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Retail brands are investing billions of dollars to deliver more compelling experiences for their customers. This year alone, Target plans to invest $2 billion in new technology. Not to be outdone, Wal-Mart is on track to spend $1.1 billion in digital initiatives. Wal-Mart's goal, according to CFO Charles Holley, is to build a better relationship with customers through "improved site experiences and apps but also [through] enhanced store experiences.”

The investments aren't just in e-commerce and mobile shopping. Brick-and-mortar brands are finding lots of creative ways to spend money on new technologies. But implementing these technologies doesn't come without risks. While some technologies help improve the end-to-end customer experience, others are nothing more than flash-in-the-pan gimmicks.

So how can big brands manage the risks of their tech investments? The key isn't to start with the technology and make it fit with the customer experience. Rather, companies need to start with a deep understanding of their customers, and then make tech decisions from there.

If you're a retail business executive, answering these three questions with customer intelligence will help de-risk your capital expenditures and maximize your ROI from new tech initiatives.

Is this technology valuable?

According to Forrester, many retailers are skeptical about flashy technology such as virtual reality (VR) and augmented reality (AR), preferring to wait until the ROI has been proven. But traditional retailers who wait until a competitor successfully implements a new technology are putting themselves at a disadvantage. In a rapidly changing landscape, the more strategic option is to involve your customers early to gain rapid and on-going feedback about how new technology might be used.

One interesting example comes from Lowe’s. The company recently piloted the use of VR, introducing it in just one store in Framingham, Massachusetts. The program visually walked customers through the process of tiling their shower, without the consequences of making a real-life mistake. The program touched on a real customer problem of wanting to complete a home improvement project but not knowing how. Lowe’s engaged its customers and found that users of the VR program had 36 percent greater recall of the skills learned, compared to customers who only watched a YouTube video. The positive reception gave the confidence to roll out the program to more stores.

Building a new experience for customers can only succeed if the customer is given a voice at each stage of the rollout. If your customers think it’s valuable, it probably is.

Is this on-brand?

While there's a lot of buzz on the so-called retail apocalypse, the truth is that the in-store experience is still important in the industry. Brick-and-mortar stores provide an opportunity to delight customers in a way that an online interaction cannot. New technologies can help enhance the in-person experience, but only if they're rooted in a deep understanding of your shoppers.

Frank + Oak provides an example. When the e-commerce company expanded its brick-and-mortar presence, it used customer insight to learn the three core values of its target shoppers: purposeful style, personalized service and shared experiences. This information informed the design of the in-store experience, enabling the company to tailor it around the shopper preference. Customer insight revealed, for example, that shoppers aren't necessarily looking for new tech like VR and beacons. The company's target audience preferred in-store coffee bars and in-person stylists who can help them with their purchasing decisions.

The tactics that Frank + Oak pursued won't work for all retailers, but the key is to follow the company's strategy of designing an in-store experience that fits your unique brand. Without doing the work of understanding what experiences will resonate with your shopper and how those expectations align with your company's values, you're at risk of pursuing projects that diminish your brand equity.

Does this create the right experience?

For better or for worse, new technology will impact the customer experience. It's critical to use customer engagement from the onset to determine the impact of your new initiatives.

When home audio brand Sonos, for example, designed its first retail store, it prioritized the customer experience above anything else because that's what market research dictated. “Sonos, we’ve learned, is a product that you learn about best in somebody’s home," reveals Dmitri Siegel, VP of global brand. This explains why the company's flagship store was designed like a stylish friend’s apartment. Once guests enter the store, they can choose from a number of fully furnished listening rooms that look more like an in-store IKEA display than a traditional listening booth.

Asking the question, “does this create an experience?” is especially relevant for lifestyle brands that meet a desire, rather than a need. “The whole store experience is based on the idea of being in a really comfortable and inspiring environment, listening to music you love, but hearing it in a way you never have before.” Siegel emphasizes that while customers could purchase speakers online, they’re going to make the trip to the Sonos store if they want to experience the Sonos sound.


Retail stores can’t afford to sit back and see what works for other brands. To compete with e-commerce and forward-thinking brands like Frank + Oak, Lowe’s and Sonos, brick and mortar stores need to create on-brand store experiences that resonate with customers. While there is an element of risk involved in any new type of investment, the pressure is taken off when you consult your customers every step of the way. The uniques experiences are for them, after all.

The Retail Survival Guide: Retail isn’t dead…but your brand soon might be

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