Marc Schumacher has several ideas about what the service of the future will look like. And he knows what he is talking about: before he started as managing partner of German brand communications agency Liganova the graduated business economist worked for several years in retail hmself.
300 employees work at Liganova’s headquarters in Stuttgart, another 70 at the companies international branches in Amsterdam, Berlin and San Francisco. Companies such as Porsche, Adidas, Nespresso, Mercedes-Benz and Louis Vuitton belong to Liganova’s client portfolio.
The transformation of the retail business due to digitization is also a big topic at Liganova. Since many years Schumacher has a focus on current and future scenarios, and since the 41-year-old regularly shares his knowledge during lectures he got a reputation as a pioneer. Schumacher’s expertise gets also fueled from the experience that Liganova gains via its San Francisco office, where the brand experts stay in close touch to the latest trends from the Silicon Valley.
What does “seamless shopping” mean?
That’s a legitimate question because the term is often misunderstood.Basically, it is about being able to use technology to facilitate checking goods availability and completing payment transactions. It could also be called “virtual shelf extension.” It’s about a product such as a pair of pants that’s not available in my size, which I can still order anyway. At the moment, interconnectivity is a powerful driver of the world. Smart homes are an example: Soon we’ll have refrigerators that know we’re running out of milk and reorder it on its own. In my opinion, this is also part of the future. I wouldn’t say Click & Collect, in other words shopping online and then picking the goods up at a store, or purely mobile payment fall under the seamless shopping category.
What priorities should be set in the development of seamless shopping technologies?
To me, seamless shopping is a process that should be developed from the perspective of the customer. How can the greatest possible convenience for the end-user be created during the shopping process? Retailers are looking into this question. Nevertheless, customer centricity that puts customer needs at the center of service efforts remains pure marketing buzz. Genuine implementation is still lacking. Instead, old patterns of behavior and sales structures persist.
Is there an example of seamless shopping that works well?
Yes, and here, in my opinion, first and foremost a non-retailer should be mentioned: Amazon. Amazon sees itself as a tech company, but now operates its own businesses. I recently visited an “Amazon Go” supermarket in San Francisco. Visually, the market is indistinguishable from a conventional one. The technology used here remains invisible. A prerequisite for entering the store is an app–when you walk in you check in automatically with this app. The smartphone doesn’t even have to be removed from your bag. In the store, customers take their purchases off the shelf and leave again. The money is automatically deducted from the customer’s account and the receipt sent to the cell phone. In my eyes, this is seamless shopping of the future.
What are the technical requirements for that kind of concept?
Amazon keeps its cards close to its chest there. Bearing in mind that the company has one of the largest R&D budgets in the world and given the number of patents Amazon is obtaining, it’s also clear why they’re so tight-lipped. As far as is known, the seamless shopping concept is based on cameras–and not, as might be supposed, near-field communication, in which the contactless data exchange with the smartphone takes place by means of electromagnetic induction. Amazon creates complete motion profiles for each customer, or so the assumption goes. The cameras detect what the customer accesses in the store and forward the information to the payment system.
Liganova has a branch in San Francisco. How do you feel about technical developments there?
It’s quite interesting to see what’s going on in San Francisco: On the one hand, technologies are being developed there that have what it takes to turn the world upside down. On the other hand, San Francisco is the most analogous place in the world. Opening your computer at breakfast in a hotel or making a call with your cell phone in the hotel lobby is frowned upon. There are signs saying “Real people talk to each other” to remind people to be socially in touch offline. Americans are open to new technologies. But only where they make sense and contribute to making life easier or more enjoyable. Where they’re superfluous, they don’t want it. Not for nothing was the term “shy tech” coined in Silicon Valley. It stands for technology that stays in the background and is invisible.
Will the “Amazon Go” model reshape textile retailing?
The digitization of physical retail is still in its infancy. We’re already seeing mobile payment systems and advanced merchandise management. The use case à la Amazon doesn’t exist here yet. And I don’t think physical textile retailers need this technology. The requirements for the retail industry are different, because often little high-tech is needed. The Nike store in Los Angeles is a good example of how closeness to customers can be established with little technical effort. The store synchronizes itself with all users of the Nike app who are in its vicinity. What are people talking about right now? Who decides where to go running? What’s the weather forecast? The goods are arranged in the store based on this information. But, strictly speaking, that too is a low-tech solution. The current relevance of certain articles among users of the app is monitored and range of goods in the store chosen accordingly.
Where do you find the use of seamless shopping useful, where not?
I would divide the world of shopping into the areas of meeting demand and inspirational shopping experiences. Eighty to ninety percent of shopping involves recurring purchases to meet daily needs. These should be made as convenient as possible. The key concept here is “one click away.” Here, the expectation of speed and convenience will grow rapidly in the near future. In particular, digital natives have little patience if the interface makes it too difficult for them to order a product online.
And beyond just meeting day-to-day needs?
The laws are different there. Here, the same consumers who’ve just opted out of an annoying and excessively complex interface accept hurdles and more complicated shopping conditions. Not only that, they even want them. Limiting the number of products or how long they are available, shopping by invitation only, paying a cover charge to shop somewhere–things like that are accepted without complaint. The best example of this is ComplexCon in Los Angeles, a hybrid consumer trade fair and shopping event. Here large sportswear brands offer limited editions only. At the last event in November, 60,000 young people bought tickets at $58 each just to get access to this shopping world. To me, this means that the relevance of seamless shopping depends not only on the product group, but on the use scenario. If I buy shoes with a welt sewn on, I can accept that doing so may take an hour and a half, and at the end I’d like to have the receipt in an envelope. That’s the opposite of seamless shopping.
What role will interpersonal contact play in shopping of the future?
Last year, Zalando achieved revenues of about €4 billion. But that also means that goods worth €8 billion were shipped. The return rate in e-commerce is still 50%. The way I see it, these figures prove that many people now dispense with personal advice and decide for themselves whether a garment suits them or not.
So, service will soon be a relic of bygone days?
That would be an exaggeration. The demographics in Germany, the fact that there are many older people among us, slow down developments like that. In Asia, service and advice is understood completely differently, so the question cannot be answered in a general way. The decisive factor is always the market being analyzed and how urban the environment is. But the following can be said: Even if a retailer has improved its service over the last five years, it’s possible that no measurable success is evident. This is because it’s now surrounded by new players who are even more service-oriented and more customer-friendly. For example, goodwill in connection with exchanging goods is no longer a competitive advantage, because today the customer naturally assumes that goods will be taken back. Things that were a competitive advantage yesterday are hygiene factors today.
Is there a paradigm shift coming? What will service look like in the future?
Yes, we are in the midst of radical change–which, by the way, is affecting other industries even more strongly than fashion. As more and more sharing concepts establish themselves, the automotive industry will experience completely different scenarios in the years to come. In the future, service will be increasingly personalized and segmented. We already know that from Amazon: “People who bought this also bought that.” Being put on hold with call centers will soon be a thing of the past thanks to bots. In the store service is becoming spontaneous, more informal. In keeping with the motto: “Can I carry that for you?” From the customer’s perspective, a significant improvement is coming. I believe that in the future, more than ever, people will want sales advice from a highly competent and credible person who will make the product tangible for them. Interpersonal contact during the shopping experience will thus take on a whole new quality.
Issue No. 288, Spring 2019