The Innovators: Building the New Retail Frontier

Brad Rhoads

March 22, 2018

Right now, in Silicon Valley and start-up incubators in New York, Amsterdam, Tokyo and a hundred of other cities around the globe, business leaders are cracking open corporate DNA and rearranging the code. This isn’t the laissez-faire evolution of MBA textbooks. This is human intervention – designed to change the consumer experience and conquer natural selection. This is innovation.

An influx of resources, money and manpower is energizing the creation of new, innovative technologies at a pace we haven’t seen since the Space Age and Cold War arms race of the 1960’s.

It’s become a game of one-upmanship on a global scale, with superpowers burning through limitless resources working to survive by becoming the first, the best, the biggest, and the strongest.

Along the way, the rulers of retail have evolved into tech giants offering goods and services far outside of their traditional verticals. And, they’re delivering them, along with a string of innovative user experiences all zeroed in on the same objective – creating a fortress inside their customer’s homes.

What at first seemed like a natural extension of a business model is revealing itself as a tactical fistfight. Google jumped in first with Google Express, which allows customers to order nonperishable groceries from partner stores and receive them in just a few days. The innovation? You can do it from any connected device, just by saying, “Hey Google!”¹

Next, one of Google’s partners, Walmart^®, decided it would be better to bring perishable and nonperishable groceries to your door in hours instead of days.² And, it found an easy way to make it happen by tapping into the expanding matrix of Uber drivers, rather than creating a fleet of its own.³

And then, there’s Amazon. It bought an entire enterprise, Whole Foods^®, which already accepted the most online grocery orders.⁴ It linked those orders to the Alexa/Echo universe, and sped them to your house in under an hour,⁵ and shipping is free for Prime Members⁶ (Hint: half of Whole Foods^® shoppers were already Prime Members).⁷ For good measure, it added Amazon Meal Kit, to give customers the option of having items bundled into ready-to-prepare dishes, pulling hungry shoppers away from meal-kit delivery innovator Blue Apron.

“That’s the goal. Retailers – both offline and online – now want to control lastmile delivery to consumers,” Chris Abele explains. As the Director of Corporate Strategy at First Data^®, he stays connected with evolving commerce trends. “This is what consumers want. They want it today, within hours. They want it at their door, and they are willing to pay for it.”

Rockets on the bottom of a space shuttle

So, whether consumers are purchasing through big retailers, or getting restaurant food delivered to their door using experience-minded mobile apps, like GrubHub, Uber EATS, and DoorDash^®, First Data^® is designing the technology that’s keeping the payment process not only easy and seamless but also behind the curtain and out of view. Abele says, “The more nuts and bolts activities like payments are blended into the overall consumer experience, the better.”Of course, home food delivery isn’t a novel idea. Pizza shops have boosted sales for decades with doorstep delivery. The 30-minutes-or-less model evolved into online ordering and mobile apps now used by every major pizza chain.

But Domino’s realized early-on that innovation was its path to differentiation. It famously transformed into a tech company (that happens to make pizza.)⁹ For starters, it was the first pizza chain to take orders over smart speakers like Amazon Echo and Google Home, as well as Apple Watches, Facebook and Twitter (remember the pizza emoji tweet?)¹⁰ And now, even its app is making headlines with a “no-click” feature that orders for you in just 10 seconds.”

With the help of First Data^®, Domino’s also built a Baby Registry¹² — the natural successor to Domino’s Wedding Registry¹³ — that lets friends send pizza and pizza-themed gifts to new parents and newlyweds.

The last-mile delivery concept also transformed Millennial-favorite IKEA^®. The “assemble-it-yourself” furniture maker bought the innovative start-up TaskRabbit, which allows users to submit requests for services they need, like dogwalking or housesitting, and then wait for pre-screened taskers to bid on the job. Now, assembling IKEA furniture is a top TaskRabbit service.¹⁴

“This is what the consumers want. They want it today, within hours. They want it at their door, and they are willing to pay for it.”
– Chris Abele
Director of Corporate Strategy
First Data

With IKEA encroaching on its turf, Amazon created Amazon Home Services, to offer customers a new and simple way to buy and schedule professional services such as furniture assembly, house cleaning, and appliance repair directly on Amazon.com.¹⁵ It also allows Amazon to sell home improvement products like flooring, carpeting, and drywall to customers who aren’t comfortable with the do-it-yourself (DIY) concept.

For those who want to try DIY, Lowe’s^® partnered with Porch, an innovative 24/7 support service that connects customers with experts who can help with home improvement projects. Customers can hire contractors directly through the site,¹⁶ request personal, guided instructions on installations and assemblies, or chat to get quick advice and ideas.

Lowe’s was also the first retailer to use virtual reality (VR) to run home improvement clinics.¹⁷ It offers the Holoroom How To experience, providing on-demand DIY clinics to customers. They also jumped in the augmented reality (AR) game. Following in the footsteps of Amazon’s AR View,¹⁸ they launched the Envisioned app last October. Both use AR to generate sales by allowing customers to digitally place a piece of furniture inside their home to see how it looks before purchasing it.¹⁹ “In the last year, we’ve seen AR evolve to be much more than a way to chase virtual monsters in Pokemon Go,” says Seth Perlman. As First Data’s Global Head of Strategy, he and his team keep on top of new technologies that are reshaping commerce. “It could prove to be a powerful tool to remove uncertainty and doubt about a potential purchase, especially for categories such as apparel and home goods, where it can be hard to make a buying decision based only on a two-dimensional thumbnail image.”

Technological advancements are also impacting the way people give gifts. What started as simple paper gift certificates has evolved into instant and engaging digital experiences. With help from First Datas^®, Walmart^® is using unique app technology to offer reloadable eGift cards like Basic Blue, which once purchased can be reloaded not only by the owner, but by friends and family as a “gift” for new occasions.²⁰

And, Walmart Pay isn’t just a mobile wallet, it also stores receipts and purchase histories. Users can also reload their own cards for easy checkout at the store.

“In addition to last-mile delivery and service, another trend shaping the evolution of retail right now is consumer brands going directly to market,” says Abele. “Big brands like Tide^® are selling over their own websites and making deals to sell to consumers on Amazon.”

After striking a direct-to-consumer deal last summer, Nike^® became a top-selling brand on Amazon. “We are looking to improve the Nike consumer experience on Amazon by elevating the way the brand is presented and increasing the quality of product storytelling,” Nike’s CEO Mark Parker told investors during a conference call.²¹

Parker says Nike^® also plans to begin selling on Instagram,²² a platform the company already dominates in terms of followers. Nike’s tone-perfect use of emotive and aspirational imagery captures the spirit of Instagram, generating loyalty and brand recognition.²³ It will likely use Instagram’s Shopping-Tags feature to turn those followers into buyers, allowing Instagram users to simply click on Nike’s posts to get information and links to the product.²⁴

Social media and mobile-focused marketing are keys to selling direct-to-consumer products. Innovative user experiences draw customers in and keep them satisfied. Take, for example, Gatorade’s GX Platform, which uses a patch on athletes’ skin to monitor sweat output and electrolyte loss. It uses the data to recommend a personalized formula for Gatorade’s “fuel bottle,” which, in-turn, records how much Gatorade the player has taken in, helping them stay hydrated.²⁵

In some Nordstrom stores, customers can go to a special Lancôme counter where their skin tone is analyzed with a technology called Le Teint Particulier. It precisely matches base colors, which are then mixed on the spot from thousands of pigments to create the perfect makeup foundation shade for each customer.²⁶

“The next retail frontier,” says Perlman, “will be the delivery of a consistent, personalized experience to every consumer regardless of where they are or what device they’re holding.” He says that First Data^® is working with retailers of all sizes to provide the payments capabilities and robust analytics they need for the next era of commerce.

Think about it, the technologies that emerged during the Space Age are still with us, affecting how we live, work, and interact with our world. This new explosion of technology delivering commerce innovations that are changing everything about how we shop and pay, will undoubtedly have a long-lasting effect on retail sales and the consumer experience.

This article initially appeared in Connected Magazine, an award-wining publication providing First Data’s merchant clients with an insider’s perspective on what’s happening right now, and what’s coming soon, in the world of commerce.

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