468 Retail and Channel Management Blog

Tuesday, January 31, 2017

Is Mobility the Next Trend in Retail?

Edmonton’s First Mobile Barbershop

As we have learned in class, one of the largest costs of running a business is the real estate a store operates in. When looking for retail space, the areas in the community with the most foot traffic are the most expensive to rent. This is what Fadi Farhat discovered when searching for a retail space in downtown Edmonton to open up a barbershop. At his ideal location, rent was approximately $7000 per month. This extremely high overhead cost would force Fadi to charge substantially more for his hair cutting services, which he approximated at $45 a haircut.



His idea for a mobile barbershop came from the abundance of food trucks in Edmonton’s downtown core. His idea to have a mobile barbershop is beneficial in multiple ways. First, it dramatically decreases the amount of overhead Fadi will have, as he will only need to pay for the van, insurance and gas. He also parks his van outside of Rice Howard Way in downtown Edmonton, which allows him to have a wider reach of customers. By operating downtown, he has a very wide trade area, as there are many people that work and live downtown that could require his services. His services are mobile, which does not limit him to staying in the downtown core, and provides the opportunity to move to different location he feels demand could be higher.


In addition, a mobile business increases the convenience level for customers, as many people working downtown could see the van and want his services.  His ideology with the business is to operate on walk-ins only, which makes it easy for customers to receive his services as an “unplanned purchase”. His competitive advantage is he can also offer substantially lower cuts from his van as opposed to if he had a brick and mortar retail space. He would have had to charge $45 a haircut if he was renting, and offers his services for $21 in the van. As he is the only hair stylist, this allows him to decrease costs for employee selection and employee engagement.




What could negatively affect this business is how the atmospherics are within the van. The van has to have good lighting, smell good, and overall have a degree of comfortability for the customer. Many people are accustomed to ordering food from a food truck, where Fadi drew his inspiration. The difference is people only interact with the food truck from the outside. There could be a lot of consumers uncomfortable with the thought of getting their haircut inside a van. It also may not feel spacious enough to some customers that are used to having their hair cut in a traditional brick and mortar barbershop. In addition, there are no complimentary businesses where he parks, as Rice Howard Way is made up exclusively of restaurants.

Ultimately, this article intrigued me because mobile services are vastly increasing as customers want more convenience and business owners are looking for a way to decrease overhead costs. Although this idea may not be extremely popular now, it does raise the question if more business people will follow suit as a way to make additional revenue. In my opinion, I think in the future, more companies will adopt this idea as it is a convenient alternative for customers receiving services and a good way for companies to remain competitive on price while still maintaining profitable margins.




Robotic Technology Geared Towards Customer Engagement


SoftBank Robotic’s Pepper, is a glimpse of how technology is progressing to not only bring customers back into brick-and-mortar shops, but ensure a positive shopping experience. The humanoid robot is designed to scan vocal inflections, facial expressions, word choice, and physical movements. As a result, Pepper is able to interpret emotions and respond accordingly. The robot is equipped with the ability to have arm and eye movements, as well as voice tone fluctuations to match the shopper. Pepper’s height was strategically crafted at 4ft tall as a feature to engage children with its capabilities.  

Pepper can be found in over 70 countries; thousands of retail locations in Japan and as of November, two California malls, a San Francisco technology store, and the Oakland airport have brought the robot to guide customers in their shopping experience. According to Softbanks Robotics, Pepper has increased foot traffic by 20%, increased customer interaction by over 90%, and improved revenue at retail stores (Schaffler.)

While the innovative technology is enough to engage consumers to come into the store to merely check out the robot’s capabilities, Pepper can also handle customer needs. The robot can answer basic customer service inquiries and if a question exceeds its capabilities, Pepper can locate a sales associate to aid the customer. The technology behind the robot’s knowledge allows for immediate automated comparison between goods, product features, as well as guiding the decision-making process of a customer. Pepper can effectively engage the various shoppers that enter the store. The mission shopper can be quickly directed towards the item, a shopper deciding between products can be given exact comparisons, and a general plan shopper can have the search selection narrowed down by explaining their needs.


The intent of robotics in the retail industry is not to replace human employees, but to reduce tasks that drain employees’ motivation for customer engagement. This service is beneficial to both sides of the sales interaction as customers receive aid and an elevated experience, and employees have a higher capability to personalize other customers shopping experience. An increase in employee engagement can increase profitability and store efficiency. Meaningful interactions with customers will drive loyalty and advocacy towards the retailer. Pepper can also capture real-time data that includes customer demographics and flow of traffic during certain hours. Another impressive feature that the robot has is the ability to converse a programmed sales pitch, aimed at the age and gender demographic it is interacting with. From there, Pepper can judge a shopper’s expression after a conversation and record the reaction the consumer had towards it. While I understand the concept of a customer service robot will not bode well with all shoppers, the incorporation of this technology signifies that a retailer is evaluating the success of its company by the satisfaction of a consumer, rather than sole profit. 


Pepper is obviously not the be-all end-all of retail marketing, but it is a clear indication of the importance of meaningful customer interaction that leads to a positive shopping experience. Technology in general is a mean to determine what the customers want and if your company is effectively delivering it. Humanoid robots like Pepper can find discrepancies that may occur between the customers, employers, and the store, and work with the issue that is being addressed. While I love the prospect of being greeted by a little white robot upon entering a store, I think Pepper is merely one small example of the many technological innovation methods that a retailer should incorporate within a company. I am a firm believer that the progression of technology is an opportunity to easily capture the customers attitudes, set priority to their experience, and thus optimize the success of a company. 

References:





Kyle Murray, The Retail Value Proposition: Crafting Unique Experiences at Compelling Prices, Rotman-UTO, Publishing 2013. Pg. 10, 127-128, 131-132