The Future of Contactless Commerce
The Covid-19 pandemic — and the social distancing it required — presented the ultimate test for many of the fundamental aspects of customer’s retail shopping experiences: no fitting rooms, no contact with retail agents, no cash payments, and no in-store testing of products. While many parts of the U.S. economy have now reopened in the wake of the pandemic, retailers have learned an important lesson: we need faster, safer, and better in-store experiences that retain and enhance the important elements of closeness and interactivity with products, agents, and the store environment. This is where next-generation digital technologies can make a massive impact, enabling new forms of “contactless commerce.”
Choosing the right suit or dress can be difficult at the best of times. There’s size, fit, price, color, feel, overall look, and a host of other factors that must be considered. It may look great in the online catalog, but how will it wear in practice? The large volumes of online returns faced by most retailers suggest that this is not an easy task.
It’s not just clothing that’s difficult to fully assess online. Fresh food, beverages, cars, perfumes, and furniture are all items we want to sense, test, and try out before making the final purchase decision. In other cases — for example, taking out a mortgage or choosing a bottle of wine — we are often looking for guidance in choosing a complex service or product. While we can turn to any number of product reviews online, they are rarely a substitute for a trusted human advisor who can pierce the informational haze and help us make an informed decision.
The Covid-19 pandemic — and the social distancing it required — presented the ultimate test for many of these fundamental aspects of the customer experience: no fitting rooms, no contact with retail agents, no cash payments, and no in-store testing of products. While many parts of the U.S. economy have now reopened in the wake of the pandemic, retailers have learned an important lesson: we need faster, safer, and better in-store experiences that retain and enhance the important elements of closeness and interactivity with products, agents, and the store environment.
This is where next-generation digital technologies can make a massive impact, enabling new forms of “contactless commerce.” Contactless commerce can take various forms: A fitting-room mirror that automatically displays the clothing items you’ve just selected from the racks, or a virtual fashion advisor on your phone who whispers advice on the season’s latest fashions. Contactless commerce is being enabled by a wide range of new technologies, including machine learning, robotics, computer vision, sensors, big data analytics, augmented reality, and computer-aided holography. It is set to transform all elements of the customer experience, from product comparison to selection to checkout.
Seamless Digital Transactions
Radio-frequency-identification (RFID) tags are now playing a major role in the automation of store checkouts. RFID tags, as their name suggests, are tiny strips of metal material that can transmit radio waves with detailed information about the product they are attached to. Imagine a tag that can store a wide array of information about a product — its brand, price, size, color, location in store, other varieties, and inventory levels — and convey that to shoppers and store managers. This is in essence what an RFID tag does. This information can be decoded via a mobile scanner (hand-held or attached to a shopping cart, for example) or at a fixed station or kiosk. While RFID tags have been around for at least 20 years in various forms, the key innovation in recent years has been the development of very lightweight, disposable strips suitable for use on retail products.
Unlike barcode labels, which must be laboriously scanned one at a time by the store or the customer, RFID tags not only hold more information, but can be automatically scanned together, vastly accelerating the automatic check out process. Dirty Lemon, a beverage brand, has used RFID technology to automate the sale of beverages in its New York store: customers simply take their preferred beverages from the coolers, wave the item under a reader to get product details, and then pay by text message, either in store or after they leave.
Using a somewhat different technology mix, Amazon Go has developed “Just Walk Out” technology for its own stores and a number of retail clients. With the aid of sensors and computer vision, the store can track when consumers physically take an item from the shelf or return it, adding it or taking it away from a virtual cart. The customer can just walk out with their chosen items, which are automatically scanned and charged to the customer’s account. (The customer can use a QR code from the Amazon app to enter the “just walk-out” gates, or they can insert any credit card at the gates if they don’t have the app, so they don’t need an app or account set up.) Chinese retail giant JD.Com has pioneered line-free technology in its stores in China and Indonesia, and a raft of technology start-ups are also active in this space. Customers get to avoid the irritation of long lines, while retailers benefit from better monitoring of stock flows and the freeing up of staff to focus on more valuable tasks such as store management or customer service.
The impact is not confined to automatic checkouts. With RFID tags, every object in a store can potentially interact with the customer. Pointing a reader at a product, mannequin, or display rack can bring up a raft of information about the product range, brand, price, availability, and other features. Many retailers are now introducing interactive fitting rooms where customers can try on items virtually. Japanese retail giant Uniqlo was one of the first to introduce virtual fitting rooms, pioneering its Magic Mirror at its store in San Francisco. Customers can stand in front of an AI-enabled mirror and see an image of themselves wearing the product, with options to vary style, size, color, and patterns. Sephora has trialed augmented reality makeup mirrors in its store in Milan to help customers find the right hue and shade of eye shadow. TriMirror, a Canadian technology company, has brought another dimension to virtual clothes fitting, developing a 3-D interactive avatar that models the items for the customer, who can then check for fit in different garment locations and customize the item as desired.
A Feast for the Senses
The retail experience at its best should be a richly varied sensory experience: the opportunity to taste, smell, and touch products — whether that’s freshly-baked bread, vintage wines, or newly roasted coffee beans. This would seem to present a major hurdle to the digital world of contactless commerce.
Yet, even here, major advances are taking place in the digital recreation and transmission of sensory information. Take the sense of touch. The touch-screen — on the ATM, vending machine, railway ticket dispenser, or airport check-in stand — has become the staple interface for customer automation, but also raises the risks of virus and pathogen transmission. One intriguing solution is the AI-enabled “predictive touch” technology developed by researchers at the University of Cambridge. Developed for in-car navigation systems, the technology uses machine learning and data from sensor-tracked eye and finger movements to predict the numerals and letters the user is likely to input, without actually touching the screen. While still at an early stage, the technology could hold great promise for touchless applications across a range of sectors. It takes us closer to a world of gesture recognition — where a wave, a smile, or a frown allows consumers to access and interact with digital screens, products, and electronic objects.
The opportunities don’t stop there, however. Advances in digital olfaction increasingly enable the detection and transmission of a wide variety of aromas, from perfumes to fresh food to new car interiors. Researchers are also beginning to unravel the mysteries of how to digitally transmit taste sensations. One promising development is the “lickable screen” developed by scientists at Meiji University in Japan. Customers use a sushi-roll-shaped device which has electrodes immersed in five narrow liquid wells representing the five traditional tastes — salty, sour, bitter, sweet, and umami (or savory). By turning on and off various electrical signals, the device can digitally transmit flavors electronically. While still nascent, the technology opens up the possibility that in the future, your smartphone could become a way to sample flavors in a contactless way, either in-store or online.
Pay by face or voice
Contactless commerce is also being enabled by AI-powered analysis of biometric data. In the food and beverage industry, the drive-thru and corner kiosk are being reinvented for an automated, contactless experience. California-based PopID uses a cloud-based facial recognition technology to give customers a “pay by face” option when ordering at kiosks or drive-thru stations — its technology is already being used by restaurant chains such as CaliBurger, Bojangles, and Dairi-O. Another technology of great potential is voice genomics — the AI-enabled analysis of vocal tones, patterns, pitch, and timbre. Voice-enabled AI is now being used for automatic customer interaction in a variety of settings. One problem, however, is that automated kiosks and touchscreens are often located in noisy locations, such as railway station concourses, which can make voice identification difficult. A potential solution has been developed by Touchless.ai, a technology start-up based in Israel, which uses machine-learning algorithms to screen out ambient noise and allow voice-enabled, touchless interaction with kiosks in railways, hospitals, and other noisy locations.
The use of biometric data for contactless commerce may raise concerns, however, for example around data security or privacy, which could deter some customers from using the technology. In addition to using opt-in provisions, providers typically have a battery of safeguards in place to reassure customers, for example by using biometric data only for the current transaction or not storing data beyond a defined period of time.
An agent at your shoulder
The retail experience, of course, is also about curation, advice, help, and support — elements that are harder to provide in a low-contact world. Help is increasingly at hand, however, from a range of AI-powered recommendation systems and virtual agents. French supermarket giant Carrefour has partnered with Google Assistant to provide a voice-enabled online grocery shopping service where the AI features enable the system to learn the customer’s shopping habits and make recommendations based on their preferences — for example, for organic or low-fat foods — and factors such as price and availability. For wine aficionados, California-based sensory sciences company Tastry provides personalized wine recommendations based on machine-learning analysis of the chemical composition of thousands of wines from all over the United States. These are matched to user preferences for different varietals, tasting notes, and wine structure.
Further ahead, holographic technology could be a game-changer, enabling highly realistic and interactive consumer experiences in a safe and socially-distanced manner. Unlike virtual reality technology, which relies on headsets to create an optical illusion of 3-D space, holograms are actual recreations of refracted light which can be seen by anyone, without a headset. This gives them a more natural feel and avoids the eye strain and headaches that can result from prolonged VR exposure. Holographic technology also increasingly incorporates elements of touch and interactivity, giving users the ability to move among people and objects. With computer-generated holography, it is possible to imagine a transformed consumer experience: browsing a virtual bookshop; meeting a holographic mortgage broker to walk through documents; or having a holographic “fashion whisperer” by your side as you try on items in a virtual store.
Imperatives for success
Contactless commerce brings many opportunities — safer, faster, and content-rich immersive experiences — but it also brings challenges related to privacy, data security, escalating customer expectations, and new roles for in-store staff, to name but a few. To capitalize on the opportunities and mitigate the risks, retailers can consider several actions:
- Capture the time dividend. The increased use of automated, contactless technology will give time back to customers and retailers, but how will they spend that time? Customers could either grab those time savings for other areas of their busy lives, or decide to spend more time in-store on the more enjoyable parts of the shopping experience — such as exploring new products, socializing with friends, engaging with in-store entertainment or getting broader lifestyle support. A key factor will be the extent to which retailers can create immersive, content-rich experiences that are highly personalized for individual consumers.
- Follow the customer. In the world of contactless commerce, we will see a blurring of physical stores and on-line experiences, as consumers increasingly use AI-powered technology to make choices and purchases across different platforms — voice, mobile, online, and store-based. The entire customer journey will begin to open up, with interactive elements in the conventional “dead zone” between the home and the store. Consider, for example, the interactive advertising used by Battersea Cats and Dogs Home in the UK, a leading animal welfare charity whose mission is to re-home abandoned pets. Shoppers at a major shopping center in London were handed RFID-enabled leaflets that lit up interactive billboards on their way home, with a prospective pet featured in each. The initiative significantly boosted re-homing rates for the charity.
- Reinvent the store. Whether it’s a grocery chain, a fast-food restaurant, or a department store, most retailers have detailed planograms or store layouts designed to ease the flow of customers through the store and optimize the shopping experience: window displays, eye-catching offers up front, essentials further in, all leading inexorably to the checkout point. In a contactless world, the nature and function of the store will change dramatically: it will become a space festooned with interactive displays and kiosks, virtual reality zones, and an array of robotic helpers, with fulfillment done from off-site warehouses or direct-to-the customer.
From electric lighting to the elevator, from the cash register to self-service scanners, technology has been a constant force for innovation in retail. For customers entering the newly opened department stores in Paris and New York a century and a half ago, the newest form of commerce was a marvel: illuminated window displays, mechanized tube delivery systems, tea rooms to meet friends, and endless tracts of store space to roam and explore. With the static shop counter gone, shopping was transformed from a burdensome chore to an opportunity for discovery and adventure. Spurred by the pandemic, but with a technology-driven momentum of its own, the coming shift to contactless commerce will be no less transformative, blending physical and virtual experiences and bringing new types of sensory experiences and customer-product interactions. Now is the time for businesses and consumers alike to seize the opportunities of the contactless era.