RETAIL’S DIGITAL FUTURE

#RetailsDigitalFuture

A report by

Page 2 Retail’s Digital Future

Introduction

Technology and property aren’t two infrastructure and tech savvy culture, ever evolving technology as well as sectors you would traditionally place Europe is catching up fast. by consumer demand. The real estate alongside each other. The fast-moving, This presents a window of industry needs to have both tech savvy volatile nature of many tech businesses opportunity for Western markets to see people and those who deeply understand is a world away from the risk-averse, what works and adjust ideas for its own the customer experience round the table. conservative approach of leading retail specific lifestyle needs. This means that Excitement around beacons, property investors. cautious investors can align themselves wearables, mapping and digital Yet while the fundamentals of with businesses that possess a track wallets could catapult the shopping income-producing real estate still drive record, allowing them to innovate experience to exciting new heights. rent from physical space, the world without taking on too much risk. Whether it’s the ability to have a Siri- around them has shifted profoundly With mobile commerce and guided personal shopping experience, towards the digital sphere. With the purchasing set to soar over the next few where recommended items are ready lines between physical and online years it will have major implications and waiting when you walk in; or the retailing merging every day, there’s a for traditional retailers. Even online potential for a 3D printing bakery piping pressing need to understand what lies retailers will need to adapt or risk seeing out your children’s favourite cartoon ahead. their very existence threatened. character, customer experience is set to In this report, we’ve sought to lift the As our interviews with Hammerson, be redefined. lid on some of the most influential new intu, NewRiver and Westfield reveal, Our report begins by examining trends, with insight from an array of shopping centres are already adapting. eight distinct areas of technological exciting new personalities, inspirational Their desire to enhance the retail innovation, some of which are already entrepreneurs and well-respected experience is in itself nothing new, but beginning to permeate the retail space. experts. BCSC’s desire to take an active the route being taken to get there is Drawing on a range of sector specific and role in supporting the industry in its changing every day. legal expert opinion, we consider specific digital revolution speaks volumes about Today people seamlessly glide opportunities and threats. The challenge the value it creates for its members and between their physical and virtual of complying with existing and future about the opportunities ahead. worlds. Customers are shopping and legislation is considered by Addleshaw With so many unchartered areas now browsing and informing themselves on Goddard’s experts from a host of legal being explored, the legal implications of the go and they expect the same from disciplines. new technology will also demand careful retailers. Now the hunger for new ways The final two sections of the report scrutiny. Although big data represents to use technology is so strong that take a step back to consider the strategic the umbrella under which many new people are much more willing to be part implications of these developments, tech trends sit, such considerations of experimental ideas. assessing the real estate industry extend far beyond compliance with the As Bristol based CEL proved when it context. We analyse the changing Data Protection Act. raised £280,000 for its Robox 3D printer landscape around store strategy and Addleshaw Goddard’s integrated on Kickstarter, a crowdfunding website, leasing, while BCSC lays out a detailed approach to client service means their imaginations are there to be captured overview of the current policy landscape. teams are not just more informed, but and boundaries are there to be pushed. Crucially, we also hear from four of better geared to offer advice across the The gulf between online and the sector’s biggest and most influential board by collaborating far beyond any physical retail stores is becoming less retail landlords – Hammerson, intu, one sector niche. acceptable. Luxury goods retailers NewRiver Retail and Westfield – who One area where property as an have been the quickest to embrace new offer insight into how they themselves industry has always excelled is its ability technology with open arms, but it’s are pushing things forward. to be social and to collaborate, and those in the middle that need to adopt However much technology can and this is no truer than with the sector’s or die. However, there are fantastic will change over the coming years, it’s approach to technology. Crucially, it is opportunities to use mobile retail clear that the role of landlords has also true of how landlords and retailers technology to expand, cross-sell and already been critically redefined. As are now working closer together than open up new revenue streams. facilitators, bringing together retailers, ever before. Both real estate and retail need to technology companies and investors, With its hotbed of tech talent – as bring in technology considerations their ability to keep a calm head and showcased throughout this report - right at the start to be effective and take a long-term view will be more vital Britain has embraced the digital word. relevant. Part of this is about finding than ever before. And while Asia still leads the world in ways to allow and plan for constant terms of digital manufacturing, digital change. Strategy is being informed by Retail’s Digital Future Page 3

Section One: Innovation

CHAPTER 1 CHAPTER 5 6 Big Data & Smart Analytics 21 3D Printing

EXPERT VIEW EXPERT VIEW 8 Jameel Syed, Semetric 22 Chris Elsworthy, Robox

LEGAL VIEW LEGAL VIEW 9 Laura Scaife, Addleshaw Goddard 23 Emma Armitage, Addleshaw Goddard

CHAPTER 2 CHAPTER 6 10 Augmented Reality 24 Wearables & Fash-Tech

EXPERT VIEW EXPERT VIEW 12 Lee Briggs, Gamar 26 Jonas Altman, Front Row

CHAPTER 3 EXPERT VIEW 14 Beacons & Location Technology 28 Kate Unsworth, Kovert Designs

EXPERT VIEW CHAPTER 7 16 Owen Geddes, Appflare 30 Biometrics

EXPERT VIEW CHAPTER 8 17 Sam Amrani, Tamoco 32 Digital Wallets

LEGAL VIEW EXPERT VIEW 18 Jonathan Davey, Addleshaw Goddard 34 Katherine Thompson, Edison

CHAPTER 4 LEGAL VIEW 19 Mapping 35 William James, Addleshaw Goddard

EXPERT VIEW 20 Joseph Leigh, HERE

Section Two: Property

OVERVIEW EXPERT VIEW 38 Ramifications for real estate 46 Stephen Brown, Hammerson

EXPERT VIEW LEGAL VIEW 43 Debbie Warwick, Daniel Watney 48 Bruce Lightbody, Addleshaw Goddard

EXPERT VIEW 44 Edward Cooke, BCSC

Section Three: Reflections

SECURITY EXPERT VIEW 52 David Emm, Kaspersky 58 Trevor Pereira, intu

BIG PRIVACY CASE STUDY 54 David Engel, Addleshaw Goddard 60 Peter Miller, Westfield

AGE OF COLLABORATION EXPERT VIEW 56 Edward Cooke, BCSC 62 Allan Lockhart, NewRiver Retail Page 4 Retail’s Digital Future Innovation

Retail’s Digital Future: Part One Innovation Retail’s Digital Future Innovation Page 5 Page 6 Retail’s Digital Future Innovation Big Data & Smart Analytics

CHAPTER 01 Big Data & Smart Analytics

BIG DATA & existed since the start of the 1980s. It Everything occurring online leaves a SMART ANALYTICS wasn’t until Nectar, the UK’s largest trail. In the music industry, major labels loyalty scheme, was launched in 2002 are using Twitter information, combined IN PLAIN ENGLISH: that it became an accepted part of with streaming and piracy data to Using large pools of daily life. But in a world that’s now inform their marketing strategies. The information and huge permanently online, companies are geographic location of anonymised looking to harness the power of big data online trends can be plotted, making it amounts of computer in all manner of ways. simple to identify locations where an processing to do things artist may be popular but perhaps has not possible with small Everyone accepts that, in a world of had no official release. multi-channel shopping and 24/7 media, amounts of data. tracking customer trends and online With people now permanently connected reputation is business critical. Data – often through shopping centres’ wi-fi has long held the keys to online retail networks - that same trail will be visible One of the biggest challenges for success and now, more than ever, bricks in the physical world. retailers has always been understanding and mortar shopping centres have the their customers. In many respects, the chance to engage their tenants and By effectively aggregating and analysing vast amount of data thrown up by the customers together, commercialising data mined through bouncing signals internet and mobile technology has been previously untapped areas. off people’s phones or maybe their both a blessing and curse. Customers, Bluetooth-enabled jewellery, landlords suppliers, inventory information and, of For example, the emerging trend of can generate incredibly detailed pictures course competitors, are now only a click ‘show-rooming’ - a buzzword for people of customer behaviour. Such analysis can away. But a business has to have the who test products in-store but buy them also be used to maximise space through right analytics tools to slice up big data online - has proved painful, especially in improved store layout and staffing levels. and make sense of it. the electronics sector. It is important for retailers to track this kind of shopper to It can also enable better management Mass data collection has been happening understand and harness this behaviour of a retailer’s stock distribution. In for decades across the aviation world and translate it into a sale, whether it be America, Macy’s tracks its stock using where frequent flyer schemes have online or offline. radio frequency identification (RFID) Retail’s Digital Future Innovation Big Data & Smart Analytics Page 7

tags in a bid to unify its offer across ringing with some pressure groups. Yet and malfunctions can be picked up on physical and online platforms. Products evidence so far suggests that customers immediately. With many large retail can instantly be sold anywhere, even may be willing to give their consent to landlords investing in old stock – and when out of stock in one outlet, by tracking technologies in return for a with rules around energy efficiency set to tighten in 2018 – sustainability may again shoot up the real estate agenda.

Now, more than ever, bricks Intel partnered with Arduino to provide and mortar shopping centres a cost effective development board which allows for the building environment to have the chance to engage their be controlled remotely via the cloud. The proliferation of tablets and smartphones tenants and customers together, means this can be done from anywhere, giving property managers more freedom commercialising previously and more control over their portfolio. untapped areas. What’s most appealing is the ability to predict customers’ future behaviour. And with many new ways for shoppers to seeing where they are, maximising rich, personalised experience, just as interact with brands - whether at home efficiency and customer satisfaction. they have done with supermarket loyalty or in a mall - far more will be known. schemes. Many will no doubt value the more An individual’s data can help provide personalised service. But firms will do recommendations and reviews, as well From an operations point of view, big well to remember that the line between as guiding users to products, all via data is already employed in helping ‘personal’ and ‘creepy’ is a thin one. their mobile devices. But the fact that facilities managers monitor all aspects store cards (and the clear consent forms of their properties more effectively – in they provide) are not needed for much real time. For instance, temperature of this information has set alarm bells and lights can be altered at any point Page 8 Retail’s Digital Future Innovation Big Data & Smart Analytics

Expert View Semetric

Semetric is the UK and US-based data analytics business behind Musicmetric. It aggregates data and analyses trends from across the web to help the entertainment industry make better business decisions. The firm has come to prominence with Musicmetric in recent years, amid growing acceptance of a move towards streaming. Musicmetric products are used by major labels, artist managers and leading companies across the music industry. Semetric is now expanding into other parts enable us to have a more quantitative massive-scale. At the cornerstone of the entertainment business, understanding of what is happening of this is Hadoop, the open-source including TV, movies, games and in our world. Take the entertainment software that allows tens of thousands eBooks. industry: the way people interact of servers to work together to store, with media, music and TV programs process and scale data reliably. is increasingly taking place online. In addition, programmes written to Individuals use YouTube to listen to run on Hadoop are written in exactly JAMEEL SYED music, watch pop programs and trailers. the same way, whether they are to run Chief Technology Just by consuming content like that on a laptop, a few dozen machines, Officer, Semetric or expressing themselves on social a few dozen thousand machines or a media, people are leaving their digital whole data centre. You can also use footprints. We can now collect raw data Amazon web Services (AWS) to rent from these, boil it down, and make it hundreds of machines to scale up data available to entertainment executives. collection, so it is no longer necessary Music executives can now make to have your own data centre or How is big data relevant to the music informed decisions when signing new numerous racks of servers. industry? artists. Because we have data assets Big data has come a long way since that go back five years we can compare What are the risks, in your view? the business intelligence and data the early days of Adele’s or Lady Gaga’s While physical retailers have been using mining systems of the late 1990s. popularity to a new artist starting today data-analytics for years, it doesn’t come Technological improvements over and see how well this artist compares. without risks. the past twenty years have enabled Firstly, the level of promise around companies to collect large amounts of How can big data be applied to big data means that, if companies raw data without the barriers of having sectors such as retail? are unable to see its immediate value big investment upfront. I think the The retail industry has also been very in a project, they may become easily music industry has particularly lent receptive to big data. Loyalty cards disillusioned and thus miss out on itself to big data because of its history were a key part of data-mining and future opportunities to use big data in with peer-to-peer file sharing sites. data-analysis a few cycles ago. Many their stores. The music industry was the first to be large firms now have incubator and VC Secondly, retailers must be careful disrupted by consumers both legally mechanisms within their businesses, for in how they use data about their and illegally uploading content onto managing and being involved in these customers. Consumers are familiar the web. The iPod was a key part of new technologies. Supermarkets are with and happy to receive personalised making consumers engage with digital also using in-store tracking to follow coupons in the post, but may be uneasy media rather than physical media. In the movement of customers around with a similar offer being presented to so doing, the way in which music was their stores and determine where they them in-store using a “Minority Report” consumed was leaving digital footprints spend time looking on shelves. style display. that could be tracked and analysed. Compared to previous generations, there is now a lot more big data How is Semetric applying big data? infrastructure software that can store [email protected] The improvements in big data collection data both inexpensively and on a http://www.semetric.com Retail’s Digital Future Innovation Big Data & Smart Analytics Page 9

consider how it complies with the law. no such thing as ‘ownership’ in data, yet agreements may exist around its transfer. Legal View Which legislation does this all fall When you create a database you can have under? database rights, but this depends on how The Data Protection Act 1998 is a key piece much original work is in the construction of legislation that is currently undergoing of it. If there is programming within the discussion at the European level. There database that makes it special or unique LAURA SCAIFE is a draft regulation coming out soon, and provides a tangible value from that Associate, Data & perhaps late 2016. And there is discussion data, then you can qualify for a database Information Group, concerning technology such as biometrics, right. It is not unusual to see companies Addleshaw Goddard data-like tracking and use of beacons that sell and transfer data but they are mainly are considered in the draft regulation. relying on intellectual property rights and Companies are paying closer attention the common terms in those agreements to how these types of data might be used are that the data has been collected with Laura is the author of so they can understand their preferences consent. ‘Handbook of Social Media and and work out when consent is needed. The Information Commissioner in the the Law’, published by Informa It will be a question of understanding UK has issued a guidance note called Buying Law in November 2014. She has how the data is anonymised and used. and Selling Databases, which discusses some been extensively published on There aren’t going to be terms and of these grey areas that might be of use to matters concerning compliance conditions at the door when you go into a data-heavy businesses. I commonly deal with e-commerce issues arising shopping centre. However, there might be with assessing if data has the right consent out of the Office of Fair Trading terms and conditions for the businesses and what the risks are of transferring it, and and Advertising Standard Agency within that mall or a straightforward how we can deal with that from a legal and guidelines as well as online revenue ‘accept’ button on any corresponding app commercial perspective. generation, defamation and or when you accept to use their wi-fi. This is a challenge because it’s a reputational management. crossover between business interests and What potential is there for big data meeting privacy laws that affect individuals to influence the design of shopping and how we can raise knowledge and centres? expectation of how their data might be We’re all used to large numbers, but In terms of its wider use, there is potential shared. Often, businesses want to monetise what exactly is big data used for? to identify how to influence the physical their data and think that they can sell data We’re increasingly finding that clients design of malls by harnessing big data. without realising the legal issues behind want to utilise large banks of data to You can use it to identify customer it. However, this is not only a regulatory advertise and interact with customers, to behaviour – for example, where a matter, but also a reputational issue, as promote products and services to certain particular demographic congregate or businesses need to reassure customers groups and drive sales. Big data, when which groups tend to shop when. that their data is being used responsibly. appropriately aggregated and analysed, Commonly, this is done through privacy can be used to identify trends and So what are the main risks? policies where you confirm that your data interests and help integrate marketing The principle risk around anything might be shared with third parties. campaigns and create detailed insights data-related is people’s expectation of into a business. their privacy. Something can be legally What considerations are there for permissible but you still need to approach senior teams? But it’s more than just a marketing customers with a sense of responsibility. Ensuring that people across a business tool, right? People need to feel that their privacy is understand consent and privacy rules, and Yes – it’s an important point to stress that being respected and that you are not using bear these things in mind when designing if used properly, this isn’t just focused information for untoward purposes. a website or commissioning social tools on marketing. It can help with defining It’s about looking at what is is vital. It is useful to engage with IT a business strategy, determining how a permissible within the realms of the law and marketing teams to make sure that business might want to develop; a business but also what is good from a business they have enough knowledge in order to can look at certain trends and product perspective. You may be able to collect highlight any red flags. It’s important to updates, identifying potential growth and store lots of data but you also need to plan a business strategy with the right areas; or help target support to different be careful not to damage your customer consents. areas of the business which may be at risk. relationship or how people perceive your brand. The challenge here is to be Finally, do we actually need this much Isn’t this just the same as store cards? commercially and legally aware and put data? No. Once upon a time, data was mainly together terms and consents that meet Rather than just collecting lots of data collected through store cards. Now, expectations about privacy, but also that increase the risk of complaints about with beacons, sensors, wearables and use data responsibly to deliver the best privacy rights we should aim for systems smartphones, there’s potential for vast possible customer service. sophisticated enough to derive useful amounts of activity to be surveyed with or assumptions and trends and show retailers without an individual’s consent which is And who owns it – the retailer, the what is actually happening in the stores clearly given when you sign up for a store landlord or someone else? without creating needless risk. card. Any business making moves towards The question of who owns the data [email protected] the use and storage of big data must relates to intellectual property; there is http://www.addleshawgoddard.com Page 10 Retail’s Digital Future Innovation Augmented Reality

CHAPTER 02 Augmented Reality

AUGMENTED REALITY described as a cousin of virtual reality interaction could be more problematic, IN PLAIN ENGLISH: (VR), rather than creating entire virtual as Google Glass users have found. It is Superimposing graphics landscapes inside a computer, AR layers something we explore in our Wearables computerised imagery on top of what chapter. or information on top you see in the real world. of what you see via a Clearly, such technology can be digital camera built into a The technology itself has been classified in many ways and directly progressing since the early 1990s and is links to other opportunities – such as portable device such as a now at a point where mobile devices can digital payment systems and mapping phone or tablet. accommodate it. technology. Wells Fargo has already been testing Oculus Rift VR headsets in The gaming industry’s current darling is its San Francisco-based lab as one way Just over 20 years ago, virtual reality Oculus, developers of Rift, a modern day of improving customer experiences in its was the next big thing in gaming. equivalent of Sega VR. The company, branches. Industry giants, Sega, had convinced which was acquired by Facebook themselves that huge head units in March 2014 for $2bn, has since And this is where augmented reality containing internal LCD screens announced a tie-up with Samsung to oozes potential for retailers – albeit with displaying clunky polygon landscapes create the mobile Gear VR headset. devices that do not restrict the users were the future. The planned 1994 sight solely to computer-generated launch of Sega VR, which tracked head Samsung claims to fully immerse imagery. movements, never happened. Instead, smartphone users in cinematic virtual the nineties continued to be defined by reality, with partners such as Imax Modern smartphones and tablets spiky blue hedgehogs and fat Italian and Dreamworks providing a wealth contain enough gadgetry to run AR plumbers. of cinematic and cartoon content to apps, meaning there’s potential for interact with. shoppers to use the technology without Things have come a long way since Sonic the need for bulky, expensive visors. and Mario however, and augmented Such face-hugging devices are likely reality (AR) shouldn’t be confused with to be attractive for immersive gaming The camera inside a phone or tablet anything like that. Although it could be or film experiences. But real world recognises features of the real world Retail’s Digital Future Innovation Augmented Reality Page 11

and is triggered to overlay information. Museum have already been using AR to face in real-time, enabling customers So a wave of your phone along a row engage younger visitors. to virtually try out products quickly of shops or cafes could superimpose in a store. This is one of the many an array of information from opening At the cutting-edge, Intel is developing applications of the technology that is times to customer reviews. Such a Magic Mirror that will allow customers likely to drive people towards, rather technology can also be used to show to virtually try on an outfit without than away from, physical stores. Other what buildings previously looked like, the time and hassle of the traditional fashion-related applications could or help make a visit to a gallery more changing room. Combining new include shoes, accessories, jewellery and enlightening. technology with maturing 3D body- cosmetics. Roll-out may be up to four years away, however.

Of course AR-type experiences can This is one of the many also be delivered in the home using software and a webcam, albeit with less applications of the technology exciting results. While it can be used that is likely drive people towards, for fashion (eBay recently announced its acquisition of PhiSix, a company rather than away from, physical that develops 3D visualisation and simulation technologies for clothing), stores. more context-dependent applications seem to offer a brighter future: paint colour schemes and home furnishings, Allowing a virtual world to enhance scanning technology ensures customers for example. IKEA has developed an the real one in this way could have get an accurate impression of fit as application for this purpose. While this profound implications for consumers. well as the look of the worn garment. in-home experience would suggest a Unlike many other innovations, it’s Similarly, Sephora and ModiFace footfall-reducing effect, there could something that drives people towards developed a 3D augmented reality well be ways to encourage customers to physical interactions. Major British makeup and anti-aging mirror that scan their homes and head in-store for institutions like the V&A and British that can simulate cosmetics on a user’s specialist design help. Page 12 Retail’s Digital Future Innovation Augmented Reality

Expert View Gamar

Gamar creates interactive games for play in the real world. The company’s AR games run through smartphone and tablet devices and encourage players to explore, create and share experiences at some of London’s most iconic attractions.

The start-up’s technology allows museum-goers to superimpose graphics over what they see through the lens of their device, allowing visitors to explore the history and story of exhibits through interactive games.

Visitors to the British Museum’s Parthenon Sculptures gallery this year have already been able to play ‘A Gift for Athena’, a game available to download on IOS and Android. The Gamar application will soon include augmented reality games for a selection of museums and attractions.

LEE BRIGGS Managing Partner, What technology does Gamar use? Our technology enables people to play Gamar We’re combining three types of with or gather information from any technology: object that they can see through their AR: To recognise 3D objects, “mini” mobile or tablet. No longer are people and “mega” environments in the real confined to only seeing what is around world and make them playable. them – they can now see and interact Machine learning: Self-improving with everything around them in ways and remembering environments around beyond their imagination. Your world us with artificial intelligence. will become your playground. Game building platform: Scalable and modular games delivered through What does it have the potential to a web platform built for non- do? programmers. Gamar’s technology can enable anyone to interact with any object How is this different to existing AR through their mobile or tablet – technology? exploring deeper, learning more and We can scan mini or mega building closer relationships with environments around us. With machine an environment. Any object can be learning, recognition improves as we interacted with, whilst it maintains use the application a greater number of its current form - it doesn’t need to be times. So the more you use it, the better altered in any way - so no QR codes. it gets. What exactly is it doing in a museum What are the advantages of this environment? technology? A visitor is invariably disconnected Retail’s Digital Future Innovation Augmented Reality Page 13

A visitor is invariably disconnected from an object in a museum – they can look at or touch an object but the object doesn’t interact back.

from an object in a museum – they can look at or touch an object but the object How could this be applied to other doesn’t interact back. Educational areas, such as retail? information is often provided but With the technology that Gamar has commonly in the form of a text-based created, a retail customer can interact description. This seems in contrast to with any product on a shelf, gathering how children learn - by playing and product information, and any other experiencing. details that can aid or encourage a sale. Our technology facilitates learning, No longer will retailers have to rely on without it interrupting the museum product packaging or signage. With environment or experience for others. Gamar’s technology, an immersive We have transported people into the experience and important information middle of a war zone, 2,000 years in can be provided for each product by the past; into the deepest oceans and focusing a device on it. over to the other side of the world – all [email protected] without leaving a room. http://gamar.com Page 14 Retail’s Digital Future Innovation Beacons & Location Technology

CHAPTER 03 Beacons & Location Technology

BEACONS & Beacons have emerged as one of retail’s LOCATION TECHNOLOGY new best friends. They are essentially transmitters that run using a more IN PLAIN ENGLISH: energy-efficient form of Bluetooth Transmitters used to called Bluetooth Low Energy (BLE) bounce messages to or Bluetooth Smart. Crucially, they are two-way devices, meaning they mobile devices, gather can be used as Like Stations, allowing data and determine customers to show their support in the people’s precise locations real world as they may do by liking within a given area. something on Facebook. Apple’s version of the technology is called the iBeacon and works, like all beacons, by turning the mobile device into a sensor that is able to send and receive location-specific messages. The phone can send messages to others, itself acting as a beacon. The functionality is determined by how near a user is to the beacon and what range and battery life it has.

Support for the technology exists across a variety of operating systems including Retail’s Digital Future Innovation Beacons & Location Technology Page 15

iBeacon Innovators consumers in the marketplace. Kopi, based in Hong Kong, and Infonomi, based in Turkey, are Montreal-based Thirdshelf is using beacons to start-ups working in a similar space. Both have take customer’s online shopping experience into developed Apple iBeacon-based monitoring the store. Their app makes sure that shoppers systems that allow retailers to track consumers’ are targeted based on their physical location mobile phones (or at least those phones with the inside the store, offering advertisements and appropriate app installed). The systems provide loyalty program rewards depending on where real-time personalised offers and promotional that person happens to be standing and which incentives based on consumers’ individual products are closest to them. purchase histories.

Optimus Advantage, a Chicago-based software On a more macro-level Path Intelligence has developer, estimates that about 30% of recently teamed up with Costain to create potential sales are lost because the customer COpath, a system that uses mobile phone signals feels the price isn’t right. Optimus’ Marketplace to track patterns of movement in defined spaces application allows consumers to negotiate such as shopping centres. With an accuracy of item prices in real time at retailers’ websites, ±1m the technology can help property owners helping to boost the rate of successful sales. manage the flow of people through the centre The app also includes an intelligent coupon by identifying potential bottlenecks, as well (an iPON™), an electronic store credit that as determining the most and least popular a consumer can apply to a future purchase. retail units, allowing rents to be determined Imagine having an iPON that can be stored online accordingly. The system also enables owners to and accessed anytime, and that can be used on assess the optimal scheduling of maintenance, a broad merchant network or traded with other minimising disruption and costs.

If you’re next to the paint section in the physical store, providing an of a DIY store, you could be sent enhanced customer experience. Local wi-fi networks have also become a a discount code. If you were key route to locate shoppers. Customers seeking a free connection can agree to stood outside a fashion store be tracked by clicking their acceptance when they log in. California-based but didn’t buy anything, the analytics firm Euclid, is hoping to encourage wider take up of tracking retailer could try and tempt you technology by offering Euclid Express, back with a flash-sale offer. which offers retailers a free analytics solution for bricks and mortar shops.

With beacons now in use across many iOS, Android, Windows Phone and If you were stood outside a fashion high profile retail centres, including BlackBerry, as well as OS X, Linux, and store but didn’t buy anything, the London’s Regent Street and malls Windows 8. retailer could try and tempt you back owned by Hammerson and Westfield, with a flash-sale offer, much like many it’s only a matter of time before The reason why people are excited owes websites now offer. customers decide whether they too are much to the technology’s “geofencing” prepared to buy into the benefits of capabilities. It can pinpoint exactly The uses for beacons could prove these new best friends. where someone is, so if, for example, endless and will allow retailers to have you’re next to the paint section of a DIY a direct line to their customers and to store, you could be sent a discount code. attach digital content to everything Page 16 Retail’s Digital Future Innovation Beacons & Location Technology

Expert View Appflare

to draw them towards stalls and events. app. The legality of using competitor’s London-based Appflare operates beacons in this way is currently unknown, an extensive network of beacons Is this an intrusion that will annoy however, there would be reasonable cause across a range of grocery and customers? to construct a legal clause to prevent convenience stores as well as Yes, as a number of organisations will competitors taking advantage of each newsagents, enabling brands and inevitably over-engage. However, as other’s beacons. retailers to engage with customers beacons are app-driven, customers can as they walk in store, browse the decide if they want them or not, and also What does beacon technology look aisles and at the till. Appflare’s have the opportunity to turn them off. like at the till when using vouchers analytics allow for tracking of and coupons? store visits, path through store, How can this technology be useful for Near-field communication is a nice engagement history, brand smaller operators who don’t have the example of how customers can interact preferences and social profile. same space for events and activities as at the till. At the moment this is not done the major players? terribly well, but it is expected to grow in Generally any shopping area has importance. The best user experience is common themes – it will have a retail one where you wouldn’t need to take your OWEN GEDDES area, entertainment nearby, and food phone out of your pocket at all. There Founder & CEO, and nightlife venues. There is an are systems that allow you to interact Appflare opportunity here for discrete businesses when you walk into a store, for example to work together, but there needs to be a PayPal’s payment beacon allows you to cohesive framework to interact. Beacon turn up at the till, say you’re paying with technology can enable these businesses PayPal and it interacts. to work together using apps. This is an interesting long-term view for shopping experiences. Technology What opportunities does beacon Are they affected by the various data shouldn’t just replace a wallet, instead, it technology hold for shopping malls? security and reputational risks? should enable the customer to leave their We can identify opportunities on two Data security doesn’t affect beacons phone in their pocket, identify themselves levels. Firstly, down at a retailer level, directly as there is no data that needs to and then be able to use coupons or this is currently similar to a retailer be secured. They are essentially pointers. vouchers on the account associated with opportunity anywhere else - the focus is At an app level, the data contained is no that beacon. Consumers will only adopt on grabbing consumer attention as they different to any other consumer-level something if it gives them value and enter a store and using this to influence data. makes their life more convenient, not just purchasing behaviour. In the future, because it is a new technology. beacons will enable retailers to do a lot Given that, then presumably a Ultimately, the consumer will more to influence the consumer in their company could malevolently use a gravitate to whatever is easiest, someone shopping journey. competitor’s beacons for its own gain? will spearhead the right experience and At a second level, shopping malls can There are ways around this and we the right time, and other competitors will use these technologies to provide a value can put measures in place that make it adopt that. added service to the retailers. This is a difficult, but not impossible, for people technology infrastructure that will allow to discover an organisation’s beacon [email protected] malls to take shoppers on a journey and identities in order to build those into an http://www.appflare.com then direct them to a particular retailer, and help that retailer engage consumers as they walk over the threshold.

What else can they support? Another opportunity lies with the fact that shopping malls are now more of a destination. Many hold numerous events and activities. There is an opportunity to guide shoppers to those experiences, but also provide beacons as added inventory to sell to the organisations running those events. Beacons will provide the ability to engage with customers in order Retail’s Digital Future Innovation Beacons & Location Technology Page 17

Expert View Tamoco

No, although that’s certainly part of it. return on investment? Tamoco are leaders in proximity Most importantly, they can listen and Brands running NFC campaigns marketing and content discovery capture valuable information about properly have already begun to see some services, connecting physical media consumer patterns and journeys. This significant uplift. In early Q2, Tamoco to the digital world, and measuring can then be passed to the retailer, so they ran a successful campaign with AT&T, it. They service a multitude of don’t need to push anything to them. sponsors of the Tribeca Film Festival technologies such as BLE, WiFi and Coupons or vouchers can be pushed in New York, using HID Trusted Tags QR, with a primary focus on NFC. out but this can be ‘action-based’ in posters. The campaign’s free tickets Tamoco’s engagement platform meaning things aren’t blindly sent all went on the first day of a four-day is made up of unique data sets, to people. For example, we can push promotion which saw 8,500 interactions allowing for intelligent, real time notifications determined by dwell time, across 56 stores. People were queuing decision making, giving businesses location or the time of day. if someone around the block to get in and tap. further insight and customers the is sitting waiting on a couch outside a relevant and contextual content shop for 15 minutes, the app can push How will shopping centres change as a they want. a notification to give them an offer result of these sorts of innovations? to a discount newspaper. Dwell time It’s only a matter of time before landlords notifications will be key to making realise these technologies will create a shoppers out of people who weren’t better experience and generate revenue SAM AMRANI before. for all parties involved. I don’t feel it will Founder & Executive Another key use is to drive app change the aesthetic of a shopping centre Chairman, acquisition. People often download for the consumer, but their experience Tamoco store apps, use them once and then will be better. never again. Using NFC technology and Bluetooth we can prompt a device to open Can beacons realistically help a store app when you walk into that store, landlords get more value from the or within proximity of a store’s beacon. space they rent out? Tamo is a proximity technology This can create frequent monthly active Beacons can be positioned around a mall firm. How do you explain that to users out of app downloaders. to drive footfall and, using the analytics somebody’s gran? data we harvest from them, landlords A proximity tech firm enables people The ability to integrate external data could easily make the case for heftier to communicate and engage via things is critical to making successful use of service charges or increased rents where that are geographically linked. There this technology, isn’t it? the right outcome occurs. Each retailer are four main proximities that require Yes. So for a Magnum campaign an has their traditional store footprint, the most attention and take up 95% of NFC tag on a bus stop panel will feed but elsewhere in the mall, the right our business. These are NFC (near field in contextual data. So if it’s 2am and campaigns targeting the right people communication), iBeacons, Wi-Fi and raining, it is common sense not to offer could easily amplify their success. QR (quick response codes). We set up a them an ice cream voucher. However, if platform, the software and an analytics it’s 30 degrees at lunchtime, then that Are we seeing a rebirth of the physical suite, which is essentially a content would be a good time to drive loyalty. shopping experience? management system and analytics. This It’s about leveraging what we capture in Absolutely. In my opinion, if you’re then enables you to manage all of the real time, e.g. time, location, make and educated about your purchase and proximity technologies. model of phone, network carrier, plus any know what you want, you can go online Anyone can buy NFC tags and additional external information we can and buy it. However, people are happy program them. What makes what us capture. to pay a little more to get a personal interesting is that we can manage it all service. There are different elements of via the cloud, and we can have a mapping How does someone without the deep convenience with online and physical network of NFC tags and manage them pockets of the major landlords or retail, but I feel that real world services all from a desktop or mobile portal. who’s not as tech savvy as they’d like are coming back with new innovations. Secondly, we can add external data to to be get on board with this? The high street is not dead; it’s time for a those collected from these transactions. Companies like ours provide a turnkey renaissance. So you can map rainfall against footfall solution. We source the beacons and help or track Twitter activity correlated create the content management system against an in-store event. to control them and then harvest the information. [email protected] Is it all just about sending vouchers? How quickly are people likely to see a http://www.tamo.co Page 18 Retail’s Digital Future Innovation Beacons & Location Technology

Loyalty programmes are the togethers for clients who are interested acceptable face of customer data in data monetisation issues, including Legal View monetisation aren’t they? Barclays, Sainsbury’s and Royal Mail. Yes, because customers are making a consensual bargain to exchange data What interesting things emerged for rewards. They approve use of their from bringing several non- data and in return they get discounts, competing blue chips together in JONATHAN offers and a benefit they can exchange this way? DAVEY for a treat or to put towards a better One key issue is managing customer Commercial Group Christmas if they prefer. expectations. As I mentioned, some head, Sainsbury’s EPOS system, of clients are worried about how use or Addleshaw Goddard course, provides basket-level data, greater use of data might be perceived but a Nectar card swipe provides the and some have asked customers what ability to join baskets together. So, they thought the company already did Among other clients, Jonathan Sainsbury’s can look at your basket of with their data. has worked with Sainsbury’s for shopping today and the till tells me They found out that their customers 12 years across a variety of Nectar what you’ve bought. But I can’t look thought they were already doing things and other contracts touching on at behaviour patterns and effects on they were worrying about doing. So data collection and monetisation. behaviour patterns without being able the big brother risk, which they were He discusses how monetisation has to match up successive baskets. Now, worried about, may not exist or may be evolved and why the answer doesn’t you can’t get that from credit card a lesser ground for concern than was always have to be ‘no’. data as credit card data companies previously envisaged. don’t let you use it. Nectar provides this insight for Sainsbury’s. How can businesses avoid getting into hot water with customers or the What is your broader perspective Information Commissioner? on data monetisation? In some cases, as I have mentioned I see it as a journey. Many of our in the context of Nectar, there is a clients gather, or could gather, useful consensual bargain in which I gladly data as part of providing services to allow use of data in return for rewards. consumers. Some clients are already If this is the price of free wi-fi in my collecting and using that data both to hotel or on my train journey, I’m more provide B2B services and to provide likely to agree. insights into the deepest levels of But this isn’t the case for many their own businesses; Justin King was businesses; then it’s a matter of demonstrating to customers that there is value for them in allowing data use – that way, I may get consent to use data There is also a lot of power in in a way that provides business benefit aggregated data. Think of the to me and a genuine benefit to my customer. If I ask for a broad consent power behind the data gathered to use data, I may get a “no”; if I ask whether I can use your data to protect by the Oyster card system, or you from fraudulent use of your details, I may well get a more favourable mobile phone location data. response. There is also a lot of power in aggregated data. Think of the power fond of referring to the “data haves behind the data gathered by the Oyster and have nots” amongst the grocery card system, or mobile phone location retailers, the point being that the data. I don’t have to use personal “haves” have a massive advantage over details to generate a lot of very useful their competitors. insights from those databases. Other clients have data, or could The legal boundaries of acceptable collect it, but are understandably data use are still being defined in some protective of their brand and cautious areas and this is a place where lawyers of customer reaction if they use that with the right skills and experience can data for other purposes. add real value. In between are companies who are making early steps into the field of data monetisation, or are considering taking further, bolder steps. [email protected] We’ve started hosting regular get- http://www.addleshawgoddard.com Retail’s Digital Future Innovation Mapping Page 19

CHAPTER 04 Mapping

MAPPING bespoke app to help customers with department store in the world to be IN PLAIN ENGLISH: turn-by-turn directions to the products mapped by Google’s Street View, helping the use of GPS and other they are looking for. customers to navigate the store via 500 separate panoramas. The cooperative imaging technologies to Clearly, such apps have the potential to department store seems to suggest the produce precise, layered be developed to help customers quickly street view will enable customers to pre- digital maps, often identify the shops they want in larger plan their visit by virtually exploring shopping centres in the UK as well the store beforehand. This kind of containing real-time or as providing other location and time mapping could be rolled out to shopping “real-time” information. specific information. centres but it is not clear whether this may simply put too much onus onto Google recently announced an shoppers. There’s nothing more frustrating impressive enhanced retail experience than hopelessly trying to locate a staff powered by its Project Tango Aside from soothing age-old member in a bid to find an a store or an smartphone and tablet 3D-mapping frustrations, this technology has the elusive item needed for a last-minute service. The application promises to potential to drive personal shopping engagement. With the wealth of data turn real world shopping into a video experiences where systems can be available, pretty soon stores may be game experience, helping costumers integrated with stock inventory, beacons able to know in advance what you’re to find and interact with products (offering vouchers and incentives) and after and direct you to it. more efficiently. A number of retailers broader information about a shopper. partnered with IBM to develop an app Mobile apps using Google Maps and based on IBM’s Augmented Reality Just as Amazon is renowned for its savvy similar mapping technologies are Shopping Advisor to ensure that the right recommendations algorithm, perhaps beginning to take hold in the US retail products are always in the right place at one day soon shoppers will get an audio market where they are being used to the right time. guide to products they might like driven help customers navigate sometimes by their purchase history, age, body type overwhelming layouts of megastores. In a slightly different vein, the flagship and information about what they watch Lowe’s Home Improvements is one of John Lewis store in London’s Oxford on Netflix or listen to on Spotify. a number of US retailers to launch a Street recently became the first Page 20 Retail’s Digital Future Innovation Mapping

Expert View HERE

mapping 90,000 buildings at over 10,500 venues in 75 countries, we’ve become more certain about it. The map is no longer static, no longer made of paper. It’s dynamic, more social and personal, constantly computing new information to give you the right information at a given moment. For retailers, the map will be less about getting people from A to B, and more about using their location and behaviour to offer them a better shopping experience. For a proper dose of retail therapy the trip to the mall is still hard to beat. Yet, physical retailers continue to cede ground to the online players. To fight back, they should consider adding a map to their arsenal of weapons. It can tell them where their customers HERE, a Nokia company, is are inside the mall or store, what a global leader in mapping and they’re looking at and when. It can tell location intelligence. With almost them who their customers are and make three decades of experience in accurate forecasts about where they cartography, its vision is to offer are going next. In short, armed with a the world’s best maps and location continuous flow of information like this, experiences across multiple screens physical retailers have the potential to and operating systems. HERE maps act in real-time just like their online can be found in four out of five brethren. factory-fit navigation systems in North America and Europe. HERE Can you explain the importance of also powers mobile, web and mapping in real-time? enterprise solutions. To understand the potential of pairing maps with modern technology, just look at how our cities are transforming today. Cars and smartphones are JOSEPH LEIGH becoming probes, their constant Head of Venue Maps, location updates giving cities invaluable HERE information about traffic conditions. Gather enough data and you can start to build a system that makes reliable predictions about traffic on a particular road on a certain day in given weather. You can start to truly understand how Why is mapping particularly helpful people move around – and live in – the to bricks and mortar retailers? city. It’s an urban planner’s dream. Many bricks and mortar retailers have lost out as shopping has moved online. Can mapping help reverse the trend But now they have a powerful weapon towards online sales? with which to fight back: a map. Or, With everyone carrying a smartphone, more precisely, an indoor map. the same revolution can happen in When combined with analytics and retail, though this time it will be shop [email protected] precise positioning, the indoor map can planners and merchandise managers http://360.here.com change the game for physical retailers. who can benefit. In the course of http://here.com Retail’s Digital Future Innovation 3D Printing Page 21

CHAPTER 05 3D Printing

3D PRINTING technology. A new straw-based plastic Walmart-owned chain appears to see it IN PLAIN ENGLISH: printing medium developed by Chinese as the evolution of the photobooth, with manufacturer Jiangsu Jinghe Hi-Tech customers coming away with life-like turning a computer-based Co, could help prices to drop fivefold, figurines of themselves, their friends design into a physical 3D according to some estimates, and speed and family. object by using a special up the adoption of 3D printers even more. In the more distant future, as the printer which builds it, technology develops and becomes more layer by layer, using single Retailers like Staples are already ubiquitous, regular retailers may look to composites or substances. starting to sell 3D printing services that downsize their properties, cutting shelf offer a glimpse of the future and the and storage space in favour of printing potential for standalone 3D print shops. products as and when they are needed. Creating physical objects by printing Carnegie Mellon University and Disney Property owners are encouraged to look them in layer upon thin layer using Research have created a 3D printer to 3D print shops as tenants, as this single composites such as plastic, metal that can print a customised teddy bear will draw custom both now (while still and ceramic has been around for a in a few hours using soft yarn and a a novelty) and in the future (when use few years now. Designers have used needle. Modern Meadow, known for its becomes more widespread). “printers” costing many thousands of work in producing bioprinted meat, pounds, to produce proof of concept raised around £6 million to begin There are risks associated with the components and scale models, bringing printing cultured leather, a biomaterial technology. Much has been made of virtual computer simulations to life in that can be used in clothing and other attempts to make 3D print designs a precise and time-efficient manner. applications. for simple plastic guns available. But perhaps the greater concern in terms In time 3D printers may be able to A number of large shops in the UK have of commercial uptake comes from produce en masse with ease and low suggested they could host 3D print the potential for design copyright cost everyday consumables from clothes services. Asda have already taken the infringement. to mobile phone cases to pizzas. But, for first steps. Beginning in York, the UK’s now, novelty appears to be the prime third largest supermarket is trialling However, with landlords’ increasing application. Already major retailers are a service of sorts based on in-store focus on leisure facilities – and selling consumer versions of printers, scanning technology. Customers can particularly the catering offer – of some of which cost hundreds rather get any object larger than a shoe 3D centres, the ability to print your own than thousands. While these are scanned and a model is printed offsite. meals – along with the plates and rudimentary, offering the ability to print With prices starting at £40 shoppers cutlery - could prove a tasty way to simple downloaded designs, it clearly can have scale ceramic models printed entice people to stay a while longer with demonstrates the public demand for the in a variety of sizes and finishes. The a bit of futuristic food theatre. Page 22 Retail’s Digital Future Innovation Mapping

Expert View Robox

Bristol based CEL is best known for power tools such as the POWER8workshop, which appeared on BBC’s Dragon’s Den in 2008. For the past two years the company has turned its attention to the world of 3D printing identifying a gap in the market for a home and office device. The Robox project raised £280,000 via Kickstarter to create what CEL claims to be “the world’s most accessible, modular, easy-to-use manufacturing system”.

internal lighting and separate build longer be restricted by the space they CHRIS chamber and electronics enclosure. have available, as they can produce ELSWORTHY Desktop 3D printing brings the stock as and when the customer designs Managing Director, process of manufacturing to the home, and prints it. Robox and CEL UK as it allows ordinary people to create their own objects and parts. Could 3D printing realistically help retailers to increase footfall? What other innovations are we This process of having new technology starting to see? in stores will make them more modern How does 3D printing work? 3D printing is now being used more and accessible for consumers who are Users can select the object they want and more in industries such as turning their backs on the high street in to print from a file, in the same way healthcare, aerospace, automotive, favour of online technology. Customers a person can choose a file to print on education and architecture. We are may welcome the opportunity of going a standard laser printer, but this time seeing developments every day where into a shopping mall and returning rather than printing a flat 2D image, the 3D printing is being used to produce home with something they have object is printed layer upon layer until prosthetic limbs, medical parts and customised for themselves, and this, it is complete and three dimensional. even drugs. In the automotive world in turn, would reduce the likelihood of This means people can quite literally – which has been using 3D printing returned items. print anything: from coffee cups, to longer than many other industries – coat hooks, Lego bricks, cutlery and Formula 1 parts, concept cars and small How can the retail sector gear up for games. The list is endless. car parts have all been produced with 3D printing? There are a number of additive additive manufacturing technology. Retailers should switch their attentions manufacturing technologies out there, It makes it easier to create from stocking the finished items, to but all print 3D objects in the same innovative things across many different stocking the raw materials needed for way, building up the layers which are industries, which were simply not 3D printing – although this may be a affectively slices or cross sections of the possible with older technologies. long way off, as people are still learning print. about the need for 3D printing both at How do you envisage 3D printing home and in industry. Shopping mall How is the Robox 3D printer being used in the retail space? landlords would also need to make sure different? The retail industry doesn’t yet consumers’ expectations are met so The Robox 3D printer includes a capitalise on the advantages of 3D they understand the capabilities of 3D dual-nozzle system so one nozzle can printing, but eventually we could see 3D printers, and factor in how long prints print highly detailed exterior surfaces, printers entering stores for customers take to produce, as while developments and another larger nozzle can fill the to use. Rather than selecting from a mean prints are getting quicker and object multiple layers at a time without small selection of items on the shelf, quicker it still isn’t as fast as selecting affecting part strength or detail. Robox customers could design their own an object off the shelf. also features automatic material products in store, or customise what is recognition, replaceable print heads, already there. This means that rather http://robox.cel-uk.com than holding stock, retailers will no http://www.cel-robox.com Retail’s Digital Future Innovation Mapping Page 23

designers facing similar issues to those Could the makers of 3D printers get faced by the music and film industry into trouble? Legal View through illegal content sharing. IP Based on a famous case from the 1980s laws that were drafted 30 years ago will involving CBS and Amstrad’s twin need to play catch up with this new cassette deck, suppliers of 3D printers technology. are unlikely to be found liable for authorising copyright infringement. As EMMA Surely we already have enough for end users, private at home, non- ARMITAGE legislation in place? commercial use of 3D printers will be Partner, Litigation Current UK IP laws do offer some allowed under existing design laws. Group, Addleshaw protection. Copyright will protect the That is because there are exceptions Goddard design drawings and blueprints from that specifically allow for private non- being copied (e.g. uploaded to the commercial use and for the making of internet). However, copyright will not spare parts. Emma specialises in all aspects generally protect against someone of intellectual property litigation making a 3D copy from the design How will firms be able to protect including trade marks, copyrights drawings. Registered and unregistered their IP being shared? patents and confidential information. design laws offer greater protection. For Companies will need to monitor file She also has substantial experience example, a design will automatically sharing sites and, if necessary, apply to in contractual disputes relating to qualify for EU unregistered design court for a blocking injunction against IP, principally around licensing and protection which lasts 3 years if it the internet service providers hosting distribution and has also advised is a new design which is different in the sites. This is something that the film clients on trade mark portfolio character to existing designs. Recent and music industries have successfully management. changes to UK legislation now make done in recent years. Although 3D it a criminal offence to infringe a UK printing will make illegal copying registered design, which should provide easier, it also presents potentially a greater deterrent to counterfeiters. lucrative opportunities for IP owners to Is 3D printing technology really a An interesting question is who will legitimately license their designs to 3D threat to copyright holders? be liable for infringement of IP laws Is printing labs and websites. The growing proliferation of cheap 3D it the supplier of the print equipment, printers and print labs is likely to lead the end user, the supplier of the design to an increase in counterfeiting and document or the print lab? There also intellectual property (IP) infringement. needs to be clarity on who in the supply [email protected] We are likely to see manufacturers and chain is liable for defective products. http://www.addleshawgoddard.com Page 24 Retail’s Digital Future Innovation Wearables & Fash-Tech

CHAPTER 06 Wearables & Fash-Tech

WEARABLES computerised information; and wrist- have put wearable technology on to & FASH-TECH worn devices which pair themselves the public stage. Many commentators to smartphones using Bluetooth believe smartwatches could soon outsell IN PLAIN ENGLISH: connectivity. smartphones. With technology shrinking devices which seamlessly by the day, it’s not hard to imagine integrate into garments You’re still most likely to see wearables this eventually happening once firms in the park however, as fitness-trackers overcome design issues and battery and worn accessories, have dominated the immature sector. restrictions. perfectly combining form A global market estimated at $238m in and function. Possibly the 2013 is led by the likes of Fitbit, Nike, As is ever the case, many are betting Samsung Gear Fit and Jawbone, creating on Apple to bridge the divide between future of all high-tech watches to track your speed, distance devices… and basic vital signs. However, there’s a long way to go before they become a vital tool for those who aren’t sporting Wearables have come along way from professionals or gym devotees. Bluetooth headsets, which typified cities circa 2007 as the weapons of choice for Yet there’s huge potential for such taxi drivers and people you might see in devices to have profound health benefits, the park. once the technology matures to fully diagnose issues beyond heart rate or Despite various product breakthroughs make questionable estimates around in recent years, wearable technology calorie usage. remains a niche sector. It falls largely into two camps: those which open Aside from wristbands, widespread media the windows to augmented reality coverage of Google Glass and Samsung’s by overlaying what you see with recently updated Gear smartwatch Retail’s Digital Future Innovation Wearables & Fash-Tech Page 25

gadgetry and great design with the Apple stats, navigation and communications Watch. The promise of its integrated NFC with all information put directly in front payment system – Apple Pay – could be of the eye, in real-time. You can call a key selling point. And with its bulky people, locate friends on a map and do new collection of iPhones, the watch is all of the usual things you might do on a seen as a key part of the firm’s product phone. strategy. Indeed, the Recon Jet, a snow visor which As with smartphones – and other looks like most other designer headgear Bluetooth-enabled devices – wearables you might see on the slopes, boasts will engage with other forms of computing power equivalent to most technology in a particular environment. smartphones. It also features an on board So, the potential for alerts and vouchers HD camera with Bluetooth Low Energy to be sent to people’s wrists while they and wi-fi communication protocols. shop is exactly the same as it would be with a smartphone. The deal with Oakley has conquered one of the prevailing issues of wearables: The prevailing problem most cited It may sound obvious, but consumers will making them truly fashionable. It’s one with smartwatches is the need for only wear things which are visually and of many marriages of convenience that’s a smartphone to facilitate network socially appealing. seeing major technology businesses jump connectivity. But given the watches’ into bed with prominent design brands. potential to carry out many of a phone’s This has been one of the principle core functions - calls, messages, camera, barriers encountered by Google Glass, Former Yves Saint Laurent CEO Paul internet searches and directions - the which has failed to ignite public Deneve and Burberry CEO Angela benefit is in freeing your hands and not opinion as it might have hoped. It Ahrendts have been poached by Apple, having to remove your phone from your has coined the self-explanatory term while Google has partnered with Diane pocket to unlock it every five minutes. “glasshole”, on account of many people’s von Furstenberg for Glass. Burberry has disaffection with those who wear it as a been one of the leading retail innovators, As with smartphones themselves – which mark of status. And while Google may with smart hangers and RFID-tagged existed in the shadow of Blackberry for point out that Sony’s Walkman faced items offering shoppers a multimedia several years before the iPhone came similar disdain early on, the fact is that experience in store. out – the design of wrist-based products headphones are far less intrusive than is likely to improve with new curved having a computer strapped to your face. But, gizmos aside, sustainable consumer and bendy screens, and as technology interest in wearables will be underpinned gets smaller. The only barrier with In an essay for Wired, Mat Honan, a by whether the products truly serve a smartwatches may be the kind of Google Glass user, wrote: “I’m not purpose. Seeing Facebook likes on a attractive design which turns them into a wearing my $1,500 face computer on hanger is cool, but not critical. Recon’s genuine fashion item. public transit where there’s a good smart ski visors, on the other hand, deal chance it might be yanked from my face. with the issue that taking your phone out Apple will be hoping its new watch I won’t wear it out to dinner, because it on the slopes can be rather hazardous. solves that problem. Looking like a mini- seems as rude as holding a phone in my iPhone-cum-iPod Nano – the firm will be hand during a meal. I won’t wear it to a “We’ve all seen riders reach for their hedging its bets on attracting consumers bar. I won’t wear it to a movie.” phones in their jersey pockets to check a who want something that screams design message or answer a call, which is super rather than gadgetry. “Again and again,” he added, “I made unsafe,” says Eisenhardt, Recon’s CEO. people very uncomfortable. That made “That problem is eliminated.” In September, it took over a high-end me very uncomfortable. People get boutique at Paris Fashion Week with angry at Glass. They get angry at you for The company is now exploring evolving a pop-up showcase the Apple Watch. wearing Glass.” its technology for law enforcement, With Chanel designer Karl Lagerfeld following investment from Motorola’s and Vogue editor Anna Wintour amid Recon, a Canadian technology company venture capital arm. the rabble to try one, there was little founded in 2008 by Dan Eisenhardt, doubt over how the company was trying seems to have enjoyed a slightly While London’s Metropolitan Police are to position it. Apple’s skill has always smoother ride with their line of ‘direct- trialing a scheme to see officers wear been creating a product that is socially to-eye’ sporting accessories. The cameras on their vests, Recon’s products acceptable in a mainstream sense – company claims to have produced the are more reminiscent of Ridley Scott’s rather than solely as a gadget. world’s first Heads-up Display (HUD) classic film Robocop. Yet, by combining products for a consumer market. It has such devices with other innovations in London start-up Kovert Design, who are two product lines currently, designed for biometrics – through improved facial interviewed in the next section, is a great cyclists and skiers. recognition – entire ‘wanted’ databases example of how design-led innovation with officers on the beat, crime prevention will come to define wearable technology. Both enable hands-free performance could potentially be a walk in the park. Page 26 Retail’s Digital Future Innovation Wearables & Fash-Tech

Expert View Front Row

not financially sustainable, so clever Jonas Altman is co-founder at JONAS ALTMAN companies have enabled their business Front Row, a fashion technology Co-founder at models by leveraging technology. accelerator based in London. Front Row Some companies are transforming the The accelerator is trying to find fashion business and have innovated by companies with dynamic teams blending online and offline shopping and great ideas and help get them behavior with in-store displays, office space and mentoring, while developing wearables and using putting them in front of investors beacons.. and commercial buyers. This is an What is the tech opportunity for the outreach activity with the view fashion industry? Of course the key is creating of finding a sustainable business The fashion industry is based on old something that people want to use. model. Two of its start-ups, Alive business models that produce garments What wearable technology do you Shoes and Kovert Designs have as close to perfection as possible, see that is practical and exciting for already received Series A funding. twice a year, and then sell those on consumers? a wholesale model. In recent years, Wearable technology could have a great Burberry has used content, media and impact on health, and wellbeing in technology to transform their business. sports. For example, in the sports world, By using customer feedback and data NFL football teams like Buffalo Bills are to inform production and sell directly now embedding technology into jerseys to customers, there’s a clear route to to monitor the heart rate and vitals of improving sales and profitability. football players. This enables them to Many London fashion brands are anticipate which players are in danger of Retail’s Digital Future Innovation Wearables & Fash-Tech Page 27

over-exhausting. A recreational athlete in their clothes unless they start to do fashion technology, they want to be could use this technology to check their collaborations. Fashion tech is about involved in fashion tech companies with vitals while training. Technology such getting a fashion brand to acknowledge great ideas, and smart, dynamic co- as this could be a very useful monitoring they have a lack of tech know-how founders, that are scaling and growing tool for the medical world and personal and then to pilot new things. A great at a tech start up rate. London is one of wellbeing. example of this is Nike+, which was a the major places to find people in that profitable joint venture between Apple fashion tech space today. The promise And with people living longer, and Nike and a great marriage of Apple’s for an investor is financial return but presumably this could be a way of tech know-how and Nike’s lifestyle also to be a mover-and-shaker in the staying in touch with relatives and performance wear. field, just like Dropbox was for sharing also, from an insurance point of Whereas, with sales of Google Glass and cloud-based storage. At the moment view, being able to understand how designed by Diane von Furstenberg, they there isn’t a huge fashion tech success healthy people are on a daily basis. had to half their inventory as no one story, but I think imminently there will But what is there related to actual was buying them. Maybe in two or three be. clothing? years we will have something similar we There are also practical innovations can buy that is a lot less conspicuous. in the materials that are actually making clothes. A good example of this is Uniqlo’s HeatTech clothing range, developed with Toray Industries – It makes me think of a scenario futuristic, lightweight thermal-wear. in the future where we have a Technology is also being used to make seamless garments that don’t fall apart. cyborg culture where tech is I can see a move towards using new materials to produce Star Trek-like embedded in our skin – Total utility that is sweat free, heated and self-cleaning. Success in this space will Recall-style. This would move to a come from those who are looking at how humans behave and designing for that, convergence where its not about rather than creating novelty items that solve no real problem. tech or non-tech anymore, it would just be ‘the world’. What potential is there for retailers in shopping centres to drive greater footfall through tech? There is a demographic of people that Currently though, many things love shopping for the sake of shopping. seem focused solely on replicating They see it as a sport. That demographic what a phone does. Can we expect tends to be young, outgoing women who innovations beyond that? gravitate toward Topshop on a Saturday There are technologies, like the Fitbit to try on clothes and then go for lunch. bracelet, that wake you up and monitor It’s a social activity. But for people who your sleep. It makes me think of a are either less mobile or less-inclined scenario in the future where we have a to be in that environment, embracing cyborg culture where tech is embedded online commerce is a powerful and in our skin – Total Recall-style. This attractive alternative. would move to a convergence where its not about tech or non-tech anymore, it What labels might start to use tech in would just be ‘the world’. That’s when it their clothes? gets scary and potentially moves us to We can see labels like Burberry losing touch with our humanity. embracing tech, and putting information on hangers that show how many likes What are the opportunities for an that product got on Facebook, to investor that might want to get into [email protected] influence your purchase. I can’t see a lot that space? http://frontrowio.com of other companies using technology For investors that can see a return in http://thesocialfabric.com Page 28 Retail’s Digital Future Innovation Wearables & Fash-Tech

Expert View Kovert Designs

Kovert is a design house creating pioneering products that inspire and liberate the modern consumer. The company combines the simplicity, minimalism and functionality of post-WWII Scandinavian design with Italian elegance and the rich heritage of British fashion. Every member of Kovert’s team is a designer in some shape or form. But it’s Kovert’s in-house technical designers who propel this design house into the 21st century.

at home it could vibrate if the nanny How do you fix that? KATE called. We can give people a sliding In a very low-tech way: focus groups. UNSWORTH scale allowing you to choose how We need to talk to the consumer. I think Founder, connected you are. that marketing and innovation agencies Kovert Designs should be finding out how the consumer In terms of what comes first, is the could use it and how it can improve design more important than the their lives. I don’t care about wearing a tech element? wristband that tracks my stress levels We are positioned at the intersection unless it impacts my life and in an Phones are getting bigger but your between design and technology, the unobtrusive way – you need to think company’s name suggests there technology we are building is not about the user experience side of it. may be another way. cutting edge - it’s more the bleeding There are tech companies out there who Our take on current tech usage is that edge. We build it all from scratch, but understand the consumer, but I would we’re over-connected and wearables we tweak existing technology and say, in general, Silicon Valley doesn’t. have the potential to help us to pull build the software it in a way that We take the innovations from there and away from that. Saying that, we makes sense for the consumer. find fun ways to apply them. actually see ourselves as an electronic design house rather than a wearable What do you think consumers tech company. We plan to merge great want? design and new technology across I think consumers are looking for various verticals, the first of which a number of different things the just happens to be jewellery. wearables industry has been unable to provide - yet. This has resulted How does that help disconnect us? in a lot of pointless products, but We are providing people with a tool its necessary to go through that that allows people to step back from innovation phase. their phone when they want to. Now, the industry has worked out Compared to most products on the what works and what doesn’t. Fitness market - smart watches or monitoring trackers, for example, can count your bands providing notifications – we’re steps and calories burned but they use trying to do the opposite. an arbitrary algorithm, which isn’t Our product is not something you accurate at all. The important thing What is your opinion on the Intel- would use 24 hours a day, but there here is that Silicon Valley tends to Edison powered 3D printed mood might be situations in which you get really excited when they’ve built dress? might not want to switch your phone a new feature, and then build a lot of For me that type of wearable tech is off completely, but only allow 5% of products without thinking how that gimmicky, it’s great for music festivals, notifications to filter through. For applies to the consumer and how but it’s not practical or fashionable. We example, while out to dinner or in an they might use it. Technology alone have this internal battle that we don’t important meeting. If you had kids doesn’t a great idea make. want to be associated with wearable Retail’s Digital Future Innovation Wearables & Fash-Tech Page 29

technology, as we want to be positioned something like that, and it would effect Apple Watch is like, and look to integrate as a fashion brand. However, we have what I buy in stores. with that. decided to embrace it and hope that There will be a handful of things the public impression of wearables will How far off are we from technology that we can do next year that the Apple change over time. It needs to relate to like this? Watch cant yet, but might in future. For the general consumer and that takes a This is a two-step process, with the example, with digital wallets you can little more thought. The technologies consumer at one end, and the hard core transfer money in store but you can’t used to create real features that improve tech developers at the other end creating pay somebody else. We can do transfers people’s lives are a lot more complex the various gizmos which can monitor between individuals wearing our tech – I than flashing lights. each of these individual things (such as could tap and transfer an amount of cash heart rate, perspiration or endorphins). to another person. At what point does all this data The next step is how to synthesize this We are opposite to the Apple Watch in sharing get just a bit too creepy? data in a meaningful way and produce that it is making people more connected, It’s an on-going debate. People are something the consumer is able to wear but we are trying to make people less worried about sharing their data and and enjoy. Crucially, it needs a cool, user- knowingly connected. Apple is more what their wearables are transmitting. friendly app to take that data and push likely to create a whole ecosystem, with For example, my health monitoring out a simple conclusion. That’s the phase an app store for wearables. Our products wristband could monitor every cigarette we are entering now. The difficult part are like the cherry on top, and are doing I have, and send that live data to my is done, it just takes common sense to something different, to remove you from insurance company meaning that my understand consumer needs. that connectedness when you need to. premiums go up every time I smoke. It would, therefore, make more sense if Going back to Kovert Designs’ first Do you see this changing the physical you opted into this sharing, rather than jewellery range – do the pieces have way shopping centres are created and having to opt out. any kind of tiny screens? designed? There is no screen - it just vibrates. It I’m interested to see that. All of this What would be your ideal wearable charges underneath and the battery technology provides context. It would innovation then? lasts a couple of weeks. We can interact be interesting to create a shopping Something that enables me to choose with it - the tech currently features an mall from scratch, based on this data outfits designed to amplify the way I accelerometer, and further down the line to facilitate the shopping experience. need to feel in a certain situation. If I’m we will activate this so the pieces can Things should just happen in store meeting with an investor, I want to feel recognise double taps that might send - queues are so last century. There’s in control and powerful. The investor a text. The only way for the ring to feed definitely ways physical stores can won’t notice what I wear, but it affects back is by vibrations. Later on though, all be designed to get away from that. how I feel and how I present myself. On a of these devices will link up. It provides that context about the date I might wear something completely consumer, and gives enough data to suave or sexy. These feelings can be How will your products connect to understand their tastes, budget and monitored using biometric data. When other sorts of tech? propensity to spend - do they like to be I’m in a shop trying on outfits, I would We are still figuring this out, but I alone or interacted with? This experience love to be able to see how an outfit is think, eventually, all of these products will be more enjoyable to the consumer making me feel. Does this dress make me will interact. This is the concept of and there is a benefit to the retailer as feel powerful enough for this investor? Is the internet of Things, where all the people are more likely to buy things. this lingerie making me feel sexy enough products will talk to each other and don’t for Valentine’s Day? You wouldn’t go through the consumer. For us, we will [email protected] necessarily want it over a big screen in have to wait and see what the uptake of http://www.kovertdesigns.com/ H&M, but, in the right hands, these data could be priceless. Eventually, if each item of clothing in your wardrobe had a feeling associated with it, we could design technology to look at your diary while you slept and see what meetings you had in the morning. When you wake up, it could then suggest an outfit that would elicit feelings appropriate to those events. It would be very cool and enjoyable to engage in Page 30 Retail’s Digital Future Innovation Biometrics

CHAPTER 07 Biometrics

BIOMETRICS It is the most personal of data and, retailers who had, up to now, only IN PLAIN ENGLISH: as such, offers retailers the potential used them behind the scenes to ensure to offer unrivalled levels of individual uniformity of clothes manufactured Data harvested from service. There’s huge amounts of across the globe, are now rolling our actual bodies is our crossover with innovations in wearable them out for customers. New Look is most personal. With technology and digital payment one of these, also for use in its denim systems, which can harness biometric department. huge crossover between data to fulfil certain functions. advances in wearables, The machines are capable of mapping mapping, healthcare and Most would probably agree that a dress 300,000 body points in no more than which lights up its chest depending on a seven seconds and the resulting body financial technology, woman’s mood, like Anouk Wipprecht’s map is interpreted by a Fit Stylist to biometric data could also Intel-Edison-powered Synapse Dress is help the customer pick out the perfect be the most powerful perhaps of less value than fraud-proof pair of jeans. Such measurements could tool we have in creating retina-scanning digital payment system. be stored and accessed in future. personal, life-changing There are more practical uses in Bodymetrics’ CEO Suran innovation. the fashion world, however. The Goonatilake explains: “One of the key body-scanning approach developed barriers in internet shopping is that, by Bodymetrics for clothes-fitting because you can’t try items on, returns applications has been around for are between 20 and 40 per cent of all around 10 years, and has been trialled garments sold. It’s a real inconvenience by Selfridges to help people achieve a for the consumer, and hits the bottom better fit for the jeans they buy. Using line of the retailer. It’s not good for the low-power infrared lights, the discrete environment in terms of transporting photo-style booths have become, garments back and forth either.” smaller, cheaper and faster. As a result, Retail’s Digital Future Innovation Biometrics Page 31

This Place in London is launching a incorporation of a fingerprint scanner new app, MindRDR, which links up on its phones has fuelled expectation Google Glass with another piece that other companies will follow suit of head-mounted hardware, the and drive the development of mobile NeuroSky EEG biosensor, to create a fingerprint payment systems. communication loop. The NeuroSky biosensor picks up on brainwaves that When adopted by the retail business, correlate to the user’s ability to focus. fingerprint recognition will speed up The app then translates these into a customer throughput and reduce the meter reading that is superimposed amount of cash held on the property, on the camera view in Google Glass. reducing security risk. It will also The app takes a photograph of what allow stores to cut back on fixed POS is being viewed through the Glass in systems, as Apple have been doing response to the meter reading. in their stores, using iPhones as portable sales units and making for a Another name that’s gaining more customer friendly experience. increasing attention is Myndplay. Though certainly not revolutionary It connects users’ computers for property owners, stores may look to minds with dry sensor EEG to re-evaluate their customer flow WEARABLES & (Electroencephalograph) BrainWave and may look at redesigning stores to BIOMETRICS technology, using a BrainBand worn facilitate this. around the head. The device picks up the tiny electrical signals from Retailers are also experimenting with the brain, then identifies what state another kind of biometrics technology of mind the user is in– be it relaxed, that could enhance customer focused, frustrated, etc., then allows experience in petrol stations. Made by that to control directly or influence Lord Sugar’s Amscreen the OptimEyes the outcome of a movie. Myndplay screens will scan customers’ facial demonstrates the potential to characteristics while they are at the revolutionise cinemas in the future, cash register to determine age and where viewers are directing movies gender and use this to display tailored advertising. This will be adjusted according to time and date and the Apple’s incorporation of a technology will also record purchases. The screens are anticipated to reach a fingerprint scanner in the iPhone weekly audience of 5 million when they 5S and the expectation that other are fully rolled out. While other technologies can companies will follow suit is leading be viewed as transactional and consensual it is unclear how the to the development of mobile customer would directly benefit from fingerprint payment systems too. such a technology, though clearly it could benefit retailers in a shopping centre setting. Concerns are already being raised about privacy, not with nothing but their minds. For least because Amscreen CEO Simon filmmakers there will be a new way Sugar has likened the technology of telling stories, and a new genre to something seen in the dystopian of creative content. Moreover, such film Minority Report. To avoid the products are also set out to train problem, Hoxton Analytics and athletes and businessmen and to University College London (UCL) are support the treatment of depression developing a technology that could and anxiety through providing reliable help retailers to identify customers feedback on patients’ state of mind. discretely by analysing their footwear. This technology could provide similar On a more familiar level, by linking personal profiling while avoiding the fingerprints to credit card details, use of biometrics, giving retailers the scanners can be used to authenticate ability to tailor stock and in-store users and let them pay with the touch promotions to the demographic of of their finger, increasing security consumers in real-time. and speed of payment. Apple’s Page 32 Retail’s Digital Future Innovation Digital Wallets

CHAPTER 08 Digital Wallets

DIGITAL WALLETS there’s a clear impetus to making this a security breaches. mainstream reality. IN PLAIN ENGLISH: To some extent, it has stolen a march money that only exists as With around 800 million cards in Apple’s on Bitcoin, the internet-based digital computer code and has no iTunes accounts worldwide, Apple Pay currency that launched in 2009. Its starts from a very strong base for the popularity soared towards the end of physical counterpart; the firm’s entry into payments. It will give 2013, when its value peaked at £750 equivalent of more or less Apple a huge head start in turning its up from £2 two years prior. But the everything that is kept previously ‘closed loop’ system into an volatility of a wholly unregulated ‘open loop’, where cards which could financial market and the failure of in a regular wallet – from only previously be used in an Apple MtGox, one of the largest Bitcoin loyalty cards and cinema environment are usable everywhere. exchanges, in early 2014, has soured its tickets to debit cards and reputation with some. Much is being made of the security cash - realised in digital of the Apple Pay payment (and quite Many see the separation of PayPal form on a mobile device. right too). Your payment details will from parent company eBay as a signal be ‘tokenised’, meaning there will be that they too will fully engage with it. a one-time number created for each In September, PayPal confirmed that transaction confirming the payment Bitcoin processors BitPay, Coinbase and The blending of online shopping with the vendor. MasterCard, VISA or GoCoin would be engaged to allow its behaviours and in-store payments Amex will do the rest. No details of the merchants to accept the cryptocurrency. has dripped into the mainstream over transaction will be stored and your card the past two years. Now consumers details will be protected. But this would only be for digital goods are demanding the ability to use their like online games and downloadable digital wallets when shopping in With such heavyweight brands standing songs, in what was called a test by the physical retail stores. behind it, trust is not likely to be an firm’s CEO. PayPal users will have to issue for Apple Pay. But with recent wait a bit longer to spend their Bitcoin Given the clear benefits to retailers’ hacking episodes affecting even major elsewhere. bottom lines of faster check out times, brands, some will still be anxious over Retail’s Digital Future Innovation Digital Wallets Page 33

As cash becomes obsolete, Start-ups such as Flypay and MyCheck use QR codes or NFC tags to offer particularly among the younger waiter-free payment solutions to settle restaurant bills, speeding up the process demographic, and technology from an average of ten minutes to closer to a minute. Cover, with a smaller redefines the very concept of focus, has also seen an increase in restaurants and customers signing up money, retailers need to be ready. with their mobile payment application. Basically free, it can be set up in minutes, in contrast to the time and cost The attraction lies in the fact that who choose to pay in Bitcoin receive associated with introducing many new Bitcoin can help retailers cut transaction 3% back on their purchases. In London, technologies, especially in regards to costs, as the fees are close to 0% in The Old Shoreditch Station Café started staff training. Momofuku Ko stands as contrast to the average 3% offered by accepting Bitcoin payments last year one example of a high-end restaurant credit card companies. The payments and recently installed the UK’s first ATM adopting the platform. are also processed in real-time. machine operated in partnership with Futurecoins, a London-based start-up. As cash becomes obsolete, particularly Companies like Square, the hotly-tipped among the younger demographic, San Francisco payments pioneer, are Digital wallets also have the potential technology will continue to redefine enabling retailers to accept digital to boost consumer engagement with the very concept of money. Retailers currency and pay for all manner of items apps and other incetives. Starbucks need to be ready for what’s to come. using mobile devices. Bitcoin ATMs recently employed a mobile phone app Combining integrated digital strategy, have started to appear in parts of east to allow instant payments and tips to novel biometric payment methods and London. their baristas in its stores in the UK. omnichannel marketing with careful The company encouraged the use of the security planning could set the bar for Digital gift card provider Gyft launched app by bringing its “Starbucks Rewards” convenience retailing even higher. last year, partnering with major retailers program to smartphone users. like Starbucks, Groupon and Nike. Users Page 34 Retail’s Digital Future Innovation Digital Wallets

Expert View Edison Investment Research

What is the state of competition in more attractive proposition than carrying Edison is an investment the digital wallet market place? around paper cards and vouchers that the intelligence firm that works with Despite the growth in e-commerce, customer has to remember to use. leading companies, fund managers sales made in bricks and mortar stores and investment banks worldwide still make up the large majority of …and what benefits can digital wallets to support their capital markets retail spending and this has prompted deliver to merchants? activity. companies that have been successful For the merchant, benefits include the in e-commerce, such as PayPal, to ability to improve customer loyalty, keep They provide services to more than explore ways of accessing the in-store customers informed of promotions, reduce 400 corporate and investor clients market with their digital offerings. The the time at tills (as there are no physical from offices in London, New York, payments world is seeing a battle to cards or vouchers to deal with) and reduce Frankfurt, Sydney and Wellington. own the digital wallet, assuming that, the incidence of voucher-based fraud. For ultimately, consumers will replace their cafés and restaurants, wallets can also physical wallets with digital versions incorporate ordering ahead and the ability on their smartphones. Mobile network to pay at the table, reducing queues and KATHERINE operators (Softcard in the US, Weve in improving customer service. Merchants THOMPSON the UK), Google (in the US), PayPal, are more interested in wallets that do Technology Analyst, Visa, MasterCard, individual retailers not require additional POS infrastructure Edison and retailer networks (MCX in the US) investment (this has been a major failing have developed or are developing mobile of the Isis and Google NFC-based wallets wallet solutions, with varying degrees of in the US). success. Is a single system or app likely to What do providers have to do to win prevail? over consumers? We doubt that one overarching neutral In our view, adoption has been limited wallet provider will emerge; instead, because most wallets don’t provide a we expect consumers to use a selection compelling enough proposition for all of wallets and apps depending on their parties. Wallet providers are keen to own preferences. While retailers may want to the customer relationship as this gives develop their own apps in order to have them access to data on user spending direct access to customer spending habits, habits, which is valuable either directly it’s unlikely that customers will want to the wallet provider (in the case of to use a different app for each retailer. a retailer) or to sell to advertisers. This could support the emergence of However, for the wallet to really take off, retail network wallets or mobile banking it also needs “buy-in” from merchants app-based wallets. The recent Apple and consumers. Pay announcement is significant - we For the consumer, in our view, the think uptake will be slow initially, as benefits of shifting from a physical the system is only designed for the US wallet to a phone-based wallet for for now and relies on adoption of the payments are minimal. For most people, iPhone 6. However, considering Apple’s taking out their phone and opening Touch ID security, Passbook and iBeacon an app is no quicker than putting a technology, and access to customer card into a chip-and-pin machine, and card data (via iTunes), it could become many users have security concerns with a significant player. The fact that Apple putting so much critical data on a device will not retain data on customer spending that could easily be lost or stolen. patterns should also help merchant The wallet starts to look much more adoption. attractive when it can also manage loyalty rewards and promotions. For the consumer, a wallet that can hold all loyalty and gift cards (regardless of the provider), that can keep track of special offers and promotions and can apply [email protected] them at the point of sale, is a much www.edisongroup.com Retail’s Digital Future Innovation Digital Wallets Page 35

1. Battery Life – encouraging people – somebody offering you a loan because Legal View to live connected is undoubtedly the you have not been buying coffee for a dream but leaving home without a couple of weeks and your stress levels physical means of payment is still not seem high, is somewhat less desirable. going to be a wise choice so decoupling 6. Fraud and Compliance – the entirely from plastic may be some way integration of your life into one device and WILL JAMES off. one environment is going to be complex Partner, 2. Increased Card Use – use of cards and regulators are not going to ignore Corporate Division, has a set of costs both personal (interest) this – they cannot. The hacking of iCloud Addleshaw Goddard and retail based (interchange) - increased is potentially an omen of the increased use of cards through Apple Pay may visibility that Apple will now have to those not be so attractive to retailers as it will who wish to unlawfully profit from the rest possibly increase payment acceptance of us and the timing is less than fortuitous. Will specialises in mergers and costs. It will now be for PayPal, Samsung and acquisitions and joint ventures in the 3. Data Coverage – as we all know others to respond to this challenge and it TMT, retail finance and transport getting a signal is still a fine art even will remain to be seen how the retailers sectors. He is recognised as a around parts of London, let alone the respond to being required to adopt corporate finance specialist in both wilds of Norfolk or Yorkshire; although alternative technologies for terminals. Chambers and Legal 500, the leading once the phone is provisioned the NFC independent guides to the UK legal functionality will work at any terminal. Could Apple Pay fall foul of current profession. 4. Transaction Limits – the current financial regulation? limits on contactless payments are going Apple may well consider they understand to have to rise. the detail of the US financial services 5. Data Collection and Use – everyone regulation. However, in the EU, Apple Pay Why is everyone so excited about is agreed that data is important and will opens up a world of complex regulation Apple Pay? be extensively monetised. Apple seem and risk. That regulation is only likely Online and In-App payments will become to be playing down their collection and to increase with the second Payment frictionless, so no more entering your use of data at launch, probably to help Services Directive (PSD) being negotiated. password as a simple swipe of the finger drive uptake with users. However, this Interestingly, unlike Google, as far as we may authorise payments; certainly for In- doesn’t prevent them in the future from are aware, Apple has not, to date, become App payments and probably for buying exploiting the potentially rich data sets regulated in the EU to provide payment online for those retailers who sign up to Apple Pay can offer; if (or more likely services of any type. On the basis that Apple Pay. when) they choose to do so, the real Apple Pay appears to be a pass-through Also, the cards currently stored on challenge will be to find the correct wallet holding third party issuer’s iTunes will be automatically registered balance - how to do it without ending up cards, Apple is likely to be relying on an and if you wish to store additional cards annoying consumers and incurring the exemption in the current PSD for services you can take pictures of them using wrath of regulators. The odd ambulance provided by “technical service providers”, iSight, these will be read and then stored chasing personal injury call is frustrating which support the provision of payment securely. services, without the provider entering Integration is key though. The key at any time into possession of the funds to payments has been and always will to be transferred. However, PSD is likely be an integrated experience so that to include such services within its scope you are not using multiple devices and when it comes into effect by 2017. methodologies to make payments – the In a timely development the Bank Apple Pay environment and wallet will for International Settlements has just link with Passbook and you will have published an analysis of “Non-banks in tickets and vouchers all in one place all retail payments”, including consideration linked to your payments information of the risks and regulatory challenges. The – what is not clear is how they are regulators will watch developments with proposing to link with the iTunes account interest - Apple is now entering a new as there is some potential regulatory minefield and will need to tread carefully. complexity here. In particular, if Apple or its partners, have As ever, Apple have done their ambitions around data usage (even if they homework on the payments experience are not accessing direct transactional and have ensured that all the major data), they may end up being curtailed bugbears (ease of use and integration) by regulation – with the EU pushing connected with payment are, as far as to strengthen regulation around data possible, ironed out. and severely restrict the ability to use transaction-based data. Wha are some of the drawbacks? Some of the problems still remain or are [email protected] going to be further highlighted: http://www.addleshawgoddard.com Page 36 Retail’s Digital Future Property

Retail’s Digital Future: Part two Property Retail’s Digital Future Property Page 37 Page 38 Retail’s Digital Future Property Blurring the physical and online

Blurring the physical and online

he full impact of new technology on together with their property mind-sets. occupiers to build their brands right under T bricks and mortar retailing is hard This newfound pragmatism has some people’s doorsteps. to fully predict. Yet it’s clear that brands’ profound consequences, as we shall The increasing Americanisation of the determination to maintain a physical explore during this chapter. British consumer (in wanting everything presence continues and, in some cases, is The restructuring of the UK’s retail on demand) will continue to drive a stronger than ever. property environment remains ongoing, resurgence of convenience retailing. And Just as it took the music industry some but there has been a gradual decline in this too is an opportunity for destination years to come to terms with the digital retail vacancies over the past year. While centres. marketplace, so it has with traditional the recent death of Phones4U provided While the irony of going to a physical retailing. Yet it’s now clear that smart a pointed reminder that nobody is too shopping location – whether a mall or retailers don’t get obsessed by driving big to fail, many other retailers talked a corner shop – to collect an Amazon every ounce of revenue through a down by the market have since prospered or eBay package may be lost on some by getting to grips with the people, what it at least highlights is digital world. the continued convergence of different Just as it took the Still, no one would deny channels, underpinning the essence of we have too many shops. The physical shopping. music industry some Centre for Retail Research forecasts that by 2018, total IMPLICATIONS FOR store numbers will fall by years to come to THE PROPERTY SECTOR 22%, from 281,930 today to Some of the ongoing implications for terms with the digital 220,000, and that around businesses can be looked at in the 41% of town centres will lose following ways: marketplace, so it 27,638 stores in the next five years. I A change in the location, and has with traditional Many also agree that the number of, physical stores, with a retailing. cost of doing business on and more diverse and dynamic occupier offline will begin to equalise, mix while the costs of delivering II A growing differentiation between ever-greater convenience locations to appeal to specific physical store. They take a broader view would escalate as leisure facilities grow demographics and catchments across their brands and various routes to in importance as part of the wider retail making money, while industry figureheads offer. III Increasing cooperation between continually refer to an ‘omni-channel Outside in the streets, the ongoing landlords, retailers and councils. retail environment’ – with consumer relaxation of planning rules enabling the IV New leasing and rental spend divided across convenience outlets, easy conversion of commercial space will arrangements that will reflect the flagship stores and mobile and computer- mean more cafes and far more residential importance of online business and based online shopping. property sculpted from the derelict frames presence While the death of physical stores of old offices and shops. Together with seemed a real possibility six years ago, an evolving housing market – see the V Change to tax and regulatory a greater focus on quality over quantity emergence of the private rented sector - issues – particularly business rates has reshaped retailers’ business models, this opens up future possibilities for retail Retail’s Digital Future Property Blurring the physical and online Page 39

As the location, quality of asset I. and catchment will influence Revising the impact of these expiries, so too will digital presence and property strategy. strategies real problem as retailers continue to vacant commercial space for residential downsize their physical presence. With use have the potential to positively 80% of retail leases signed now under impact towns in many ways, bringing raditionally, retailers would need to five years in length according to IPD, people and cash back into localities. T be present in 100-200 high streets income streams are likely to come under To ensure vibrancy, an appropriate mix across Britain to gain a national footprint. increasing pressure. of sale and rental housing, together However, the rise of e-commerce means But while incumbent retailers may with retirement and and student that, today, many are focusing on just the not renew many stores leases, there accommodation should be considered. top 25-50 locations, and that retailers is opportunity for a more diverse and But demographic change promises to with an online presence will need less dynamic occupier mix to emerge. have a profound impact on how and than 70 stores for national coverage These could be simple, existing types where people live. Technology will enable according to Andy Street, managing of tenants – for instance a solicitors or retail to also evolve in support of this. director of John Lewis. a bank – but also physical showcase Decisions over where people base While retailer insolvencies have stores for online giants such as Amazon their business will depend on all manner generally been slowing – with just and eBay, digital art galleries, reinvented of considerations. But having a strong 732 store closures in the year to ‘arcade-esque’ leisure spaces, or even digital presence will grow in importance, August in 2014, compared to 3,951 light manufacturing in the form of mini- according to the mayor landlords. in 2012 according to the Centre for manufacturing and 3D printing units. However, the type of location shops are Retail Research - there remains a very At the same time, moves to convert in will largely be the overriding factor.

DEFINING LOCATIONS retailers and consumers. These locations TERTIARY LOCATIONS: Now that the dust has settled around will have the money to invest and tech- Small high streets and insolvencies and initial downsizing, it based offerings will be used to help shape old shopping centres is possible to define broad ‘types’ of individual brands’ positions in the market. location, how they will be affected and These are the areas most severely how effective digital strategies will fit into affected by the downturn and will rely their future growth. Secondary locations: most heavily on cooperation between Second tier towns and community, council, landlords and shopping centres retailers to halt further decline and Best locations: support growth. Key town centres and These are locations that are seeing a Strategies to halt declines will range shopping centres declining demand from tenants and from jointly finding ways to re-market the consumers, but are large enough to be retail offering, to opening up cheap space These areas will more easily retain able to use active management to reverse for boutiques, entrepreneurs and start-ups. low vacancy rates due to the need that. Joint investment in technology and online among large retailers to occupy prime Many will see landlords adjusting presence may follow. commercial space for revenue and brand their rent, adding new infrastructure, In Mansfield, the local business status. However, they will not be standing leisure and parking options to keep their improvement district used Spacehive.com, still, for maintaining their positions as assets occupied – often through direct a civic crowdfunding platform, to share ‘best’ locations requires constant active cooperation with councils and retailers. the cost of a £38,000 wi-fi installation management. Carefully considering their providing free internet access for the high Embracing both current and demographics and selling points – and street’s visitors and businesses. new technologies will be critical in how new technologies can attract this maintaining primacy and differentiation - will be key. They have the potential to amongst competition. Being able to host carve our their own niche and offering. a full suite of omni-channel retail options Harnessing digital tools could make all will first attract, and then keep big name the difference. Page 40 Retail’s Digital Future Property Blurring the physical and online

mentality. Characterised by higher levels Rochdale, street markets are being used of ‘dwell time’, their multifunction mix will to attract people back to the high street, II. include an enhanced leisure offering to while pedestrianisation schemes are encourage shoppers to spend a full day or being used to accommodate event space evening there. and other experiential attractions. Re-defining Considering how technology as a product or service fits into this retail CONVENIENCE LOCATIONS redefinition of location will be essential – that offer the maximum amount of – and soon move beyond offering wi-fi for choice and easy access. As such free experiential locations or free parking for locations parking, click and collect services and click and collect services. food offerings will need to be carefully The government has recently aligned. announced funding for 21 high street technology ideas through the Technology ow and why we shop is changing. Strategy Board’s ‘Reinvigorating the High H Locations increasingly need to FUNCTIONAL AREAS Street’ scheme. Proposals range from establish how they fit into this new – which would provide easy access to being able to pre-book your parking spot landscape and determine what new essential items such as groceries and DIY by mobile, to sending out an alert to strategies – both physical and digital – goods. shops to tell them what you are going to are needed to attract consumers. be shopping for, and even Town Pounds, British Land, among others, has a national network of local e-currencies defined three type of shopping location No two types are mutually exclusive, but that act as a local marketing and loyalty emerging: retailers, landlords and councils need to tool. identify how their retail offering fits into For each location, defining how this this type of framework, and adjust their technology supports their new niche in EXPERIENTIAL LOCATIONS strategies accordingly. the market will be a priority in the years – which focus on offering consumers Examples of this are already to come. the retail experience and the ‘day out’ happening: In Rotherham, Birkenhead and Retail’s Digital Future Property Blurring the physical and online Page 41

“waiting for normal economic III. growth to return is unacceptable and will result in many towns Increasing moving further into decline.” MARK WILLIAM, Chairman, cooperation Distressed Retail Property Taskforce

according to the DCLG’s Future of High hile on the one hand there will be Strong, local leadership Streets report. For instance, Stockton- W a growing focus on differentiation A smaller, more focussed retail core. on-Tees invested £25 million of its own between destinations, on the other this A wider range of uses such as food money, with £13 million from the private has led to the intermingling of objectives and leisure sector to enhance its public realm, with for those in specific locations: retailers, Accessible and affordable transport walking links between the centre and landlords, councils and communities. A greater number of office and civic the town’s riverfront. Ipswich focused Nowhere is this more important than functions on delivering a large-scale master on the ‘traditional’ high street, where Allocation of jobs plan, to better link-up retailers with taking a proactive posture and pushing Re-use obsolete areas by defining new facilities being established across its own hard to reinvent traditional retailing is uses waterfront development. the concern of all involved. Re-basing of occupational costs (rents Other new powers and initiatives are Chairman of the cross industry and rates) currently being piloted and consulted Distressed Retail Property Taskforce, Revise planning system towards upon, they should all consider how Mark Williams, said that “waiting for sufficient flexibility technology can assist. New powers in normal economic growth to return is the forms of compulsory purchase orders unacceptable and will result in many To achieve such objectives will need (CPOs), joint ventures (JVs) with the towns moving further into decline.” In the cooperation of all actors, as will the private sector and local property vehicles its final report in 2013, ‘Beyond Retail: financing and use of new technologies are already being piloted. Redefining the shape and purpose of town that will be essential in attracting people Civic crowdfunding platforms such centres’ the taskforce listed some key to, and advertising these high streets. as Spacehive.com are also growing in factors needed to be taken into account There is already evidence of this popularity, working with various groups through the process of traditional retail happening, especially in town centres across the private and public sector to centres re-development. outside of London that fall within the support the match-funding of projects secondary and tertiary classifications promoted by creative local people. Page 42 Retail’s Digital Future Property Blurring the physical and online

IV. Retail lease lengths and rent free periods

Average retail rent free period length (months) Leasing Average retail lease length, including breaks (years) Average retail rent free period length (months) 10.0 9.0

etail leases had started their R inexorable decline in length long before the recession. The thousands of 8.5 7.8 insolvencies post 2008 cemented this, but, more importantly, led to the equalisation in the relationship between landlords and tenants. 7.0 6.5 As landlords scrabbled to maintain income streams, tenants increasingly found themselves in a position to negotiate for more favourable leasing terms – as the growing inclusion of events 5.5 5.3 into leases – break clauses, rent free periods and rent reviews – has shown. (years) lease length, including breaks retail Average

According to Phil Tily, executive director 4.0 4.0 at MSCI, where IPD forms the core of the 2011 2012 2010 2007 2002 2003 2005 2006 2009 2004 real estate offering, “In order to avoid 2008 costly voids, retail landlords during the recession were doing anything they could to secure income streams. This led Source: IPD Lease Events Report to lower lease lengths, more rent-free periods, and reduced rents upon re-letting. “Returning confidence in the market But, as technology becomes cheaper is again allowing commercial landlords and turnkey solutions hit the market, to be more discerning, but lease events the ability of these locations to harness V. remain a key incentive in attracting digital efficiencies may well stand them in tenants – particularly in less prime a good position. locations.” What is clear is that we will continue Business As such, there is likely to be growing to see huge variation across the market. scrutiny of how digital retailing is going But, as increased upfront investment is rates to impact upon lease negotiations over required, prime locations will continue to the coming years. While the aligning move away from turnover rents as many of landlord and tenant objectives has have done already. They were widely led to a willingness to invest in new promoted after the financial crisis as a full review of business rates has technologies from both, questions remain sign of landlords and tenants working A been long overdue. Out of step around how these investments will be together. Of course, in a cyclical market with the economic cycle and still held captured within leasing contracts. things always change, but with occupancy at peak, 2008 levels (since then rents From a practical perspective, much rates surpassing 97% in top shopping have dropped by 40% in real terms), will depend on the location and the malls with more than 47 shopping centres in many towns rates account for a sales achieved there. No matter what fully let, according to research by BCSC disproportionately high percentage of investment takes place, retailers will and Local Data Company, landlords can occupier costs for retailers, and have been always know the value of a unit and afford to be a bit more choosey. widely criticised for curtailing growth and we will likely see a further polarisation the recovery on the high street. between prime property and everything Rates exemptions have already been else. used on a number of high streets to aid At the bottom end of the scale, tenants, with the Future of the High across poor performing tertiary areas, Street report citing examples in Stockton the onus will be on landlords and local – where discounted rates were offered to authorities to make concessions to attract businesses willing to take a vacant shop tenants through rent free periods and in the town centre, and Margate where more flexible lease structures, as well retailers were given a 15% reduction as digital and conventional investment. when the local shopping centre expanded. Retail’s Digital Future Property Blurring the physical and online Page 43

Expert View Daniel Watney

improvements: adding air conditioning Daniel Watney is a boutique DEBBIE adds to the value of an asset, rental full-service property consultancy WARWICK values, and subsequently business rates. run by an experienced team of Partner, Thus, if you augment your shopping centre partners. The firm’s high-level Head of Rating, over and above the value of others, this expertise covers the full spectrum Daniel Watney should maintain occupation levels at the of commercial property, residential centre and this would be reflected in the real estate and professional service value of rents achieved. functions. Government relief is only applied where sectors need an incentive to make Established more than 150 hile the importance of digital changes. Therefore, landlords making years ago, we pride ourselves on W innovation grows – particularly investments to maintain and augment our innovative thinking. With a highly with regards to high street retailing their property values are unlikely to collaborative partnership structure, – there is, as yet, little impetus for attract any central or local government we can tailor services around your Government to look at rates exemptions sympathy for relief from businesses rates needs, offering a flexible approach for digital investment. for occupiers. vital for more complex projects. At the investment level, new There will continue to be debate technologies are not directly taxed around the suitability of the current through the business rates system, but business rates system – particularly in they will be if they lead to a rise in rental respect of modern online retailing versus levels at the date of the next revaluation. the high street – but any changes will The UK’s rating system is based on the inevitably have to wait until the full ‘simple’ financial measure of rental levels. review of the system, promised after the So if there is a rise in rents due to digital 2017 valuation. investment, this is reflected in the rating assessments and, therefore, passed on in business rates bills. [email protected] It’s the same as with any physical http://www.danielwatney.co.uk Page 44 Retail’s Digital Future Property Blurring the physical and online

Expert View BCSC

about awareness and partly differing money to the Technology Strategy Board Retail has been high on the investment and risk profiles which drive to pilot technologies to get people back government’s business agenda in the levels of capital investment. For into town centres, so money is being recent years. As a member of the example, Intu buys regionally dominant made available but the government has Digital High Streets group, chaired shopping centres and holds onto them. not shown real intent by, for example, by John Walden, chief executive of They’re strong assets from which it providing tax breaks within the sector. Home Retail Group, BCSC has been creates additional value through active Personally I can’t see this happening to working to influence the ongoing management within a single brand. any great extent soon. debate to secure tangible support Therefore, it will make decisions about At an investment level, new for landlords. investing in emerging technology on a technologies drive rateable value different basis than, say, an opportunity increases and more tax is paid. This The group includes companies fund seeking counter-cyclical windows creates a barrier to investing. There across retail property and to make a return over a five-year could well be scope for ministers to look technology. It wants to understand horizon. at a rate exemption which essentially what government can do within its waives new technology infrastructure for existing fiscal constraints to get To what degree do you think there is a number of years - provided it benefits investment in digital technology scope for lease structures to evolve to the wider community. Surely in today’s into town centres. One of the big reflect the direct commercial benefits modern economy that’s a better use of challenges faced by the industry of new technology? business rates relief than the one that is making sense itself of the Capturing the value created by new exists for agricultural buildings? opportunities and risks. technology and increasing e-commerce The government could also look at is a real challenge for property other enhanced capital allowances which companies. Property companies need to could potentially be a good investment get close to the consumer and provide EDWARD COOKE the services they expect. For example, Director of Policy wi-fi, or more specifically the ability and Public Affairs, to have access to information at every BCSC waking moment, is now thought of as a ‘basic human right’ by some investors. As such, they need to provide customers with access free of charge. Previously, they never needed to be consumer At its core, real estate is still facing in this way. Ultimately, if you’re about generating a rental income not willing to invest in the kinds of from physical space. How much technologies shoppers require to meet do landlords need to care about their emotional as well as functional investing in new technologies? needs then they will stop shopping with I don’t think that traditional model of you, retailers will lose customers and a property company and retailer exists landlords will lose occupiers. as it used to. The two are increasingly For example Javelin Group has done reliant on one another with an ongoing some interesting work exploring how need to play an active role in each intelligent analytics can enable real- other’s business performance. At time choice about customer targeting, an agency and a property level, that and when integrated with existing convergence further down the supply customer data and existing marketing chain is happening. and promotional campaigns can deliver messages to the right customer in the Is there a divergence between major right place, at the right time. Ultimately landlords who can afford to invest, helping deliver vast increases in and smaller ones who cannot? customer engagement and conversion This has remained the case with rates. everything – not just technology. But considering whether to invest What’s the government doing to help in emerging technology isn’t simply the industry with technology? down to affordability. I think it is partly The government has allocated some Retail’s Digital Future Property Blurring the physical and online Page 45

decision by the Exchequer. They could and find how new technology product manufacturing servicing town centre take into account other revenues development is impacting consumer businesses, or transforming town generated by modernisation work and purchasing decisions. There is a role for centres into micro-manufacturing the economic benefit generated for shopping centres in creating incubator centres. Increasingly, these parts local enterprises and other business space for start up businesses, in a way of industry are converging. As a neighbours. we probably more often associate with consequence there needs to be a better Just as civic crowdfunding has the office sector. Property companies understanding of business priorities, brought citizens, companies and public cannot bring a lot of expertise in terms motivations, capabilities and the sector bodies together to improve their of new product development necessarily, funds available to deliver successful neighbourhood, there’s clearly a win- Google and Samsung will always trump businesses and city centres. win for central government if they can them in this respect, but perhaps they At the moment that knowledge is bring major landlords to the table and could, for example, go to a venture fund missing across the sector, but it’s an oil the cogs of community investment. and offer access to their shopping malls, exciting time for retail, property and the that can quickly push a bright idea into wider economy. I think, in the years to Some major landlords are setting a fully functioning business. come, we’re all going to understand one up innovation hubs or filling empty another’s businesses and how we relate space with start-ups. Is there a role How does BCSC plan to work with a lot better than we did when landlords for property investors to step out members in coming years to enhance signed a new lease with a retailer, and of their comfort zone and partner understanding of these technologies? then gave them a call 10, or more, years with VCs adding their weight behind I think some technologies are more later to renew. potentially successful innovators? relevant than others. I think 3D There’s a clear role for property printing could be interesting. Imagine [email protected] companies to get closer to the consumer the possibility of smaller scale http://www.bcsc.org.uk Page 46 Retail’s Digital Future Property Blurring the physical and online

Expert View Hammerson

like me have joined the business was to and make sure the infrastructure adds Hammerson is a FTSE 100 bring a direct understanding of retail value as we share the same goal. company with a portfolio of marketing; challenging the business and retail property in the UK and help to up the anti. I’ve been supported Will other emerging trends change France valued at around £6.3 by the board 150% and significant the way retail property is physically billion, including 21 prime shopping investment has gone in to upgrading laid out? centres, 22 retail parks and our web presence and trialing mobile It already has done and I think it investments in nine premium applications with loyalty functionality. inevitably will continue to do so. Just designer outlet villages. Hammerson We’ve been the first major landlord as my local Sainsbury’s has gone from focusses on winning locations that to trial Beacons in a meaningful way, purely till-based to self-serve tills plus cater to consumer preferences for rolling them out in France for the a couple of real people in short space experience, convenience and luxury. opening of Les Terrasses du Port. We’ve of time, store design across the board also looked at upping the focus on the will similarly evolve depending on how overall shopper experience – not just shoppers want to interact, pay and shop. digital. Digital innovation will enable us The House of Fraser Click & Collect store STEPHEN to do what we already do, but enhance in Union Square, Aberdeen is a great BROWN the experience. example of changing store formats. Many Group Marketing retailers are now using a combination Director, With everyone fighting to own the of video content and tools that engage Hammerson customer how will you ensure tools – directly with the web (e.g. stock checkers, such as iBeacons – don’t conflict with remote ordering tools, style advice) in things your tenants do? their store designs. The aim of our shopper activity is to People come to our centres for the You were hired four years ago having enhance what retailers provide, for social aspect of interacting with friends, worked for Home Retail Group and example in terms of wi-fi we have family, retail staff and the myriad Dixons Retail. What’s changed since airspace policies: the retailers subscribe other things on offer. Human interface then in terms of Hammerson’s digital to them and we also offer our services. underpins the thinking around what ambitions? With technology like Beacons our plan, we do. In a real word, when people are There’s been a long-term recognition as with everything we do, is to have an walking round and touching things, that investment in this area would be open dialogue with retailers around what that level of service offered by humans critical to driving growth and supporting we are doing and see how we can best is the critical differentiator between our customers. One of the reasons people support our retail partners. We’ll invest a genuinely multichannel shopping experience and one that happens online.

Technology also gives you the opportunity to engage male shoppers who, research says, are less to be as engaged in the latest Topshop sale? The technology helps us engage in a highly informed way, offering benefits and incentives to all customers groups in order to influence behavior. Data will continue to be a core component of our marketing plans. Bored husbands and boyfriends are a target for us like everyone else, but it’s about more than just messaging them. We need to work to amplify and enhance the whole experience: different people need to be able to do different things. Two teenagers going shopping, trying something on may want to check what’s happening online or look at a web- enabled clothes hanger to see how many Facebook likes at item has. They might Retail’s Digital Future Property Blurring the physical and online Page 47

want to know what the bloggers they rate say, or share photos via social media. A lady shopping with her daughter may want to have lunch somewhere nice or see a movie if she’s with her husband. We have to find reasons for people to be there. It would be helpful if these were things you cannot do remotely – like eating – but there are other service areas like, barbers, cash points, dry cleaning – all these things make it a place where you can enjoy yourself or simply get things done conveniently. And of course we need highly programmed malls providing entertainment and a constantly changing environment for all sophisticated retailer models which A healthy attitude towards trying our shoppers. Such thinking is core to support how they allocate stores. One things is vital as is a supportive, forward- how we develop our ‘product’ now, and in of the reasons they do that is to make thinking board. It’s also about using the the future sure their staff are channel neutral as correct external partners who live, eat, well. The last thing you want is a store breathe multi-channel and technology. So very much the American principle manager discouraging people from going And about hiring people with new skill of ‘the individual is king’? online because they’re focused solely sets. The employee base at Hammerson Yes, I think so; we should be able to on shop sales, a move which could risk looks very different to a few short years cater to as broad a church as possible, to pushing customer to a rival. ago – with many people that have had create a place that people want to spend If retailers understand the ‘true’ value retail side experience, specifically in a lot of time in, even if they’re not the of stores across all channels – it’s our job marketing, product development, digital kind of people who want to clothes shop to make sure that our destinations drive and e-commerce. all day. profitable sales across all channels. This The launch of our PLUS app in makes our centres valuable commodities, Marseille is a great example of trialing Presumably enhanced technology driving revenue for all concerned. new initiatives, Thousands of shoppers makes landlords more able to have signed up to since the centre unequivocally demonstrate what’s Given how the game is constantly opened four months ago. It features going on? changing, how are you ensuring the geolocation technology powered by the The trials we’ve conducted in Marseille myriad legal risks of harvesting and largest installation of iBeacons in Europe include a bespoke app which interfaces sharing data are covered? and was rated in the Top Ten lifestyle with about 300 beacons. This helps you If we are providing wi-fi or looking at apps in France. understand how shoppers use the centre, shopper data, we ensure we subscribe Pragmatically, we had already tried which brands they interact with and all to the law as it stands when we invest. apps in a more low key, low cost way in manner of things, which improves our Offering people clear options to opt out the UK (at The Oracle and Highcross) understanding of what goes on. This and meeting all other standards set out to understand how shoppers wanted to data – alongside tracking tools like Path by the Data Protection Act is black and interface with us and how we could get Intelligence will become increasingly white to a large extent. There are shades retailers to engage with the platform. important not least to retailers of grey around the usage of shopper When we built PLUS we were able to themselves. data going forward, because its moving use these insights to invest in a smarter, quickly, but all of our activity at the scalable platform. Shoppers have clearly But at the end of the day, your key moment is permission-based so as to taken to it and the clever bit is that we’re focus is revenue. avoid any room for doubt. embarking on an innovative, data driven Everything comes back to sales: a retailer Customer Relationship Management knows how valuable a store is and they What are the key things needed for programme with them. This is all know which store is most important. success in this area? designed to drive sales and footfall for The smart ones take a holistic view and An obsessive focus on shopper insight our retailers, which is what it’s all about develop models in which physical and and retailer needs. We want to help at the end of the day. online sales don’t compete with each retailers drive sales – but not get in the other. Data derived loyalty schemes way of the relationship between the or website data fuels increasingly shopper and the retailer. http://www.hammerson.com Page 48 Retail’s Digital Future Property Blurring the physical and online

Legal View

While check-out areas will change to through turnover provision means this BRUCE include mobile payments and changing type of lease will be consigned to the LIGHTBODY rooms may soon accommodate “too difficult” list and will become less Real Estate Partner, augmented reality, the evolution of the common. Addleshaw Goddard lease in the digital age will be somewhat muted. New technologies are unlikely There’s also the law of unintended to trigger an immediate or substantial consequences. From a retailer’s change in their structure or content. The perspective, while a cleverly drafted fundamentals of indexed or upwards turnover rent clause will factor in a high Bruce is a real estate specialist only rents are a comfort for investors, as number of returned items, employees with extensive experience on a are other key aspects of the FRI – or Full bonuses may be linked to store-based wide variety of transactions and Repairing and Insuring – agreement. sales. What might reduce the rent development schemes, including roll will also inadvertently act as a large-scale portfolio acquisitions; We saw how difficult the concept of disincentive to staff. urban regeneration projects involving change was when the BPF looked at retail and mixed use schemes; standardising leases at the start of 2014. The other part of the lease impacted by advising on one of the country’s digitalisation is the service charge. This largest regional shopping centres However, we should expect to see is likely to be more incremental as all for many years. certain key lease clauses being more parties feel their way around the value carefully negotiated. Turnover rents are of digital infrastructure. The extent to He acts for major property funds now in a dwindling minority and both which it should be met by the tenant dealing with investment and landlord and tenant should approach through the service charge or absorbed property management, and advises them with caution and some pretty by the landlord as an investment in large numbers of landlords and rigorous legal advice going forward. driving higher income will depend on tenant clients. Landlords are becoming increasingly individual landlords. On balance, the wary of turnover rents: in the complex emerging technologies highlighted in world of online sales and returns, our report will have more direct benefit for retailers. While footfall data was once the While footfall data was once the pinnacle of technology, the ability pinnacle of technology, the ability to target and incentivise shoppers is now incredibly advanced. Savvy to target and incentivise shoppers retailers will begin to demand high quality intelligence from landlords is now incredibly advanced. Savvy as a matter of course. However, as we draw away from a lengthy recession, retailers will begin to demand high during which service charge was kept as low as possible to accommodate quality intelligence from landlords struggling retailers, a new dynamic has as a matter of course. emerged. Landlords are beginning to reinvest in good quality infrastructure and emerging technology in order to improve footfall and enhance the it’s very hard for the landlord to feel attractiveness of a space. Once that confident that it has control over, and yields tangible results, landlords will access to, all the data needed to get expect that to be passed on to the the price right. With no benchmarking tenant through a heftier service charge. or standardised methodology for Whether the tenant will want to pay for calculating ‘turnover’, there’s plenty of that emerging technology remains to be scope for it to be manipulated. seen.

Clearly, the approach retailers take to combining – or wholly separating – their online and physical retailing businesses varies enormously. The risk [email protected] of sleepwalking into a poorly thought- http://www.addleshawgoddard.com Retail’s Digital Future Property Blurring the physical and online Page 49 Page 50 Retail’s Digital Future Reflections

Retail’s Digital Future: Part Three Reflections Retail’s Digital Future Reflections Page 51 Page 52 Retail’s Digital Future Reflections Security

REFLECTIONS Security

infrastructures like shopping centres, cause unforeseeable chaos, including DAVID EMM David expresses concerns over their shoppers walking around the centre with Senior Security vulnerability amid increasingly digitally a connected digital device. Therefore, Researcher, connected security systems, saying shopping centres need to do envisage Kaspersky geographic point of location will no security measures which extend well longer be a limitation for intruders. “As beyond putting one or two people in long as a system is connected, it can, front of a bank of CCTV screens. potentially, be reached from anywhere, so comprehensive digital protection over With the source of an attack being According to co-founder and CEO of security is required to ensure safety.” increasingly unpredictable - and maybe Kaspersky Lab, Eugene Kaspersky, undetectable - the potential damage has 10 years ago we were only seeing the Big shopping centres have nearly widened too. For example, one possible beginning of cybercrime. However, everything enabled by the internet, scenario could seethe hijacking of the now, due to our constant connection including doors, air-conditioning and security system in a shopping centre, to the internet and the increasing CCTV. Anyone connected to the internet resulting in shoppers being locked opportunities to make money from can, potentially, breach the system and in. As the internet is becoming more cybercrime, we are exposed to an unprecedented number of hidden threats in our everyday lives. Big shopping centres have nearly “Intercepting banking transactions and gathering personal data are typical everything enabled by the internet, examples of cybercrime,” explains David Emm, Senior Security Researcher from including doors, air-conditioning Kaspersky Lab. “These criminals focus heavily on people’s online activities, and CCTV. Anyone connected which is increasingly possible as people to the internet can potentially are doing more and more on ‘always-on’ smartphones and tablets.” breach the system and cause In regards to businesses run in big unforeseeable chaos Retail’s Digital Future Reflections Security Page 53

inclusive of people and devices, such As many may recall from earlier this detecting previously unidentified risks action may no longer require a criminal year, eBay had to request that 145 in real-time, building up a so-called mastermind, which is why a tighter, million users change their passwords Enterprise Immune System. more advanced and constantly updated as a precaution after cyber-attackers digital security system is a must for managed to get their hands on some IT security professionals in the retail shopping centres today. employees’ login details and used these sector can also learn from the work of to gain access to a database containing so-called ‘white hat’ or ethical hackers. Nevertheless, on site security is just part encrypted customer passwords and For example, some years ago, a hacker of the story. A perfect example concerns other non-financial data. called Barnaby Jack discovered a way to American retail company Target. make an ATM give out free money, yet Hackers are thought to have broken into These examples pinpoint the importance he chose to release his research to the the computers of a heating, ventilation of controlling how data is managed and world, thereby highlighting the need for and air-conditioning firm that was a accessed as well as highlighting the need banks to secure themselves and their supplier to Target and gained access to for employee education on security risks customers from potential tremendous login details for the retailer’s systems. and enhanced encryption -especially financial loss. He once said that, Once inside, the hackers were able to considering that connectivity and the “sometimes, you have to demo a threat install malware on Target’s point-of- internet means tills can be hacked from to spark a solution”. As everything sale system that captured credit- and a computer located within the same merges into one integral network, debit-card details at tills before the data building as well as from the other side of ensuring both real world and cyber- was encrypted, resulting in a scam that the world. security will result in a more pro-active affected 40 million customers. Learning position. from the debacle, Target fixed the flaws To prepare themselves for newly in their security system, reinforced emerged risks and threats, retailers security around passwords used by its need to revise their existing security staff and contractors, strengthened its system, as well as seek assistance internal firewall, and also developed from new solutions and technology. “whitelisting” rules for its point-of-sale For instance, Darktrace, developed by system, which flag up any attempt to the University of Cambridge, provides a install software that has not been pre- new category of cyber defence, which approved. addresses challenges of insider threats [email protected] and advanced cyber-attacks through http://www.kaspersky.co.uk Page 54 Retail’s Digital Future Reflections Big Privacy

REFLECTIONS Big Privacy

The first is data protection, which is to protect your right to a private life, DAVID ENGEL ultimately about what you can and can’t and it has become very important. For partner Litigation do with “personal” data. Technically it’s example, all the phone hacking cases Division and not about privacy, but ultimately that’s against the News of the World were Reputation what it’s there to protect. Once you’ve based on the Article 8 privacy rights of Protection lead, ploughed through all 100 pages of the the victims of voicemail interception. Addleshaw Goddard Data Protection Act, it’s fairly black and It’s a much wider, very general right, white, though of course it depends on not written down anywhere in a more how the courts interpret it. detailed way than you see it in Article 8 David is an industry leader in Data protection came about from of the convention. defamation and privacy. He believes the European Commission’s wish to companies should invest in proper protect people from having personal ARTICLE 8 OF THE EUROPEAN due diligence, keep a hawk eye on data provided to one person being sold CONVENTION ON HUMAN RIGHTS their reputations, and ensure they on to a third party or used in a way that understand the confusing legal they didn’t want. 1. Everyone has the right to respect categorisations of privacy. Just to further complicate matters, for his private and family life, his there can be quite a lot of overlap home and his correspondence. between data protection and the law of confidentiality. 2. There shall be no interference by “Many opportunities of modern life a public authority with the exercise come at the expense of our personal So where do laws protecting the of this right except such as is in data,” says David. “It’s why Facebook, right to a private life come in? accordance with the law and is Twitter and Google are free to use. It’s Until quite recently, that was all necessary in a democratic society the reason Nectar points exist. But it’s about the law of confidence, i.e. the in the interests of national security, also likely to be a source of potential restrictions on the extent to which public safety or the economic disputes for companies as they dive into confidential information, whether about well-being of the country, for the the brave, but confusing new digital a business or a person, can be disclosed prevention of disorder or crime, for world.” to a third party. the protection of health or morals, or However, the Human Rights Act , for the protection of the rights and Everything involving privacy often which came into force in 2000, has freedoms of others. seems to get bundled under the introduced to English law the novel umbrella of the Data Protection concept of a free-standing right to Act, but the law is broader than that, privacy. Isn’t this rather vague? isn’t it? This relatively new law of privacy Indeed. Some people want to keep some Privacy comes in two legal categories, derives from Article 8 of the European things private that other people might which causes a fair amount of confusion. Convention on Human Rights. It’s there not be fussed about it, for example, Retail’s Digital Future Reflections Big Privacy Page 55

their salary or their shopping habits. Google of course recently came Broadly speaking, the test is whether a person has a “reasonable expectation of unstuck in the European Court of privacy” in relation to the information. There are still many unresolved Human Rights in relation to the legal issues and so far most of the cases have been against the media using ‘right to be forgotten’ private information for journalistic purposes, rather than retailers using it for commercial purposes. they will have plenty of data protection but it may not help reputationally. The courts in this country have lawyers who know a lot about data Consumers tend to expect the not yet really considered how data protection, but sometimes they forget household name to take responsibility held by a business about an individual about Article 8 privacy, and indeed old- for partnering with the right kind of may constitute an infringement of fashioned confidentiality. Corporates suppliers, i.e. those who aren’t going his privacy. But that’s sure to come. who want to use data in new ways will to have some technical problem Google of course recently came unstuck need to make sure that they’ve done that will let down the consumer. The in the European Court of Human Rights their due diligence and they are not reputational buck probably stops with in relation to the ‘right to be forgotten’ exposed to undue litigation risk. the biggest brand, even if technically, – the Court decided that Google have But, of course, reputational risk and legally, it is not their fault. to take down old information which could be far more damaging that a People will look upon these sort people want to keep private. single short-term legal challenge. The of ‘anchor stakeholders’ to ensure that essence of some new technologies is everything is in place to reduce the risk So if people are doing things they how they bring different stakeholders of data loss or other technical glitches. don’t want known – in a shopping together. Digital wallets involve a That anchor may be the shopping centre –those watching could receive variety of different companies, for centre itself where the landlord wants a legal poke in the eye? example. And we’ve seen problems in to exist as a consumer brand. They Potentially. Would I want a supermarket the past when major credit cards or will want to know that their systems to disclose to third party companies bank payments go down even for just an are wholly protected even if it’s the that I’m getting through three bottles hour. financial services guys who bear the of whisky a week (that’s a hypothetical When a reputational crisis blows brunt of obligations on things like example, by the way)? Possibly not. So up, as a result of a commercial partner digital wallets. No shopping centre is that private information in an Article having fallen short, e.g. because its data would want to become synonymous 8 sense? There’s a very good argument security is inadequate, there’s always with a major digital pickpocket scam. that it is – and it’s completely separate the temptation to point the finger at from data protection considerations. the other businesses. Legally, this may [email protected] Quite often in these businesses, work as a means of avoiding liability, http://www.addleshawgoddard.com Page 56 Retail’s Digital Future Reflections Age of Collaboration

REFLECTIONS Age of Collaboration

How has digital technology shaped shoppers the opportunity to experience Rodrigo is a civic technologist the evolution of retail in recent new technologies within months of and researcher who designs, times? their invention. builds and analyses tools to help The evolution of retail in the past five communities and governments years has seen the radical divergence So bricks and mortar retail has to collaborate for social good. He of online and offline experiences, work a lot harder to meet consumer published the first study of the use fuelled by technologies that capitalise expectations? of crowdfunding for civic projects on the strengths of the two modes of Consumers are demanding something while at MIT, and is now studying consumer interaction. As consumers quite different from offline retail, the social impact of crowd-based split their activities more strategically seeking more depth and engagement technologies on organizations as between online and offline retail, they from the in-person experience. a doctoral researcher at Stanford. are demanding quite different things This goes far beyond the already Prior to this, Rodrigo was a business from each. well-established idea of destination journalist for Bloomberg and BBC Online retail is being pushed shopping, such as when retailers serve Radio 4’s Today Programme. towards greater convenience and speed, as a ‘hang out’ venue for younger shown by the emergence of same-day shoppers, and requires smart, data- shopping, and Tinder-style browsing driven management of the customer applications for products that reduce experience. If a website is capable of RODRIGO DAVIES the selection process to a simple swipe. modeling a users’ past behaviors to researcher at the The rise of the ‘maker movement’ offer suggestions of suitable products Center for Work, showcasing grass-roots manufacturing, of interest, a brick-and-mortar shop Technology and and the explosion of crowdfunded should be able to identify existing Organizations, products, has shown the potential for customers and their preferences, Stanford University. goods to be designed and brought to and support their in-person retail market much faster than traditional experience in real time. It is also production cycles, and has given clear that simply being able to browse Retail’s Digital Future Reflections Age of Collaboration Page 57

Online retail is being pushed PayPal to multi-currency, and are adapting their processes to speed up towards greater convenience and the process, such as equipping every point-of-sale staff member with a speed, shown by the emergence of tablet-based checkout. At the same time, web-based retailers, facing stiff same-day shopping, and Tinder- competition and tight margins online, are taking inspiration from the some style browsing applications for of the latest innovative in-person experiences to differentiate their products that reduce the selection service, from sophisticated sizing process to a simple swipe. and fitting tools by fashion retailers to interactive personal shopping. As online and offline retail experiences continue to evolve, this cross- products is not enough of a value-add Does all this mean online and offline pollination of ideas may be a critical for the in-person shopper, who might retail will develop separately? way for businesses to surface the most have access to a wealth of high- The contrasting pressures on offline durable strategies going forward. resolution images online. Instead, and online experiences are reaching an in-person experience should some points of convergence, however. offer meaningful and exploratory Online retail has pushed the checkout interactions, from augmented experience to a point of frictionlessness reality-enhanced browsing to hyper- and convenience that consumers are customisation of products using 3D now right to expect from offline retail: printing technology. shops are fast accepting the full range [email protected] of payment options, from Bitcoin to http://web.stanford.edu/group/wto/cgi-bin/wp/ Page 58 Retail’s Digital Future Reflections

Expert View intu

When Capital Shopping Centres rebranded as intu in mid-2013, one of the key elements of the strategy was a pledge to focus on digitally connecting its centres and customers using the latest technology. The group owns some of the country’s best known malls, such as intu Trafford Centre in Manchester, intu Lakeside in Essex plus St David’s in Cardiff.

TREVOR PEREIRA Commercial and digital director, intu

On the other side, we have retailers collaboration between retailers and who aren’t even using multi-channel landlords based around data. platforms yet. Trevor joined the company eight What kind of things have you put in years ago after spending 21 years as How is this coordinated and overseen place that add value in this regard? commercial director for Heathrow within your business? We have invested in free wi-fi for Airport and others owned by BAA. He In our move to a single, national brand, customers that can triangulate believes planning for future technology we wanted to clearly identify what we shoppers’ positions in the mall, giving is all part of being a good landlord, but stood for. One of our key attributes is us the ability to reach people who opt in admits that the property industry will digital connectivity, so we created a with location-based messages. This is an have to collaborate like never before. digital team, which has now grown to 40 added value a retailer could participate people, who, for example, are running in. By combining location data with How has understanding of our online transactional marketplace information about how individual technology evolved in retail over the – intu.co.uk – a key requirement to customers are using our wi-fi, such last few years? achieving this connectivity. This team as use of our website, what they are There have been numerous phases of is also our incubator looking at a browsing, and what products they have evolution in retail technology over the number of other technologies and how looked at or bought, gives us a powerful past years. Some time ago, the debate we can support retailers in their own picture we can utilise for the benefit was about online and e-commerce deployment of them. of our retailers and would add another versus physical stores, later it moved layer of added value. It also means that onto the use of multi channels and Now that landlords are finding our customers can be guided to products interaction between those channels. benefit in various data-driven and offers relevant to them, making It then evolved into seamless omni- activities , will we see an overhaul their shopping trips more productive channel technology, ensuring this fits of leases and business contracts to and rewarding. together from a customer perspective recognise that the landscape has by providing the individual with what changed? Is there potential to use demographic they want, when they want it. Now this We need to look at what this means and footfall data to give greater has moved on to greater relevance and for establishing rental values which intelligence to the lettings? personalisation of offers, and how that depend upon supply and demand and, That capability exists, but understanding relates to mobile technology. In each ultimately, what value a retailer sees in how to analyse this data and put it to of these phases we have early adopters a space. As a pure property transaction, commercial use is still being evaluated. of technology. On one side, we can see I can still see a net rental value driven We hope to add a layer of intelligence companies such as John Lewis or Next by supply and demand, and that being that can demonstrate performance for profiting from their understanding used as evidence. However, I can see that the retailer. For example, a rental space and investment in those technologies. there will be an area for value added might not be at the prime centre of the Retail’s Digital Future Reflections Page 59

mall, but if all the kid’s events happen at positioning. Apple and Google are around data and transactions, but we one end or a crèche is nearby, we could putting a huge amount of investment don’t really talk about how property identify that this is the right area for a into replicating the GPS experience might use technology to reduce costs children’s cluster. Demonstrating this inside public buildings. for retailers in terms of service charge. performance can be done at a micro Telecommunications companies can We can use new technologies to improve level as well as a macro level. Again, if now put their data to commercial use. our operational systems. Putting that we were running a kid’s event at one The days when shopping centres could backbone in means that we can deploy end of the mall, we know from previous collect and keep consumer data for digital CCTV, for example, including history there are certain impacts, and their own use is now gone, and there is facial recognition and map people’s we can suggest to retailer that they transparency around that data. Due to movements more easily. Connecting increase staff levels and get offers out. there being a whole plethora of places lifts and escalators so that they are It’s common sense that being a good from which data can be gleaned, from feeding back data to a control room can landlord revolves around creating a our perspective, I can see an increasing now be done very easily using wireless profitable environment for the retailers. need to understand this and collaborate technology. You can use all of that data This new data will doubtlessly support with other organisations to put data and capture usage statistics to improve us in doing this. together and gain exponential value. maintenance regimes. This opportunity That will require collaboration in new is there, and we are using it to drive Legally, how are these – very non- ways we haven’t considered yet. down costs for retailers. property concepts - fitting in with the corporate structure? What does the property industry How can these new technologies help The first stage is getting up to speed need to consider in the case of risk to improve sustainability in poorly with legislation and understanding it. management? performing buildings? We’ve done this internally and hired Risk management is a discipline that We can use data to feed a central consultants and experts to guide us. the property industry is used to dealing building management system that Wherever we are talking at an individual with. Now there is a whole new plethora allows you to develop much more consumer level, our entire strategy is of risks that we need to deal with. You intelligent and focussed building permissions based. Whatever we do is can plan for the worst, have mitigating management plans to drive down costs. only with explicit permission of the actions in place and understand what We have taken 30% out of our electricity customer. If you are managing a strategy you would do if the worst happened. It’s over the last three years, creating service on that basis, it’s important to stay the a new arena to utilise existing skills. charge savings for the retailer. right side of that legislation. Thirdly, it’s important to have the right partners How else can new technologies to help you navigate these issues. benefit the property industry? Fundamentally, we put the customer The conversation always tends to be http://intu.co.uk front and centre; we don’t want to bombard them with messages they have no interest in.

What do you see for the next few years of retail technology? The continued growth of mobile technology means that we need to adapt to communicate with people using their mobile devices, personalise that communication and be timely and relevant. If this isn’t achieved there will be a public backlash against being inundated with messages. In addition, the time for mobile payments is already upon us, alongside the use of other location-based technologies based on the fact that everyone is now mobile. There is a growing trend for iBeacons, and the use of wi-fi for triangulation and indoor Page 60 Retail’s Digital Future Reflections

Case study Westfield

“Shoppers seek innovations that create convenient and seamless experiences”

The relentless pace of technology Research from Westfield’s ‘How We Shopper inspiration – virtual mirrors, is changing the way shoppers shop. Shop Now’ report focuses on these augmented reality, online third-party What is not so well documented is the shopper impulses and looks at how reviews and personalised content and manner in which technology creates they translate in-store. Broadly, the offers more demanding customers seeking prime technology needs and popular solutions that deliver convenience, solutions for shoppers are: With close to 50% of shoppers choosing speed and inspiration. As developers, shops based on wi-fi availability, this we must be in a position to constantly Convenience – click and collect, should now be a ‘hygiene’ factor for all adapt and evolve to meet their searching online for availability in- developers and retailers – it is close changing needs. store and an unremitting concentration to becoming an everyday part of the on price shopper matrix. The challenge is that rapid technological advances require Speed - quick payment options the ability to look beyond the next few including self-service tills and years. This is vital if long-term future- ‘e-wallets’ proofing of assets and adaptability are to be a reality. Retail’s Digital Future Reflections Page 61

we have invested heavily to establish a emerging ideas and technologies into PETER MILLER digital infrastructure that supports and viable businesses that move the sector Chief operating implements technology and associated forward,” he adds. “New products, officer for the services for our shoppers,” says Peter partnerships and services are being UK and Europe, Miller, Westfield’s chief operating developed and commercialised. The goal Westfield office for the UK and Europe. “We have is to use digital technology to provide invested in technology that allows a seamless shopping experience from Westfield to add new technologies web to mall which are focussed on core quickly and efficiently rather than shopper needs.” How is Westfield responding to retrofit. We have also created Westfield emerging tech trends? Labs.” “Practically, in our London centres, “This has a remit to transform http://uk.westfield.com/london/

Westfield Labs making digital an integral part of the in-centre experience

Westfield Labs has around 25 INSPIRATION ongoing projects at any one time. “Digital Storefronts” New innovation technologies Giant, internet-connected, ultra- currently being piloted by Westfield high definition touch screens, include: displaying products enable shoppers to browse, determine product availability and facilitate CONVENIENCE navigation to stores stocking the “Dine on Time” relevant products. A solution for our visitors and food retailers that allows shoppers and local workers to “skip-the-line” and INSPIRATION pick-up or have food delivered– “iBeacons” fulfilling the omni-channel vision. Westfield Labs is developing iBeacon technology for Westfield centres globally. SPEED “Express Parking” Cashless and ticketless app-based After successful implementations parking technology that allows of pilot programmes, Westfield shoppers a seamless parking will extend new technologies to its solution. centres globally.

“Convenience, speed and inspiration, should be the key focus for technological solutions that deliver the ultimate shopping experience for retailers and customers.” Page 62 Retail’s Digital Future Reflections

Expert View NewRiver Retail

NewRiver Retail is the UK’s leading value-creating retail property investment platform. A specialist AIM-listed REIT focused solely on the food and value sector, NewRiver has quickly become the UK’s third largest owner/manager of shopping centres with assets under management of £740 million.

ALLAN LOCKHART Property Director, NewRiver Retail

understand the customer journey, from the consumer experience and the ability Has it been the main driver of the point they first research goods to for shopping centre owners and retailers recovery in the retail property sector? the ease of access and cost of parking, to learn from consumers using real-time Retail is fundamentally about the and ultimately, their purchase and data. The exciting part is that this will customer and their experience; and recommendation to friends and family, only become more sophisticated in the modern change within those parameters often shared using social media. future with our learning and ability to is driven by convenience and technology, optimise the experience in turn, helping not the other way round. How should consumers be engaged to drive sales. A recent report by CACI, a research with? Data success for retailers and firm, said that convenience shopping We need to engage with, and learn from, shopping centres lies in activating centres were driving the bounce back the consumer at every given opportunity. incremental spend using data to predict from the recession. This has been the However, the data-capture needs to be and drive sales for the long-term, making result of consumer needs, not the non-intrusive and you need to speak to marketing budgets more efficient and benefits of technology. Money spent the consumer when they are content, as enhancing customer experience. on food and drink has grown too, and well as disgruntled. Using intelligent, again, this is not a result of technology. real-time loyalty programmes where Do you think the property world Ultimately, technology will never replace the vouchers directly link to the point- has enough awareness of new tech the human sense of taste, physically of-purchase is critical. Sainsbury’s and trends? trying a garment on, or selecting a Tesco were once leaders in this field, now Excitingly, the property sector is being child’s first pair of school shoes. it’s a big focus for all retailers, especially bombarded with new ideas, many still the food operators. in their development stages. The first What’s your approach to big data? For instance, Iceland, one of challenge, obviously, is to weed out the As shopping centre owners, the most NewRiver’s top 10 retailers, does this good from the bad. Some will genuinely important step is to truly understand well. They use real-time insight from enhance the retail experience, while what data you need for the benefit sophisticated software to drive their others will be fads. Then you need to of your business. We work extremely loyalty programme which targets offers consider the supplier as well. Too many closely with our retailers to gain insight at individual shoppers. A considerate Big companies are adopting tech and digital from their performance figures. This is Brother, as it were. Iceland has reported trends purely as a box ticking exercise. assisted by technology but hinged on a 20% increase in customer satisfaction Good examples of this are creating strong relationships. as a result. video content for the sake of it, or Retail success always comes back jumping on the QR (quick response) code to the customer and their experience. How do you see some of the bandwagon, as many have. People didn’t Success lies in how it enhances customer opportunities of big data? truly acknowledge how poor the uptake enjoyment, convenience, choice and What technology has done to physical was because so few people actually price. It means gathering data to better retailing is advance the sophistication of have a QR scanner on their phone. Retail’s Digital Future Reflections Page 63

The key for us is identifying viable and board level. We may have grown to £740 scalable trends with robust suppliers and million in assets under management in platforms behind them. only five years but our unique advantage is the pace at which we can move and How does property, as a whole, adapt to such emerging trends, with compare to other sectors? the crucial ability to deliver without red Often, property companies are slow tape. ships to turn on tech. The digital age is radically influencing the strategic How do you capture value from the growth plans for every company. Other increasing blurred lines between sectors such as IT, communications the roles of landlords and tenants in and advertising are leagues ahead. engaging with end users? We should have greater collaboration Great human relationships with our with the property sector, learning from retailers. Ultimately, our end goals big innovators as well as the FMCG are the same - to attract customers, brands who are close to the consumer help them enjoy the experience, spend and whose strategies are informed by money and return time after time. The Landlord and Tenant Act 1954 is that intelligence. It’s great that BCSC More revenue/ turnover means higher a hindrance to the effective management has taken a clear lead on making this affordability of rent. Ultimately, between of retail agents. It desperately needs to happen. the shopping centre owner and retailer, be reformed. After all retail is a very fast Fashion brands are also key it is people managing the asset and retail moving and dynamic matter and should businesses to learn from because the portfolio who extract the intelligence not be regulated by a 60 year old act. fashion-forward are generally early- from the data generated across adopters in technology too. As this increasingly blurred lines. Are there legal risks which you report makes clear, this is a key reason believe the industry is under- why Apple chose Paris Fashion Week to Do you think leases need to evolve prepared for (across the wider showcase its Apple Watch. further to keep up with changing property world rather than within consumers and the evolving retail your business)? How are these issues currently industry? Yes, I think there is, but when it comes managed in your business? And how We are already seeing the evolution of to making larger investments, decisions important are they? shorter and more flexible terms, but need to be based on a robust and tested They are certainly growing in importance simpler, more efficient leases would technology. Legal issues could emerge around the boardroom table but help the process. The reality is that, from gaining intrusive data about individual technologies hold varying sometimes, the demands from different individuals, also leading to security benefits for different areas of the sector. sides makes this harder. Valuation concerns. There is no one-size-fits-all approach. methods remain a sticking point. From community shopping malls and How does your business oversee the discretionary centres to the value sorts of things being discussed here? retailers, supermarkets and fashion We have an entrepreneurial approach to chains - each one will take a personal property, so we consider and try to keep approach. up to date with emerging technologies, At NewRiver, we are uniquely placed that’s part of our responsibility to our to learn from the consumer through our shareholders as shopping centre owners. own retail specialisation. Our intensive consumer research, excellent retailer Do investors currently care about relations and the fact that our £740m technology? retail portfolio includes 27 UK-wide non- Yes. Investors care, however, as the value discretionary shopping centres, gives us of incorporating technology is constantly eyes and ears on the ground everywhere. evolving, it is not necessarily a solid At each one of our asset management base upon which to make investment meetings - held on-site every six to eight decisions, but investing in companies weeks - we are sponges to the rapidly who are receptive and market leading is. changing trends on the ground. We then filter our findings, through advisors and partners, and discuss key matters at http://www.nrr.co.uk Page 64 Retail’s Digital Future

Credits

Report commissioned by BCSC and Addleshaw Goddard and produced by Blackstock.

Sincere thanks to all of those who were interviewed and contributed to the production of this report. Bruce Lightbody Partner [email protected] @RealEstate_AG

Andrew Rosling Head of Retail & Consumer Sector [email protected]

@AGInsight http://www.addleshawgoddard.com

Edward Cooke Director of Policy and Public Affairs [email protected]

@BCSCRetailProp http://www.bcsc.org.uk

Blackstock Andrew Teacher, MD Blackstock [email protected] @andrewjteacher

http://www.blackstockpr.com

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