Is 2018 Living Up to the Retail Modernization Hype?

At the end of 2017, retail industry observer and former Morgan Stanley retail analyst Walter Loeb predicted that “2018 will be the year of technology and more integration of it into mainstream retail.”

In his column, published at Forbes.com, he observes that 2018 “will be the year where we see retailers create new operating models that are less focused on their store vs. the web and more focused on creating experiences that gives customers more control and convenient ways to shop. I think it will be an exciting year where customers will find newness and creativity.”

So far this year, the overarching trend in retail technology adoption appears to be this: Leverage in-store technology to encourage customers to visit, build retail environments that serve as showrooms and gathering spaces, and customers will come.

Checking in on some of the more noteworthy developments in tech integration in retail so far, there’s a lot to report. 

Gap Leverages Data

Gap Inc. started in April to focus on how technology can boost its brand, announcing that stores will use sales data to assess and meet staffing needs more efficiently during periods of high foot traffic.

The move followed an eight-month pilot in 28 Gap stores in the San Francisco and Chicago markets, which saw sales increase by 7 percent and labor productivity increase by 5 percent as a result of the data-enhanced policies, according to a recent report. 

“We use data and customer insights to drive our business — including the customer experience inside and outside of stores — and we’re constantly learning how to read and respond to data in a way that doesn’t create imbalance,” C. David Ard, senior vice president and global head of people at Gap, wrote in an April statement. “The apparel retail business is complex, and we’re working diligently to make meaningful improvements that benefit our employees and customers.”

Nordstrom Experiments with In-Store Tech

Also in April, Seattle-based retailer Nordstrom opened a sleek, three-story men’s fashions store in New York City, replete with new technology aimed at helping customers better understand available inventory and allowing them to test out products on personal avatars.

Digital screens in the suit section show off how custom-made jackets might look on a customer, while a digital kiosk set up to accept returns requires no human interaction — attractive to busy customers who want to make an exchange for another product quickly and then move on with their days.

The company chose Manhattan for the location of a similar, seven-story store offering women’s fashions, set to open in fall 2019, according to The New York Times. If successful, the company plans to roll out similar technology throughout many of its U.S. stores.

Best Buy Keeps Customers Coming Back

In a bid to slow the practice of “showrooming” — checking out products in-store, then purchasing at the lowest price online — in 2018 Best Buy continued a price-cutting strategy adopted in 2012, re-emphasized in-store customer service and also continued to enhance its hybrid e-commerce and offline strategies, moves that appear to be paying off, according to a recent report in The Wall Street Journal. Same-store sales rose 6.2 percent in its fiscal second quarter over the year before, and beat analysts’ 3.7 percent predictions, the newspaper reports.

Best Buy joins a handful of retailers that meet or exceed customer expectations when it comes to in-store technology integration to enhance their experiences. Investment in strong Wi-Fi to support customers’ web surfing and price-comparison work pays off when the store also pledges to match any price found online to make that in-store sale. 

New point of sale systems in 2015 also went far to boost customer experience. That back-end technology investment works hand in hand with strong emphasis on customer service, punctuated by in-store employees’ ability to offer expert advice and installation support — all reasons that keep customers coming back to the actual store instead of turning to online rivals.

Home Depot Invests in Tech Talent

Home improvement retailer Home Depot announced this spring that the company plans to add more than 1,000 technology hires through the end of 2018. The move was made to support its planned $11 billion multiyear technology investment strategy, aimed at fending off increased competition from Lowe’s and online outlets, according to a report from Recode.

The store plans to add software engineers, user experience designers, network engineers and product managers, primarily in the company’s Atlanta, Austin and Dallas technology offices, according to a release. Ultimately, the plan should improve Home Depot’s online shopping experience, expand warehouses to speed up deliveries and add in-store improvements that will help customers find items and check out faster.

Home Depot CIO Matt Carey tells Recode that the hires will increase the store’s technology staff by more than a third, and that he’s confident in the plan. “I don’t run their roadmap; I run my roadmap,” Carey says of Amazon. “The roadmap we have is one our customers are encouraging us to go execute on. I’m not limited by anything other than time right now.”