Before we celebrate our successes, let’s look at another vertical: Cities. Like stores, their consumers are changing, their services need to adapt. IBM invested approximately $350 million in smart city technology and marketing trying to reinvent the metropolitan centers globally and have perhaps made 10 % return on this effort. But 557,000 cities spend $4.5 trillion per year, 10% of the global GDP.
According my colleague, Sascha Haselmayer, the CEO of CityMart in Barcelona, 0% of cities publish their needs, a mere 10% of cities engage with business that have new solutions and 70% only trust existing solution providers. Killer apps such as Shared Bicycles globally have taken 20 years to reach 0.1% of the market.
Why? Because cities look at a problem: Say, street lights for the blind and they focus on procuring a solution for street lights. Whereas, they should be looking to find a solution for the blind. Minnesota spent their budget on a talking street lights. Stockholm, on the other hand did not. It provided a device to its blind population that empowered them all the time (not just at street lights) and made them feel 90% less disabled and saved the city 20 million per year.
Why am I talking about cities in an article on stores?
Because we need to understand the challenges we face and embrace what we do well in order to do it better. Yes, are inundated with vendors that offer to change our world and it is a challenge to weed through the solutions and find pilots and trials. But we do.
I cannot tell you how many times I have sent an article on something that Jason Newport at Carat is doing with Macy’s and have been asked to investigate how we can do this in our store. Maybe it is because we feel that we are under siege in the retail vertical and need to trial and innovate?
Well to all the innovators that are reading this article, I want to ask you to explore a very simple sea change in the way you need to adapt the world in 2015. The retail mall, the city and the shopper are all about to change profoundly.
This change is not based on a technology as much as a new way of looking at the mobile landscape. Until now, we have seen the store as Minnesota saw their traffic light challenge: “How do we adapt our streetlights to service our blind population?”
Minnesota got their best and brightest on the task and solved this problem. However, we know that Minnesota should have asked a different question: “How do we best service our blind population?”
“Spend 90% of the time framing the question. And 10% on the solution,” as Albert Einstein once said.
Retailers are very good at finding solutions for “traffic lights.” We have trials and jettisoned countless solutions and won industry accolades for them in the process. We celebrate innovation but we often miss the ROI award.
THE APP STORE DILEMMA
What are the questions? Well perhaps they are:
- “How do we drive more loyalty doorswing?”
- “How do we better address showrooming in our stores?”
- “How we build a better mobile app?”
Or maybe we need to refashion the questions with the independent, mobile empowered shopper at the center:
- “How do I help the shopper find me?”
- “How do I help the shopper reach the web through my portal?”
- “What is a mobile app?”
Take our retail marketing departments. Our CMOs go to work every day and try to better position their products and services to the marketplace. They get to work and instead of marketing these products and services, they try and drive their app download.
Instead of marketing themselves they are marketing Apple.
Now, this understandable. Apple makes its money selling hardware. One of the reasons it has always succeeded is because it can bundle content seamlessly with an iPod or iPhone. To do this, Apple spends a large amount of its marketing dollars on helping developers. It publishes simple SDKs to help developers build better apps faster. Then they provide a virtual main street and allow retailers to publish their stores to their storefront.
There is nothing wrong with this; however, let me ask the following questions:
“What is a mobile app?” Could it be that our stores are apps? Could our shelves be apps? Could our products be apps? And the phone could be the trigger.
THE INTERNET OF THINGS
There is a new term in town, The Internet of Things (or IoT for those in the know). This is big. Why? Because it could force us to ask the correct questions.
The IoT is really an extension of good old machine-to-machine (M2M) communications. What the industry calls telemetry (tele – distance metry = measurement). With mobility, we have consumerized telemetry. Every modern phone has a compass, gyroscope, accelerometer ambient light sensor, proximity sensor, and many other ways of seeming sentient and smart. These sensors allow apps on your phone to also be smart and capture all sorts of information on the phone user and adapt accordingly. It also allows the app to transmit this data for medical, wellness, business needs to the cloud.
The phone was the first IoT thing. We took a rotary dial object, made it portable with a mobile network and then gave it all these smart sensors to allow it to be an ambient device.
In the IoT of 2015, everything you can shake a stick at has the potential of being an IoT thing. The lighting system in your store, the POS, the electric switches and garbage disposal units. All inanimate things have the ability with sensor and business logic of becoming much more efficient and intelligent in their tasks.
So when a retailer looks at their store this year, do they want to think of putting their store on the app store or making their store into an app? When the digital web is becoming a physical web (See Google’s Github post: https://google.github.io/physical-web/),perhaps we need to repatriate the interactivity of our stores from the app store and infuse it into our bricks and mortar?
HOW DO WE MAKE OUR STORES INTO APPS?
Ah, good question. Well the first thing that many well says is use a $20 beacon. This is a good answer. If you have an investment in apps and need to connect the app to the store, a beacon is a good solution.
But if you want to go IoT on the status quo and put the store back in the center, start to delight your mobile consumer by offering smartphone like services in the aisle and counter.
Does your store have Wi-Fi? Well a mobile consumer is a connected consumer. Let them offload their social Wi-Fi data needs onto your network. Act as a gateway to the web and be the concierge.
If this simple move did not intimidate Apple, they would not have made such a privacy fuss about nothing by hashing the phone unique identifier. (Privacy for pseudonymous consumers can be addresses without Apple’s deus ex machina approach.)
Wi-Fi offers the store (from basic VAS to super enhanced value):
- A way of being a social concierge
- Basic heat mapping of the store
- A digital hub to drive manufacturer promotions and smart coop dollars
- A loyalty platform to opt in shoppers and tether their phone to a OTT communication channel like email or SMS.
- A IoT network where every store now can communicate directly to a loyalist phone without the need for an app download.
- A proximity smart digital out of home engagement network to allow the store to identify and based on certain business logic drive street to aisle marketing for itself and its manufacture partners.
- A media network that can not only ask for coop budget from their manufacture partners but real media dollars to drive targeted, proximity-based engagement.
The store becomes the smart IoT things and the phone becomes the IoT trigger. The investment is back in the store’s domain and cannot not be disintermentiated.
Tie this engagement to wallet and coupon, and the solution becomes more and more sexy. And you thought IoT was something futuristic? Start being the innovators you are and begin asking the right questions.
Read on RetailTouch Points @ http://www.retailtouchpoints.com/features/executive-viewpoints/the-retail-internet-of-things-iot-turning-your-store-into-an-app
Gary is the CEO of Impact Mobile, Inc. and author of The Impulse Economy and Fast Shopper, Slow Store, which were published by Simon & Schuster, Atria Imprint. He also is working on a new book, covering the Internet of Things as the new app store. Schwartz founded and chaired the mobile committee for the Interactive Advertising Bureau (IAB) helping to establish a joint task force between the IAB, Mobile Marketing Association (MMA) and the Media Rating Council (MRC) to develop global mobile measurement standards for which he received an IAB award for industry excellence in 2009. He was elected for three terms as the Chairman of MEF North America and currently is the Global Director of Location Based Marketing Association; the Executive Chairman of 4More Innovation (Thinkwire platform on Twitter) and Special Adviser to The Wireless Registry.
Retailer Innovator 2014 Awards: Gary Schwartz on innovation 2:30 min interview.
Retail Innovator 2014: Gary Schwartz on “Who drives innovation?” If you focus on technology you lose the retail mission of connecting to your customer. One minute interview at the Retail Touchpoints’ Retail Innovator Award. June 18th 2014
HEDNA.org Brussels Conference, June 2014 Keynote by Gary Schwartz on the Internet of Things and how it impacts your hotels and the relationship you have with your guests.
While the phone will continue to connect people to people, it will increasingly connect machine to machine. The new phone will amplify, control and navigate the world around us. Many call this the Internet of Things (IOT).
The IOT is about how to talk to your washing machine as your friend. Maintain a relationship with your baby as if you were beside them in the crib. It is about finally having the basketball tell you how it thinks you have played and could improve your game. It is about having plants talk to you and shoes become your eyes. It is about clicking, signalling calling, texting, waving, approaching inanimate things and making them into digital, active, responsive stuff.
The digital app store is expanding to a new app store of objects for our home, work, and travel.
New York City 2014: The Science House (45 minute keynote)
When Cisco’s CEO, John Chambers, took the stage at CES in Vegas this year and announced that there was a difference between The Internet of Things (IOT) and the Internet of Everything (IOE), many cried “semantics”. But there is a difference and one that ripped across the US to the National Retailer Federation (NRF) Big Show at the Javits Centre in New York.
IOT, according to Chambers, is made up of billions of connected objects; however, IOE are the smart networks that are required to support all the data these objects generate and transmit. What will help move the IOT into the IOE and drive what Chambers predicts to be a $19 trillion in new revenue by 2020?
IOE requires a universal solution to tie the billions of sensor data into an intelligent device and system agnostic solution.
To our detriment, we are so focused on the idea of a hardware (IOT) solving all our problems that we neglected that simple insight that all these hardware solutions require a method of managing the people and service behind them.
The industry needs a wireless domain (DNS) naming solution that can provide profile, tools and privacy controls to enterprise and the consumer.
When I was invited to sit on a panel at the launch of the new wireless registry (www.wirelessregistry.com) at the NRF show and I realized that this registry could be the silver-bullet platform.
50 Billion Things
When Cisco, Qualcomm, IBM and other set up shop at NRF to talk retail, the IOT verse IOE discussion continued. Brand agencies such as Ogilvy were pitching a solution using Qualcomm’s wireless Gimbel platform to solve retail engagement in the store. Qualcomm’s Gimbel platform is essentially an IOE riding on Apple’s IOT’s iBeacons? Mobile Location Analytics (MLAs) companies that collect consumer behavioural analytics, are a big data IOE play riding on the IOT emitting from the phone and anchored to its MAC address
There are a proliferation of IOE solutions using different technology that require different CAPEX and resources.
Presently there are an estimated 10 billion sensors globally. This is predicted to grow to 50 billion sensors by 2020. Imagine the wireless noise we can anticipate as we move from city to city, street to street, aisle to aisle.
There are barriers everywhere:
- On the consumer side we have option paralysis but more importantly simple human inertia.
- On the retailer and brand side we have incumbent investments and IT budgets to navigate.
- On top of all this stasis we have the DC beltway privacy folk crying “do-not-track”.
How will the consumer navigate this noise? How will the retailer, brand, entertainment provider select from the exploding list of vendors selling various solutions using LTE identification, WiFi MAC identification, Bluetooth MAC, IMEI, etc.
My Wireless Name
The phone in 2014 is becoming less of a Cracker Jack container that acts as a repository of millions of sundry apps, and more of an intelligent device that performs as a server that can manage our world through smart profiling and APIs.
Think about it. We have been hoodwinked by the OEMs to believe that an application store tethered to a phone can deliver any service, entertainment, widget. The app store was a marketplace to the world: clocks, measuring tapes, cash registers, coupon dispensers, shopping lists, ad infinitum.
Google’s acquisition of Nest is good example of the changing landscape where the app will live in the IOT and the device will simply be the profile and the auto-controller. The 94Fifty smart basketball, the Sensible Baby smart sensor monitor, the remote Vibeasy vibrator: all use the phone as the remote control manager.
A service such as The Wireless Registry can offer a naming protocol that can work agnostically with all the in-market sensor solutions and offer a central repository for a retailer, brand, and entertainment provider’s identity. Any existing wireless signal (SSID) that a coffee shop or a big-box retail transmits can now have a name (Starbucks, GAP, Walmart) with an accompanying sophisticated profile. A consumer that has a phone, tablet and PC can now attach a personal name and wireless profile to their MAC addresses.
When the retail and consumer wireless signals bump in the proximal world, the consumer profile can do a simple look up can see what offers, services, commerce is available to them based on their specific identity. The consumer can also block unwanted solicitation answering Jules Polonetsky and the Privacy Commission’s concerns around “do-not-track”.
Now the consumer is in full control of their identity and the phone becomes an intelligent server interacting with the world of wireless signals based on that consumer preferences.
While this solution can interface with existing apps on the phone, ultimately the profile and preferences can be baked into the OS as part of the devices DNA.
Until later. Yours truly from my MAC address aka “MOBILEGUY”
There must be the equivalent of Moore’s Law for the speed of turning mobile intent-into-action and mobile path-into-purchase. Technology and patents are rippling through the marketplace that drive measurable efficiencies for brands, retailers and their consumers.
This week Amazon predicted that small, unmanned drone aircraft could be delivering packages within a year. Many have viewed the fun look-see video showing a web purchase and immediate dispensing of a 2.3 kilograms box into the carriage of a buzzing drone and after a short flight, a smiling kid waiting for the package at the doorstep.
(And before we tackle any ensuing U.S. Federal Aviation Administration regulatory issues of landing a package in a backyard ball hockey game or logistical issues such as possible “drone chasers” who maybe on the hunt to pick up drop offs nationally, let’s talk bras. . . )
While Bezos was pitching Drones, Microsoft announced research on sensors built into female lingerie, which collects EKG activity near the heart that predicts a “cookie snack attack” and sends a notification to the smartphone.
The month before, Motorola joined other patent holders such as Nokia/Microsoft that are positioning epidermal haptic feedback tattoos to speed up the connection between wanting-to-connect to the phone and connecting.
All of the above future-facing ideas are attempting to do one thing: anticipate intent and eliminate barriers.
In short, these solutions optimize the process of turning mobile intent-into-action and mobile path-into-purchase.
From purchase to delivery, from munchies to mobile warning, from tattoo sensor activation to phone activation is ideally all one blink, no needless hesitation, no undue thought.
In The Impulse Economy book, I spent 300 pages discussing the value of impulse. All mobile action is predicated on a paving a smooth path. Any bump en route drives precipitous drop off and abandonment.
Intent to take action (such as buy, opt-in, download) is a fragile thing and on a mobile device this dance between the seller and the buyer is even more perilous.
A Better Mouse Trap
The entire purchase process is like designing a good mouse trap. We see a call-to-action (trap well positioned at the mouse entrance); the good price or value proposition (cheese); quick ramp up to the product (platform) and a fast trigger mechanism to close the deal (hammer).
While our response may be based on previous advertising or experiential conditioning the sale is all based on how well the brand has built the process. Many brands focus on the pickup and well they should but sitting pretty on the physical or virtual shelf is not good enough. P&G labeled the sitting pretty moment: FMOT – the “First Moment Of Truth”.
(No not “Follow Me On Twitter”)
This is the moment when the customer sees the product and in a 5 x 5 (5 seconds by 5 foot) moment throws that product into the shopping basket. But we know that many shoppers will leave their shopping baskets and exit the store if the line is too long or the checkout is too cumbersome.
Moreover, shopping is not a linear process. We may research the product in what Google calls the ZMOT (zero moment of truth) and only rebuy the product if the product performs in the kitchen, livingroom or bathroom. (What the FMOT folk at P&G call the Second Moment of Truth)
Coining a new efficiency law
But for all this shopping science, the consumer is very grounded in decision and reward. To close a deal, buy a product, opt-in to affinity programs, the industry needs to find ways to speed up the purchase cycle.
We know the famous Moore’s Law shows that the number of transistors on integrated circuits doubles approximately every two years. Martin Cooper coined the mobile spectrum equivalent of Moore’s Law that spectral efficiency has doubled every 30 months since Marconi patented the wireless telegraph in 1897.
There is a mobile path-to-purchase law to be coined.
Intent-to-action efficiency doubled every X months. As an industry, ideas that work are the innovative ideas that drive this efficiency, optimize process and speed up the loop from call-to-action to action.
What is X?
Part II: Wild Turkeys (continuing from the Nov 26th post)
Here are three tips on identifying elusive innovation and finding a black swan. I had just returned knobbly kneed from a trip through South Asia and Russia. I attended three conferences and was just decompressing on Thanksgiving and felt obligated to continue the turkey analogy from the previous post.
1. Bottling Innovation
On the road at various industry events, the keynote always seems to start with innovation. The word has been peppered into panels and keynotes as in the place of the term “technology.” It is as if by magically by using the word “innovation” it will prime the techno-entrepreneur’s pump.
This is not a bad thing. It certainly gets the attention of the patriarchs. The Moscow Open Innovation Forum was keynoted by Dmitry Medvedev, prime minister of Russia, accompanied by the prime ministers of France and Finland. The World Summit Awards in Colombo, Sri Lanka, was opened by the country’s president, Mahinda Rajapaksa.
Innovation is associated with fresh ideas and out-with-the-old. At each event, the youth innovators are marched out bushy-tailed and bright-eyed. Mr. Medvedev and Virgin founder Sir Richard Branson posed smiling with the winning youth delegates.
The challenge is that while we all want to celebrate innovation, it is a difficult to bottle it. We find it hard to present it as a formula. Disruptive innovation is central for businesses that want to survive and stay competitive.
Incumbent players such as the wireless carrier want to appear light-footed and on the next wave, but the discussion generally gravitates to bemoaning the OTT competitors – that are never in the room – and proposing that the ecosystem is not sustainable.
There is unquestionably innovation, creativity and energy in the room, but we tend to present “wow,” and not the ingredients to cook up the same “wow” at home.
We chase mobile ideas to improve our retail business when, in fact, the sexiest thing about innovation is the resulting customers, sales and EBITDA.
2. Digital Inequality
Clearly, innovation is fueled by connectivity. I met with the Nikolai Nikiforov, Russian minister of communications and mass media and the youngest person in that country’s history to take over a ministerial position at the tender age of 29.
We talked about “digital inequality” in Russia and as well as other nations and how this is one of the biggest inhibitors of innovation. How can Russia future-proof its mobile network infrastructure to allow for universal access to high-speed Internet for the data-dependent business, education, health and entertainment services that will appear over the next decade?
“Electromagnetic spectrum is the crude oil of last-mile connectivity.” Mr. Nikiforov wants high-speed fiber with wireless relay into every community of 500 and above. The challenge is finding the funds and partnership.
When Peter Diamandis, the charismatic cofounder of Singularity University, took the stage, connectivity became a firebrand. “We have not started.” In ten years distance will mean nothing.
“Where you live and where you work do not need to be the same,” Mr. Diamandis said.
3. Crowd-Sourcing Innovation
So, for those of us that cannot cook up innovation, we know there is abundant creativity out there that we can tap into and global access and connectivity is making this possible.
Apple has shown us that by creating a marketplace for ideas, developers have risen to the challenge. The app store is a case study in innovation: The smarts of Steve Jobs to provide an SDK and audience and the smarts of app shops globally in designing for every possible user need.
So there is much talk about how to best crowd-source innovation globally. After all the discussion of innovation and digital access, we can focus on harvesting business ideas that work.
Mr. Diamandis showed how his first X-Prize challenge of $10 million to build a reusable rocket to take humans into orbit generated more than $100 million in R&D.
This ability to link innovation with connectivity allows entrepreneurs such as Sascha Haselmayer, CEO of CityMart, to build a crowd-sourcing engine for more than 80 cities globally. His engine allows for ideas to be vetted and adopted all through a remote online process. Sascha’s engine is a blueprint for crowd sourcing retail innovation.
So innovation has a retail formula and it is:
Black Swan innovation = connectivity for all + a readily accessible global market place