Next-Gen Retail: When Physical And Virtual Worlds Merge

Imagine the scene. You’re standing on the subway platform heading home, with eight minutes before your train is due. On the wall is a huge poster of a grocery store shelf, stocked with all kinds of daily essentials. You use your phone to scan the five items you had planned to pick up on your way home anyway, and ask for delivery later that evening. The store already knows your details and preferences and works accordingly, helping you to save time while you kill some dead time.
Welcome to the start of context-based services, where the physical world can merge with the virtual, and when supplemented with the information already known about you, can provide new opportunities and better experiences. This isn’t simply imagination, but a real example from a local offshoot of Tesco, the British grocery retailer, in Seoul, South Korea.
The simple idea is that businesses will increasingly look to draw on a range of inputs, all at the same time, to take the user experience that they offer their customers to the next level, making it far more context-sensitive. There’s several elements to this: one is in being able to identify you; another, knowing something about your location or environment; and a third, understanding what you’re doing – and, in some instances, what your friends or colleagues are saying about it.
This will occur across all manner of industries, although it will likely be more noticeable in retail. Mobile app Shopkick is one example. It seeks to enrich the in-store shopping experience with personalized offers, highlighting products that others have liked, and rewarding customers for walking into selected stores. The reward for walking in is just the bait; the context piece comes from location (knowing you’re in the store), understanding interests and intent (scanning an item you’re thinking about), and social (knowing what others liked). In turn, it enriches both the physical and virtual shopping experience in a wholly new way.
Underpinning context-based services is the ability for firms to aggregate and apply smart analytics to a widening array of new data – from customers’ location information and social networks, to mobile apps, blogs, tweets, purchasing history, and more. The more that firms know about where their customers are, and what they’re doing – analyzed in real-time – the more they will be able to deliver immersive and valuable services specifically tailored to them. In essence, a context-aware service is one that makes use of a person’s location, activities and preferences to provide a better quality and more target service. Reach.ly is an example: it scans Twitter data to help connect hotels with individuals potentially travelling to their area, based on their tweets, so that they can provide specifically customized offers.
This ability to combine specific information about people, along with other contextual information, can result in wholly new approaches to services or product offerings. For example, a car rental company may already provide its frequent business customers with a service to minimize any queues at check in, but might build on that by ensuring that their car is waiting for them – along with the child-seat they always request – when they near the outlet. Or immediately dispatch a replacement vehicle to your specific location in the event that a fault or accident is alerted from the rental car.
This may sound like a privacy-threatening world akin to that of the film Minority Report. But the reality is that firms can already infer a huge range of information about their customers based on their existing interactions with them, or with their peers, or simply by asking users to share new information themselves. As many have learned, when given a meaningful reason to do so, people will often share useful personal information about themselves. Scan a QR code from a poster of a model, for example, and you might happily share some personal information, such as your waist size, in order to check availability of a particular item in stores near you. By 2015, analyst firm Gartner estimates that 40% of the world’s smartphone users will opt-in to context service providers, which track their movements and digital habits, in exchange for better services.
Misys gives a different kind of example of this in practice, illustrating how context can impact a range of sectors. It is working to combat bank fraud with GeoGuard, its new consumer location-based offering that runs on the Force.com platform. This gathers geographic information and enables customers to allow their banks to request their most recent location information, regardless of the services they use. Customers can enjoy hassle free use of their cards, while banks benefit from being able to cut the considerable costs of confirming a customer’s location abroad and having to reimburse any fraudulent transactions.
As such services proliferate, leading firms will use context to help deliver mass-personalization for their customers, enabling them to better differentiate themselves from their rivals. In turn, consumers will be among the clearest beneficiaries from this trend, enjoying richer user experiences that are more tightly customized to their individual location, needs and preferences. And as context becomes more commonplace, consumers will increasingly start to expect it. This is the primary challenge for CIOs in the year ahead: a need to start getting to grips with context and how to adapt it, or else risk being left behind in a rapidly evolving marketplace.