That type of technology is dead simple and has been around for years. It's more about getting consumers comfortable with that, sort of, allowing the merchant to see what your purchases are because you're being tracked on what you're buying."

Mobile payments are just one small example of a much larger evolution in retail that has yet to take place. Take apparel shopping as an example. With the technology available, such as augmented reality, sensors, and mobile payments, shoppers today should be able to find a shirt they like, see how it would look on them through an augmented reality app, pay for it from their PC or mobile device, and then either receive it in the mail on the same day or stop by a retail storefront to pick it up.

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Shoppers who would rather see or feel a product in-person could use location-based services and in-building mapping apps to find the items they're looking for immediately, and sensors installed on the store shelves would make sure the product is always in stock. And mobile payments, by their nature, can be made in-store, replacing the cash register and its long lines.

Much of this technology is ready to use today, and could be reaping benefits for both shoppers and retailers. The barrier that has prevented the retail experience from evolving since the pre-Internet age lies in the consumers themselves.

"On the barrier side, it's not technology as much as it is business case," Bauer says. "So it's a bit of the chicken and the egg. The retailers can offer it, but their question is, they can spend all this money to offer the technology, but will people adopt it? They really want to see the gains for it."

Most consumers today are what Bauer calls "digital converts." They may have smartphones, but rarely use them to their full potential. They didn't grow up with the high-tech tools that are available to them, but adapted to them, often skeptically. Until the digital natives those who don't know life without the Internet and more actively adopt new technology outweigh the digital converts in the marketplace, retailers are going to be wary of investing in and deploying technology that might scare off traditional consumers.

Rather than sitting idly by, retailers will need to prepare consumers before unleashing new technologies on them. For example, Amazon CEO Jeff Bezos announced the company's plans for an airborne drone-based delivery service in a 60 Minutes interview last December, while admitting that it could take as long as seven years for the company to launch the service. Bezos made this premature announcement for the same reason that Google introduced its Glass device to a limited group of hand-selected users years before releasing it to the public. Consumers need time to warm up to disruptive technology before realizing its benefits.

"What Bezos has done here that is so genius from a marketing standpoint is this: he's started the debate now, before he's even perfected the octocopter technology and before it's even legal, so that the public will start the long process of self-normalizing the concept of an octocopter in the first place," Will Burns, Founder & CEO of Ideasicle, wrote in a Forbes column in December.

Just as important as giving the market time to warm up to new technologies is giving businesses time to develop them. For example, retailers will have mountains of data to use to create highly personalized promotions for individual customers in the next few years. These personalized promotions should become more accurate as the data grows and the technology improves. Over time, consumers will grow to expect personalized promotions that advertise only the products they're likely to buy.

"The recipe for success is to have personalized and individualized down to segments of one, and those that aren't targeting segments of one won't be successful, because increasingly the population will be made up of more digital natives, and they will have had experience," Bauer says. "I think it'll turn off some consumers that don't receive that personalized attention."

Although a more tech-savvy customer base will be more willing to try out new technologies and services, these consumers will also have much higher expectations, and no shortage of social media to express their disappointments. In the future of retail, introducing a new technology that underestimates its users could be just as dangerous as investing in over-advanced technology today.

"They have a different expectation of a level of service that will allow those retailers who are willing to invest in those technology changes that we're talking about to really differentiate themselves," Bauer says. "So those retailers want to, in five to 10 years, to be successful, they're going to try to attract and retain the digital native and their behaviors."

Colin Neagle covers emerging technologies and the startup scene for Network World. Follow him on Twitter @ntwrkwrldneagle and keep up with the Microsoft, Cisco and Open Source community blogs. Colin's email address is cneagle@nww.com.

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