Over the last sixty years, computing has been one of the most positive influences on human existence. The pace of change in computing continues to accelerate—causing disruption, to be sure, but also offering exciting opportunities. What are the implications for retail? How can new technology help to close some of the gaps between the experience shoppers have and the one they want?
At the root of the incredible technological advances we’re seeing is one central fact, known as Moore’s Law: Roughly every two years, the size of a transistor halves, making it possible to fit twice as many transistors on a single chip. Why should a retailer care about the size of a transistor? Well, the more transistors, the more features that can be integrated onto the chip. And the smaller the transistor, the smaller computer chips become. Smaller means lower cost, making hot new technology affordable for wide deployment in the store. As Moore’s Law continues to advance, we get incredibly powerful computers built using chips with billions of transistors (think cloud computing) and incredibly small computers, such as wearables and the Internet of Things, built using ever-shrinking computer chips.
Smart, Optimized, and Natural
As computing simultaneously shrinks and becomes more powerful, it also begins to become more natural, meaning that, increasingly, it will be able to interact with humans in ways that are natural to us. Computers will be able to see, hear and understand the world for the first time. From these developments come three very big ideas:
- Everything—every object and every piece of infrastructure—can become smart.
- Everything can be optimized.
- Computing interactions will become much more natural.
For retailers, the implications are profound. They will be selling smart products in smart stores, using exciting technology that interacts with shoppers in new ways.
As computing becomes increasingly cheap, small and low-power, it will become possible to integrate it inside objects of all sorts for nearly no cost. You can start to imagine every object in our lives becoming smart, connected and sensing.
Think about teddy bears, for example. Cuddly, comforting—kids love them. What if you could make one smart? What could it do? Well, for starters, it could read a book. Every parent knows the bedtime ritual—no matter how many times you read your child’s favorite story, the response is always, “Again!” What if, after you’ve read the story for the fourth time, you could turn it over to the teddy bear to read? What if the bear could read the book in a different language—one that you don’t even speak? How much is that worth? $60? Or maybe $19.99 plus $5/month for the reading service? Or, if you want translations in French, German and Italian, maybe that’s another $5/month for the language pack. Now you’re turning a product into a service. Instead of selling a product as a one-off, you’re creating a new revenue stream.
As the price of computing continues to drop dramatically, most objects will become smart. If making an object smart provides new value services and the cost difference over the non-smart version is marginal, you’ll never buy simple objects again. Smart technology is innately customizable, because of the software element. Thus, it solves one of those unmet needs I discussed in my previous blog. Just as you add apps to your phone, you could add apps to your smart teddy bear to have him read, tell jokes or perhaps function as a nanny cam.
Making products smart is one way of closing the gap between the experience shoppers have and the one they want. But how do you go about it? And what other opportunities for creating value does technology offer? For further ideas and discussion, check back in this space next week.
Senior Industry Advisor, Retail and Hospitality
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