Redefining Retail Value

Closing the Expectation Gap

Retailers today hear the alarm bell ringing. They know that just putting goods on their shelves and selling them is no longer enough to keep them relevant—particularly to Millennials, whose purchasing power is expected to top that of baby boomers by 2017. Retailers around the world are working hard to redefine the value they provide to shoppers who increasingly expect customized products, personalized experiences, and first class sales services that place the retailer in the role of concierge.


Hointer*, a Seattle apparel retailer, offers an interesting case in point. Hointer customers enter their information—sizes, preferences and credit card info—into an app on their phones. In the store, instead of finding piles of clothing they have to sort through to locate their size, shoppers will find just one of each item that Hointer carries. Using their phones, they scan items that interest them. When they’re ready to try on a piece, they choose the “Try” button on the app and head for a fitting room equipped with two chutes. Down one chute come the selected items, in the customer’s pre-specified sizes. The shopper tries on items and throws any rejects down the second chute. Activity in the two chutes triggers products to appear and disappear from the shopping cart on the shopper’s phone. When finished, the customer picks up their goods—automatically billed to their credit card—and leaves the store. Done. And with minimal friction.

From the customer’s perspective, Hointer’s approach is wonderfully convenient—no carrying huge piles of clothing into the dressing room, no awkward asking for another size (just order one on your phone and it comes whooshing down the chute), no standing in line to pay, no wasted time. From the retailer’s standpoint, the potential for increased sales is sizable. A sales assistant armed with a tablet, information about the customer’s current and previous choices, and analytics can easily recommend other items that might go well with the customer’s selections.



In Seoul, Korea, grocers are helping customers reduce friction by enabling them to use their phones to shop for groceries in the subway station. A high quality photo that looks like a store shelf appears on a wall of the station. Using a mobile phone, the shopper makes purchases, then gets on the subway and, on arriving at home, finds the selected items waiting.

Aware that busy consumers, conditioned by Internet speeds to expect efficiency, want shopping to be easy, smart retailers are embracing the idea of omni-channel shopping—moving seamlessly back and forth between the online and physical worlds. Surveys show that two-thirds of shoppers today start their shopping journeys online, but approximately 90% of transactions still happen in the  store.1 The simpler retailers can make it for shoppers to discover products online, put them in their shopping carts, and then pick them up at the store, the likelier it is that the brand will be able to hold their attention all the way through the shopping journey.

The Value of Services

The effort to redefine value has led to a review of every aspect of the shopping experience. It turns out that, in addition to a process that’s efficient, what shoppers increasingly want are not products, but services—both advisory services and even products as a service. Bundling products with services has become a major trend. Home Depot, for example, offers optional consulting services. You can still go to the store and simply buy a bag of nails if you like—or, you can go in and get help planning your kitchen remodel. Home Depot sales assistants can advise you on the design and component selection; they can even source an installation company.

Need a ride but don’t want to pay thousands of dollars for a car that will sit parked most of the day? Then “car as a service” might be right for you. Sharing services such as car2go* have a solution—and an effective response to changing perceptions of ownership. A 2013 survey by Goldman Sachs reported that 30% of U.S. Millennials said that they did not intend to buy a  car2. To these consumers, the idea of car sharing makes perfect sense.

Innovative approaches like these are closing the gap between what shoppers want and what can be delivered— a key focus for smart brands. In the coming weeks, I’ll talk about some of the ways that technology can help.

Steve Brown

Senior Industry Advisor

Intel Corporation

1 Cisco IBSG, 2013-2014; Statistic Brain, 2014; Forrester, 2013; KPCB Internet Trends, 2015

2 Goldman Sachs Fortnightly Thoughts intern survey, 2013

* Other names and brands may be claimed as the property of others.

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