In February, Target abruptly shut down its “store of the future” project, a major innovation initiative that was testing out automatic checkout capabilities (à la Amazon Go), robot-driven order fulfillments and other e-commerce integrations at a store prototype in San Francisco.
The futuristic store was set to open to the public later this year, but after holiday sales performed more poorly than expected, Target CEO Brian Cornell pulled the plug, shelving major plans for a brick-and-mortar overhaul for the time being. The only insight given into the decision was a statement released by Target stating that innovation efforts were paused to “refocus” on core strategy.
Therein lies the problem with the “store of the future” terminology: the initiative becomes a self-fulfilling prophecy, and real progress around a new store experience is always going to be a few years down the line — out of tangible reach, but talked about often in hypotheticals.
“When Target canceled their store of the future, they didn’t discuss why at great length,” said Jason Goldberg, svp of content and commerce at SapientRazorfish. “But it followed poor holiday sales, which shows just how quickly these down-the-line initiatives vanish. As soon as things go south, the first budget to be cut is going to be for something dubbed ‘of the future.’”
Now that industry analysts have proclaimed that brick-and-mortar isn’t dead, it’s just evolving, retailers — particularly those with a large fleet of traditional format stores like Target — are tasked with overhauling, tweaking and improving the physical shopping experience.
The “store of the future” mindset, however, potentially does more harm than good for a company’s actual advancements.
Revamping the in-store experience is a huge undertaking, and as a result, the “store of the future” moniker checks a box that says a company has its eye on innovation, without setting up expectations for a mass rollout. The more grandeur that accompanies an in-store project, the less likely it is to take off across a full fleet of store locations outside of San Francisco, as it exists in a vacuum and marketers do little to make sense of the resulting data.
Tech vendors feed off of that hype by promising big fixes with buzzy trends like smart fitting room mirrors, VR experiences, endless aisles, scan-from-your-phone checkout, Google Analytics for physical traffic, heat mapping, beacon notifications and body scanners that can identify each person that walks into a retail store by phone number and history of purchase.
Actual progress, when it comes to digital evolutions in store, boils down to how well a company has integrated its approach to innovation internally, from its technology team down to its in-store associates.
“We don’t use the term ‘store of the future.’ That’s not how we think about,” said Kohl’s CEO Kevin Mansell. “New technology has to apply to every store, and the problem with the store of the future idea is that it’s not a practical acknowledgement that we have 1,150 stores all over the country.”
Mansell plans to use those stores to better fulfill online orders and offer capabilities like buy online, pick up in store and online return in stores. Kohl’s biggest undertaking, however, was overhauling its rewards and couponing experience to operate fully on its mobile app and through a mobile checkout capability, Kohl’s Pay. Each customer shopping in store can link his or her loyalty card to the app, and every item scanned will reflect the actual price that person will pay, all discounts and promotions automatically applied.
“We’re prioritizing the biggest friction points for our customers, and our customers like to play the savings game. We’re focused on the pragmatic approach,” said Mansell.
Internally, Mansell described an organization that’s designed to take small steps — all of which affect the company’s entire fleet of stores — toward a longer term vision. Kohl’s 200-person technology team in California tests new ideas that are then put into action by the 800-person technology team that’s woven throughout every department at Kohl’s Wisconsin headquarters, led by chief technology officer Ratnakar Lavu.
“A single isolated team can’t successfully deploy a new store. To deploy technology at scale, you have to get the operational teams in the real stores involved,” said Goldberg. “A lot of it is about culture. One board member might see an article and say, ‘Where is our magic mirror?’ Then there’s one magic mirror in one store with no chance of being profitable. Changing corporate cultures is a lot harder than buying a magic mirror.”
The technology providers working with retailers to push the in-store experience into the future aren’t doing any great service to retailers who don’t consider their technology part of a scalable plan.
“The problem with the ‘store of the future’ idea is that it focuses around the single event, which is the launch,” said Healey Cypher, founder and CEO of Oak Labs, which powers fitting room mirror technology and works with brands like Ralph Lauren and Rebecca Minkoff. “What happens after the launch? Most of the time, nothing. It immediately plateaus.”
Cypher said that it’s easy to tell which clients are interested in the technology as a one-off move for positive press and who’s actually serious about incorporating the technology as part of a long-term strategy.
When retailers are focusing efforts on substance over flash in stores, they’re not spending too much time giving lip service to the “store of the future” and all it could entail. However, that doesn’t generate much buzz.
“When retailers are actually rolling out ideas at scale, they’re not talking about the store of the future as much,” said Goldberg. “Then on the other hand, you have retailers who have a ‘big bang’ of innovation every few years to get on the board and say, ‘Hey, we’re doing something here, and it could change everything.’ That pleases the board of the directors, but that’s not affecting real stores.”