Whatever you’re looking for on the Internet—entertainment, a product to purchase, a connection to a community—in most cases, you’re likely to receive an overwhelming amount of results to choose from. These relevant search results are valuable to you… Or are they?

Published on : http://method.com/

More and more commentators are wondering if the tools we create to give us more choices—such as search engines—are delivering less variety, ultimately limiting chance discoveries and exposure to new ideas.

On the BBC’s The Culture Show, Aleks Krotoski recently examined the role of serendipity as an online commodity, questioning whether the Internet is as innovative as we think. She points out that computers have the unique ability to make valuable, unseen connections for us. Instead of maximizing that potential, our search filters keep us focused on only the most relevant information.

Alex explains, “We will never have the opportunity to bump into something truly new, because the machines are predicting our futures based on our past preferences, creating an infinite loop of cultural homogenization.”

The concern over the consequences of homogenized choice is not entirely new. David Byrne noted in his book Bicycle Diaries, that in many urban developments gentrification leads to separation, rather than integration, of different social and cultural groups. This separation leads to less collisions between ideas and the stifling of creativity.

David describes, “I think online communities tend to group like with like, which is fine for some tasks, but sometimes inspiration comes from accidental meetings and encounters with people outside one’s own demographic, and is less likely if you only communicate with your ‘friends’…”

Other commentators also question if recommendations based on a combination of one’s preferences, social profile, and history of consumption really offers new opportunities. In an article for Design Week,Steve Price discussed how the role of media retailers is changing in the age of the “Filter Bubble.”

“Google, as amazing as it is, can only answer the questions you ask it,” he states. “It cannot tell you which questions you should be asking. Search results and news feeds are all now influenced by engines that take as a point of entry all that they know about you and spit back the information they think you’ll want. What is on the screen when you open Spotify? Recommendations on new music based on its knowledge of you. What happens if you visit Rough Trade Records? You often leave with albums and music from artists you’ve never heard of, having heard it played in the store, or from talking to one of the employees who clearly live and breathe music.”

Concerns aside, the tech community seems to be moving in the direction of “smarter” recommendation engines. For example, The Filter founded by Peter Gabriel. These developments suggest we might soon see recommendations for vacuum cleaners based on one’s music tastes. For example, a robotic system called HyperActive Bob has been developed to anticipate customer behaviors in fast food restaurants. This includes correlating a customer’s type of car with what he or she might order, but this particular filter has failed to prove successful so far.

When the self-referential nature of media increases the speed of recycling ideas in film, design, music, fashion and global culture as a whole, what will it take to receive truly original recommendations? What can we design into user experiences that will allow for the unexpected?

Imagine the possibilities of using “dumber” algorithms that will allow us to be pleasantly surprised by serendipity wherever we are…and whenever we “don’t” expect it.

If you liked this article we recommend: http://youtu.be/9ZlBUglE6Hc

Alexander Grünsteidl & Nikki Roddy @ Method

As part of the 10×10 series by Method, we contributed the article “Changing Retail Currency”. It’s a companion piece to The AppLounge.

“Changing Retail Currency” is about the new role of the store, and the opportunities this creates for retailers.

Take a read: http://method.com/

As e-commerce continues to shape the retail experience, new and exciting opportunities for retailers and customers are emerging. The transactional value of the storefront has a different currency than the value that online shopping offers. We are witnessing a transformation in business models for retailers, opening up possibilities for more fluid and convergent retail experiences.

The article is build around 4 insights from different market sectors that have witnessed commoditisation and margin pressure in the recent past, and highlights a few cases that adapted successfully to new customer experience requirements.

01 Think Like an Editor

02 Learn from the Fashion Industry

03 Embrace Hospitality in Your Brand

04 Own Your Community Network

Method has co-published this piece with Fast Company’s Co.Design.

Check it out online here: http://www.fastcodesign.com/1662269/four-keys-to-surviving-the-future-of-retail

]]> http://digitalwellbeinglabs.com/dwb/changing-retail-currency/feed/ 0 http://digitalwellbeinglabs.com/dwb/the-applounge/ http://digitalwellbeinglabs.com/dwb/the-applounge/#comments Sun, 05 Sep 2010 15:23:29 +0000 agrunsteidl http://digitalwellbeinglabs.com/dwb/?p=608
A place to meet and discover great apps matched with accessories that fit your mobile life.

The AppLounge is a hybrid space, featuring a selection of well-crafted mobile applications and services. It opens from 15 September 2010, at 100 Wardour Street for coffee during the day and cocktails at night, encouraging people to discover and sample exciting new mobile and tablet applications, digital content, including eBooks, eMags, and useful online services. During the London Design Festival, the AppLounge will also conduct inspiring AppTasting events and AppHealth workshops.

This first-of-its-kind ‘pop-up’ space was has been designed to facilitate discovery, education, and engagement. The AppLounge is an innovative alternative to the traditional retail environment, converging the best of in-store and online retail experiences. This unique collaboration between Digital Wellbeing Labs, Method, App.itize.us, Spotspot, and D&D London, celebrates the best in contemporary design languages from around the world and aims to answer the challenges that retailers face as e-commerce reshapes the retail process and consumer behavior. Says Grünsteidl: “The value of the storefront is changing from one of transaction to experience. We are witnessing a transformation in business models for retailers which is opening up possibilities for convergent retail experiences. The AppLounge is a pilot store that aims to bridge the gap between the in-store and online retail experience. The space is designed to encourage customers to slow down, have a drink, and sample a variety of applications and accessories on display.” The Applounge serves as a conduit between producers and customers and is not necessarily involved in any transactions.

Conceived by Alexander Grünsteidl, together with a collective of design agencies and a hospitality group, the AppLounge proudly presents a new retail concept, bringing together hospitality and the latest in physical and digital products under the umbrella of Mobile Lifestyle. Mobile Apps, accessories and content, like music and iBooks are presented as collections that will enrich daily life and resonate with consumer lifestyles. The first Digital Lifestyle Showroom made its debut during the 2006 London Design Festival to critical acclaim. Grünsteidl has also written a thought piece on the topic of retail convergence, titled “Changing Retail Currency” for the 10×10 thoughts on design series published by Method.

The AppLounge is open from 15 September through to 2 October at Meza, 100 Wardour St, London W1, UK.

Hours of Operation:
Monday – Saturday 12pm – late

Location:
The AppLounge at Meza
100 Wardour St
London, W1F 0TN UK
http://www.mezabar.com

For more information please visit www.theapplounge.com

About the Sponsors:

Method
Award-winning product, service, and experience innovation firm Method proudly sponsors the AppLounge. Method designed AppLounge materials and lead execution, from the brand identity and mark to the website, in-store displays, posters, and promotional material. Additionally, Method has provided direction on marketing strategies, event production, and the retail experience.

Alexander Grünsteidl is the Senior Director of User Experience at Method, and the author of a thought piece for Method’s 10×10 series, “The New Retail Currency.” Learn more about Method and read Alexander’s 10×10 piece at www.method.com.

To get in touch with Method, please email inquiries@method.com.

app.itize.us
Jason Fields founder of app.itize.us is happy to have provided guidance and curation for the carefully selected applications and services available at the AppLounge. Find out more about app.itize.us at app.itize.us.

Spotspot Creative & Engineering
Spotspot proudly participates in the AppLounge concept development and design of the pilot shop. Spotspot creates interactive objects for public and commercial spaces that link physical and digital customer experiences. Learn more about Spotspot at www.spotspoton.com

Meza and D&D London
D&D London is the UK’s leading high-end restaurant group with an annual turnover of more than £70 million and 20 individual restaurants across London, including Meza in Soho, which plays host to the AppLounge this September. www.danddlondon.com.

Is the time right for the emergence of the Webfront showroom? A place that links the high-street to online retail but does not necessarily depend on traditional retail margins to be profitable. A space that allows you to discover products and services, follow demonstrations and then try them out for yourself. You then are able to order products or sign up to subscriptions directly in the showroom or postpone this decision to a later moment at home or on the road.We recently wrote in “The Last Click” article how business models for the high street have to change in response to online commerce and will give rise to new retail formats.

Ian Yolles of NAU discusses in the BusinessWeek article Retail2.0

“Of course, for many shoppers, online research of prices or customer reviews is the first step towards a store purchase. Others survey products in a store to decide which they want and then find the best deal online. In others words, for many consumers the Web and the mall are both parts of a larger shopping experience. “Nobody has really done anything to connect the dots and take discontinuity out of customer behavior [online and offline],”

Webfronts, coined and trademarked by NAU, are places which only showcase products and services whilst purchases are completed online and products then are shipped directly to the customer within a couple of days. These places have little or no merchandise for on the spot sales, in order to reduce inventory and distribution costs. Instead they offer hands-on demonstrations of services, or allow customers to try items, like garments, for size. Typically self service or managed kiosks are available to place an order online.

Over the past years quite a few instances of these innovative retail formats have emerged. But for various reasons many of them, after having been launched in a PR cloud of pioneering optimism, have failed to become economically viable.

It’s clear that these hybrid retail formats are not suitable for all types of merchandise and transactions especially in the FMCG and perishables sector, but then again, each sector is currently experimenting with internet integration.

We would like to understand why some hopeful integrated retail formats failed and others became successful, and how we can make this formula succeed in future development. There is only little data available but we can at least bring together a selection of examples to compare different emerging models and look at the pros and cons.

At the core of the debate on integrated internet retail innovation is the uneasy diversion from established, well proven, retail formats. These formats are based on common sales practices:

• Setting conditions for impulse purchases, by attracting customers with aggressively priced, loss-leading merchandise.
• Various forms of price perception manipulation based on artificial sales offers and staged price reductions that lead to price erosion of products. As recently reported in | Never-ending sales “have to stop” | BBC | October 2009 |
• Up-selling by applying perceived quality differences within a family line of products to obtain higher margins.
• Creating cross-selling situations that tempt customers to add more items to their shopping basket.
• Negotiate unique and exclusive products with suppliers that allows the retailer to command the price with the highest margin, whilst telling the customer you are offering better service by helping to select the otherwise incomparable product.

Retail is about only two things; sell more items with low margins or few items with large margins. The whole design of retail environments online or offline is based on these few principles.

Customer behaviour proves these business models to be very successful. Though at a time when consumption patterns are changing as we exit the industrial- and enter the information-society, we should consider different sustainable models to manage customer relationships. One form will come from the fact that the nature of connected products is changing value perception of transactions.

Customer expectations are driven by a whole range of psychological factors. We don’t know how much we can manage these motivations and delay for example instant gratification of an impulse purchase and supplement it with something else. It will be at the core of these hybrid retail experiences that service design solution will have to be developed to satisfy customer needs and keep shoppers returning.

The increasing dominance of some (global) brands have lead to the Flagship-Store, which in effect is more about maintaining a brand image and fostering customer relationship rather than promoting instant sales. The question is if department like stores and curated boutique sized shops can offer profitable services based on business models which link smaller scale producers to their customers without necessarily providing direct sales?

Here is a selection of different approaches to the Webfront retail format, some more explicit and others almost transparently interwoven into the existing context.

Starbucks and iTunes

Starbucks was already a very successful vendor of music compilations cds, when it hooked up with Apple iTunes, offering wireless access to the location’s playlist from within the iTunes Application on for example an iPhone. A customer can see the current song playing and download it for the usual price. In addition a free song of the day is given away with a purchase coupon. Each Starbucks location becomes in fact a Webfront for the iTunes Online Store. It demonstrates that music stores don’t need to look like “traditional” music stores.

Apple and Starbucks iTunes WiFi integration hands-on | endgadget | Nov 2007 |

Shazam

Shazam turns any location that plays music into a Webfront. The customer uses his/her phone to transmit a sample of the music playing in the space, to a server and receives details about the song, album and artist, including a link to purchase the song from iTunes. Dj Clubs, Bars, Shopping-malls, Cars all become locations that can act as instant Websfronts.

The store in this case is often formed by the social context in which music is consumed. The crucial question is if Shazam would be willing to share in the revenue as the location and time of exposure is known to the application.

NAU Webfront stores

Nau was an apparel company with an environmentally aware, sustainable mission, based around a disruptive business format. It aimed at fundamentally reinventing its relationship with customers. One of their many innovations was the design of their retail space, which they don’t call a “store”, but rather a Webfront. It combined the efficiencies of the Web with the intimacy of the boutique. At a Nau Webfront, one sample of every piece in the collection and every available size hangs ready for visiting customers to try on. The company encourages shoppers to use the Webfront just as a testing platform for the clothes. The central mechanism is a self-serve kiosk that transfers the online shopping experience to an on-site touch screen kiosk and encourages customers to have their purchases sent home, with the incentive of a 10% discount and free shipping. By running retail this way, Nau dramatically decreases the regular inventory required at its multiple physical locations, thereby reducing the impacts of freight and lengthy supply chains.”

summary articles:

In a Search for the Authentic, I found nau|TrendBites | Jan 2008 |

Leap Of Faith | Fast Company | POLLY LABARRE | Dec 2007 |

about the customer experience:

Nau in Chicago: an interactive, sustainable, apparel store | Team Kane Street | Sept 2007 |

Unfortunately the company had to close a year after opening after failing to raise the next level of funding, and is currently re-launching as a web only store.

Sustainable clothier Nau pulls the plug | Jerry Casey | The Oregonian | May 02, 2008

What Nau? | Good magazine | Luke O’Brien | October 2008

Analysts consider the failure after just one year of operation due to trying to reinvent too many retail practices simultaneously, whilst not being able to create enough storefronts and develop parallel sales channels to become profitable. We would be interested to learn more about how customer behaviour had changed in reaction to this new off-hybrid format. Apparently about half the customers, many more than the 10% predicted, choose to have purchases sent home. Although undoubtedly at the heart of the customer experience, the apparently pricey to develop website struggled to become usable soon enough.

Various technologies are being brought together to facilitate these new environments. A summary of these can be found in this The New York Times article | Thinking of Going Blond? consult the Kiosk First | March 2009 |

Intel shopping kiosk prototype with Frog Design video of the prototype

The question is not if we can make the technology work, but how far existing retail infrastructures need to be adapted, if the cost of implementation offers sufficient ROI and most importantly if it can be made acceptable to customers.

Oki-Ni

Oki-Ni has been operating a similar retail format before NAU, featuring temporary gallery type shopfronts in different locations.

Images of the Gallery Shop

Their concept is based on offering exclusive products sourced from global renowned brands to unique collaborations with a range of niche brands, combined with the accessibility of on-line retail. The physical gallery is a place where consumers can view and try clothes. These outlets don’t sell any of the products, which must be ordered directly from the internet for delivery within a few days. Interestingly these pop-up galleries are seen as temporary marketing tools “We always see the galleries as a springboard to the internet. They are a marketing push in each territory where people become aware of the brand but then are happy to go online. Once we’ve become established in a territory, the galleries are not as important and then our focus as a retailer is online,” says Paddy Meehan.

UK RETAIL: Window shopping with a difference at Oki-Ni. | Goliath | February 2005

eBay Drop Off stores

Initially hyped as a new successful business opportunity with low start-up costs and growing returns. The format is based on branded high-street locations which accept and manage items to be auctioned on eBay and share in any profits made from a deal. After few initial success stories, many franchises failed. It turned out that location overhead, services costs which included labour to research products, create suitable images to present an item online, and writing descriptions were too high in relation to the deal margins on most low cost auction items. At the same time some more expensive items like cars were prohibited unless the franchise would obtain specific trade licenses.

http://tradingassistantjournal.com/2008/03/ebay-franchise-drop-stores-why-they-failed/

Evans cycles

Evans Cycles makes use of in-store sales kiosks to aggressively expand business across London.

So called “Info Hub” kiosks are prominently placed on the shop floor and allow online browsing as a shared activity between staff and customer, ordering anything from their online catalogue and then have it send for pick-up at the store or delivery at home. Employing instore online sales kiosks allowed Evans to rapidly open new locations, even settling for smaller, less suitable shop properties, in close proximity to their competitors, whilst overcoming limitations of having not enough space to stock the complete range, and instead only displaying items suitable for the target audience at each location.

Evans Cycles buying options

Apple Flagship stores

Brand Flagship stores are in fact nothing but Webfronts. We always wondered how far for example the Apple Stores are designed to be Webfront locations. The Apple high-street stores are intertwined with the Online Apple Stores. They have been the game changers in the consumer electronics sector, allowing people to touch and tryout products before buying. It is claimed that Apple Stores have some of the highest retail turnover per square meter in the industry. But surely (even if we can’t prove it) the salaries of the numerous staff must be paid by more than just in-store profit margins.

“Retail Analyst: Apple Store Regent Street most profitable for size in London “To make £60 million a year from a shop of Apple’s size is absolutely phenomenal””

The figures in this analysis seem way over the top, but then again it’s within the range of the possible; over £150k average a day and £15k an hour. Lets assume they process consistently 100 paying customers an hour that would create an average spending amount of £150. Sure enough this calculation is to simplistic. It would be interesting to learn how sales are divided between core Apple hardware, third party products, software and accessories?

But what surprises me that although many have studied the Apple Stores since their first opening in 2001, no-one has been able to successfully emulate the formula. Even in London, the Nokia flagship store, across from the Apple Store on Regent Street, both, not quite incidentally, designed by the same company, Eight Inc. seems to completely miss the point. This showroom really can’t be more than an advertising space, in an environment when most handset sales are tied in with the service providers.

We wonder if it is about the presentation format, or about the choice of products which are out of synch with requirements in multi-channel customer relationships? Incidentally Microsoft just opened the first store this week copying many successful elements from the Apple formula.

It seems like this formula only works for brands that can offer a complete package; in Apple’s case, everything from hardware to software, to content. It makes us question if these type of stores actually can be developed in a different consumer sectors and with merchandise sourced from different brands without a core brand forming the central organising principle.

Perhaps the food sector can offer some insights?

Ocado the only way to shop for groceries.

Tesco, Every little helps and Tesco direct

We are really interested in the relationship between groceries bought the traditional way in Waitrose supermarkets and products ordered online. Or for the same reason how customers both shop online on Tesco Direct and Tesco.co.uk and Sainsbury’s online whilst having visited the comparable local supermarket locations. How much are the items chosen on the Webshop, depending on initial discovery on the physical shelf. On the other hand, how many products in the online shopping basket come from cross selling opportunities, for example by offering ready shopping lists based on recipes, which would have be difficult to realise on a physical shelf? How much is Waitrose a Webfront for Ocado.com? Instead most online discussions are about how much they compete on product ranges and prices.

http://en.wikipedia.org/wiki/Ocado

De Kijkshop

Just as a curiosity to include in this list is the 35 year old Kijkshop. (literally translated Look-Shop) A unique shopping format from the Netherlands. Initially the stores were located off main shopping locations but easy to reach by car. The shops were mostly designed with dark walls and flooring, with spotlights highlighting merchandise locked inside glass showcases. Each items was provided with extensive printed descriptions. Customers note down the product numbers selected items and pass them to a cashier. Merchandise is then delivered boxed up straight from the warehouse. When the the chain changed ownership a few years ago, a more conventional format, with products openly accessible to the customer, thought to provide incentives for impulse purchases, was tested in one of the locations. After failing to achieve the intended effect, the company has decided to remain with the proven format.

First was the announcement of the change

Kijkshop stopt met vitrineformule | Nieuwe eigenaar verwacht omzetstijging door ’open aanpak’ | Trouw | August 2007

Then came the “disillusioning” insight after a year of trials, that the original formula was still pretty effective.

Aanbod Kijkshop blijft achter glas | de Ondernemer | April 2008

Similar to Argos in the UK, the Kijkshop has increasing web presence, although it’s arguable how far the relationship with the high-street showrooms goes.

Wired Store Christmas Pop-Up

Here the well known magazine “Wired” lends its brand to endorse the selection of gadgets for a pop-up store during the holiday season. It is a yearly pop-up store in New York, “curated” by Wired staff, but as some commentators note, more likely driven by lucrative sponsorship deals. It’s a place where you are actually able to touch products you otherwise only encounter in blogs and magazine articles. A range of advertorial events and charity games are hosted on site during this period. Customers don’t purchase directly but from internet kiosks around the store. Items are then shipped to their homes in time before Xmas. The main aspect of this format is similar to Oki-Ni but to the level that Wired only takes a fee from sponsors to offset the cost for product placement and does not take a percentage of the sales revenue. The inaugural Wired pop-up store sold $9 million worth of merchandise,65 gadgets in all, and attracted 14,000 visitors. As such the Wired store becomes a trusted mediator between companies and customers.

related articles:

photos of example products in the store by Digital Lifestyles

Wired Magazine Becomes Holiday Retailer | Phil Wahba, | Special to the Sun | November 2006

Some critical notes by PFK.com

Sample Lab

The obvious conclusion to where contemporary business models, in acknowledgement of the relationship between the high street and online retail, are heading is the Japanese Sample Lab franchise. It’s a true try-vertising space where potential consumers, called try-sumers come to test and experience products for free, before buying them elsewhere. The model evolved from the mostly unwanted, in-your-face free samples, offered at inopportune moments in the street or whilst browsing in department stores. The business formula is build on product placement and includes demonstrations in a stylish but neutral environment creating a unique retail experience. Customers become members for a nominal yearly fee. At each visit they can try everything on display and then take 5 items home. Before being able to return to a store try-sumers are requested to fill out a questionnaire, either on the spot or in their own time online or on their phone. Companies who place products will receive information from in-store surveys and at same time will gain wider awareness of their products and services by word-of-mouth, spread in the social network of the Sample Lab members.

It is an alternative to the free-samples, often packed with print magazines, now with a vanishing role in competition with content on the internet. The model is probably best oriented to FMCG products but we are wondering how far this could be stretched to introduce online services and for example specific mobile phone apps. In the case of some consumer electronic products it has already proven to be a suitable place to gain exposure with people that otherwise would not be inclined to visit their a brand flagship stores related to the product. “…By renting lab space, Sony was able to put Playstations into the hands of women, many of them for the first time…There are a lot of people Sony can’t reach with their regular promotional events. Sony marketing thought this would be a way to access customers who normally wouldn’t visit game software shops or electronics stores…”

It’s All about the Freebies | American Way | Ethan Rouen | May 2009

A Trip To The Sample Lab | Nightly Business Report | March 2008 |

Conclusion

This is only a small selection of the most prominent cases exploring hybrid business models, combining brick and mortar and online retail. It will require more than just placement of CRM technologies within existing retail environments to achieve customer acceptance, what we call a new Culture of Use, and satisfy underlying consumer needs. The question still is how far places on the high street need to evolve to adjust to these changes and what completely new formats will arise. What mechanisms draw people into shops on the high-street, compared to access to stores on their mobile phone in their hand? How can we create enough stickiness that people want to return to destinations on the high-street?

E-tailing – has the revolution arrived? BBC January 2009

High street reaction to online march too slow, says George Davies Retail Week September 2009

Dixons’ browse-somewhere-else-then-buy-online-from-us advertisement campaign in London, is yet another indicator that business models for the high street have to change and will give rise to new retail formats. Stores with location overhead are competing with online retailers, who blatantly acknowledge that they depend to some extend on the services offered in brick & mortar stores, before attracting customers with competing price offers. Storefronts increasingly play a different role, which is less about actual transactions and more about brand driven customer relationship management.

With the advent, in the past decade, of fast and cheap broadband access for most of the UK population, the unacknowledged has become common practice. Most of us have been in situations discovering and trying products in shops on the high-street, or flipping through books in book stores, before searching for the best deal online. Many online retailers were implicitly silent about this behaviour whilst relying on this practice. Now for the first time, a company explicitly, although in a tongue and cheek manner, tempts potential customers to follow this practice. Dixons had to close or rename many unprofitable stores in the UK to Currys Digital in the past few years. As such they don’t have much high-street presence anymore. Instead their tag line has become “Dixons.co.uk The last place you want to go”

Naturally some high-street stores, who currently feel the effect of this practice are not too pleased.

Both Selfridges and Harrods have commented on the Dixons campaign. Both claim to be different by offering unique products and exceptional service in contrast to the Dixons online store. Although this may be true it is increasingly difficult for customers to choose between similar products whilst functional differences become negligible.

Online the debate about the Last-Click has been going for a few years, especially since AdSense and price comparison robots changed the rules of commerce. Recently companies like Google and Microsoft have recognised that users may visit many different sites in a chain of events that lead up to the final purchase click. In the current model the last click receives the full value of the the transaction, whilst persuasion to purchase or subscribe may have been accumulated through a succession of customer touch-points in the course of multiple sessions in as many days. This becomes increasingly an issue when driving communication about products and services into social media networks.

Various companies are developing tracking and measurement tools, which establish the value chain leading to the transaction and remunerate the facilitators accordingly. It’s a guess if Google and Microsoft are interested in this, not because of the ethical issues surrounding the current situation, but because they are worried that otherwise crucial links in the chain of events start missing. Mediators between producers and customers cannot afford consistently loosing out on their share, if dominant players keep grabbing it from them. If these mediators are removed from the chain it becomes harder for potential customers to get exposed and decide on a diverse range of products and services.

In fact in recent years advertisers increasingly demand quantifiable feedback to establish the effectiveness of a campaign and ensure ROI. These same mechanisms can be used to cut up the value cake and ensure that minor players can still fulfil a useful and worthy role in the retail customer relationship ecology. It’s possibly a way out of the dominance of the large brands and perhaps a route that makes the Long Tail actually work.

Our question is if it’s possible to merge these new online transaction-lead tracking tools, with customer touch points in the physical world. What’s missing is the possibility to uniquely trace a product purchase trajectory through the value chain. Some will argue about privacy and guaranteeing anonymity of the customers. Though customer loyalty cards, purchase vouchers and wish-list services exist already successfully in this environment, without necessarily having to compromise the individuals anonymity. The emergence of VRM (Vendor Relationship Management) type systems should support these requirements whilst affecting at the same time the remuneration in this value chain. But that will be the basis for another article.

Relevant Links:

Dixons-the last place you want to go? | Marketing Week | Rosie Baker | 22 Sept 2009 | Discussion of the the effect of the campaign on the brand perception.

Dixons-the last place you want to go? |jkr |22 Sept 2009 |reflection on the style of the advertisement.

Harrods attacks Dixons’ ‘low-down’ ad campaign | Retail Week | George MacDonald | 22 September, 2009

Moving on the last click wins | imediaconnection.com | By Robin Davies | April 01, 2008 | both Google and Microsoft are looking at ways to measure beyond the ‘last click wins’ model

]]> http://digitalwellbeinglabs.com/dwb/the-last-click/feed/ 0 http://digitalwellbeinglabs.com/dwb/location-based-services-barcode-comparison-and-other-disruptive-ideas/ http://digitalwellbeinglabs.com/dwb/location-based-services-barcode-comparison-and-other-disruptive-ideas/#comments Sun, 04 Oct 2009 23:21:20 +0000 agrunsteidl http://digitalwellbeinglabs.com/dwb/?p=402

Barcode and location based price comparison services, including augmented reality applications which overlay information on top of the physical world, are about to become mainstream. This will have a profound impact on business models in retail, will in the long run affect the way we conduct transactions in public space and will impact urban planning …

going shopping with a camera

Lets cast our imagination a few, lets say ten years forward. You walk by your local deli and your GPS enabled mobile phone, or some other piece of location aware wearable technology vibrates. A few days ago you agreed to dinner with friends and set a reminder on a service like reQall, to pick up a bottle of wine in the case you are in the vicinity of the shop. You walk into the shop and pick up a nice looking bottle. You scan the barcode  with Redlaser and confirm that this is indeed a variety you might like based on previous purchases. Whilst you are glancing at an expert review of the bottle and compare the rating with an trustworthy online forum, you notice an alert that shows the prices and locations of nearby shops offering the same bottle of wine. It turns out that another shop down the road offers a three-for-two deal and you decide it is worth to walk the couple of minutes.

T-Mobile G1 Shop Savvy Demo

In this scenario the retailer who made the effort to inspire you to consider this particular bottle of wine, loses out on the deal. You’ve been to his store before, it’s in a convenient location, the store has a great ambience and on previous visits the staff seemed knowledgeable, but in the end the deal offered at the box selling warehouse merchant around the corner is too good to let go. For various reasons the deli on the high-street has to calculate higher margins to be able to offer the level of service that attracts customers, but is unable to compete once information on price is available freely. In German there’s even a term for this: “Beratungsddiebstahl”. Loosely translated as “Customer Advice Theft”.

This scenario can be played out with a variety of products in different markets. Retailers will consistently loose out on sales and have their customers pulled away, even if they offer better services, as soon as any unfavorable price differences exist. It’s not long before the shop offering additional service will have to close. Sounds familiar?  In fact over centuries, changing availability and access to information, together with increasing mobility have been the major forces to alter the functional lay-out of our cities.

Actually this scenario is about to become reality much sooner. Most underlying technologies have been around for a while and many similar applications are expected to appear on iPhone, Android, Nokia and other platforms within the coming year.

More interestingly … I believe the above scenario will never become common place in the form described, as it becomes obsolete as soon as it is realized.

The resulting closure of shops in this scenario has unintended effects for the winemaker, affecting distribution and in succession the availability of his wine. This effect is already noticeable on the UK high street where a variety of stores are squeezed out of existence. (Sure the winemaker has the opportunity to sell his wine online, but that is a different story)

A BBC Click recently reported in an interview with a German games developer, as the amount of independent stores on the high street is shrinking, that smaller computer and console game manufacturers have diminishing opportunities to reach out to customers. According to the report less than 50 independent buyers for computer and console games are left in the UK. Smaller manufacturers find less and less outlets, few are able to set up their own branded shops and find it increasingly difficult to compete with large global brands both on and off-line.

One common strategy is to make products incomparable in retail. Companies will revert to old tricks, differentiating virtually the same product, lets say a compact camera called Gotak CS-y03 and the similar Gotak BS-09 to offer exclusive deals to different retailers. The cameras are virtually the same whilst the BS-09 includes a seldom used auto-smile-detection software feature, added on firmware level, allowing to price this product with a slightly different margin to remain competitive. A variety of similar strategies are deployed by manufacturers that produce multiple brands on top of the same product platforms to diversify margins for their retailers.

Drive by advertising

Lets look at a similar scenario, but from a slightly different perspective. Instead of the proactive case, having intentionally set a location based reminder to buy wine, we now have a more passive approach; contextual advertisements based on your location, time of day, weather, social context, your diary, mood and any other measurable patterns.

In a recent discussion amongst friends, we were talking about the soon to emerge widespread application of location based services, especially the common scenarios of GPS type location tracking together with geo-coded data. This will allow for example menus of restaurants to pop up on your mobile phone as you drive through the city, receiving alerts in the form of vouchers as you pass hotspots in synch with the preferences set in your profile. This will include time and location limited deals, offering selective access through coupons, to content and products available in your proximity. You can expect every few hundred meters yet another attempt to sell you some perfume or wet your appetite  for the latest lunchtime pizza deal. You can easily picture yourself driving down your local high-street or approaching a shopping mall from the highway, being bombarded by the same Starbucks, Pizza Express, H&M, Footlocker ect messages on your phone.

We realized that many of these location aware scenarios anticipate a variety of choices from a diversity of retailers situated in brick and mortar locations, vying for our attention. Instead we will be seeing the same messages appear repeatedly on our mobile devices whilst we traverse our homogenized public environments.

Starbuck locations in central London

Or am I wrong and these technologies will enable retailers to compete again on a local level; shops can now be “discovered” away from the well trodden paths of the high-street pavements, disperse footfall to side alleys by pointing potential customers to walk “around the corner”. This might diminish the value of “location, location, location” and level the real estate prices, so independent shops can manage their margins on a more competitive level with out of town online warehouses? The high-street will increasingly become a proxy to the online world and we expect new types of retail hospitality type of environments to start populating the the spaces vacated by retailers relying on traditional transactions.

from Flickr group

Augmented reality applications

This is not an argument against the development and commercialization of these technologies. To the contrary we are excited about for example  Augmented Reality applications, which currently start appearing on consumer level devices. for example Layar Wikitude by  Mobilizy and Delicious Monster using registration barcodes on books. cds and dvds creates a seemless link between books owned on your bookshelf and online recommendations from Amazon. These technologies and affiliated services emerge as part of the evolving nature of our networked society. Many of these applications are being realized on a “can do” basis. Relatively cheap and computationally powerful mobile platforms are now sufficiently distributed in the population. Online access to rich geo-tagged databases is rapidly growing. The time is ripe for services to come out of labs and offer opportunities for many start-ups to grab a piece of a potentially huge market.

What will happen?

It’s not surprising that retailers wont be too happy with people holding their mobiles too close to products on shelves and will want to prevent taking pictures inside their shops. Currently many places forbid photography, citing the right to “privacy” of fellow customers. But how will shops be able to enforce this? “Checking” your phone whilst taking a picture and running a price comparison app is hardly detectable by security staff. It’s a lost game similar to the early days of digital cameras, when concert visitors were told to leave their camera’s by the entrance because of possible copyright infringement. Now, a few years later, we are instead encouraged to take as many pictures as we like and upload them as soon as possible to a Facebook fan page. In the long run we will need a way of dealing with a situation were many products, including digital spectacles and brooches, will have camera type technology build-in and continuously store and compare image data online. This will lead to a situation where brand outlets will be inviting people to publish as many pictures as they want, to demonstrate brand loyalty , whilst department type stores who aggregate products through buyers who negotiate purchase and sales prices with the manufacturers and suppliers, will want to avoid people comparing prices.

Price aggregator sites serve a self defeating purpose. Once a site emerges the price differences between comparable products will run down to bare minimum levels, just about covering margins to sustain the cost of warehousing and delivery. A situation only maintainable by companies operating on sheer volume . At some point most prices will become almost similar and the reason to exist, the very purpose of the site, makes itself obsolete.

What’s next?

Location based price comparison technologies, if applied straight out of the lab to the current retail environment, are plain naive from a business point of view. We can and will not be able to run them successfully for any length of time unless we develop radically different business models that take into account how products are introduced and exposed across all communication channels and customer touch-points.

The emergence of these technologies is is unstoppable. The effect of these will be different, in different geographic locations, none the less the impact will be profound. We need to reconsider business models considering new forms of pricing, sales strategies, haggling, financing and distribution. We will need to understand the role of up- and especially cross-selling in these new sales environments. It will affect how we will encounter public spaces in the near future and we better prepare for it. Already now many traditional retail typologies are vanishing from the high street e.g. The Bookstores, Music-stores, travel agents, electric retailers are all becoming extinct. I don’t believe we should keep these types artificially alive in a wave of nostalgia. Instead we should actively encourage projects that consider how pubic space will be affected by new technologies and how we can take this massive opportunity to design appropriate solutions around innovative business models. We should not make yet again the mistake of watching and condemning something like music piracy, in the mean time ignoring to develop alternative business and experience models that match the sign of the times. Whilst these technologies will have considerable impact on the way communities interact in the near future, politicians are probably still ignorant of what is emerging. Once we planned cities for cars, now we might require complete new approaches to urban planning, based on integrating brick and mortar with an overlay of the virtual.

further reading:

ShopSavvy by Big in Japan for Google Android

The Future of Retail: Instant Price Match, Ad Lab

Stores Clueless About Mobile Barcode Scanning Applications?, Read Write Web

Barcode Shopping – The Future Of mCommerce?, Lester Madden

The guru of retail, Paco Underhill, has presented a verdict on the current state of digital signage in shopping environments at the Digital Signage Expo in February 2009. His critique was pretty rigorous. His proposals for improving the application of digital signage are very much in line with our own observations and the conclusions we’ve drawn.The title of Paco Underhill’s talk was Good digital signage is not ‘cool’   It was for the first time that there was critique in an other wise self-congratulating industry. As the industry speaks about all the successful implementations and its rapid growth, most”signs” on the high street point to the contrary. Few hyped implementations of digital signage, beyond the massive billboards on Piccadilly Circus in London or Times Square in New York, survive beyond the first year. One company after another promises yet another revolutionary display technology with increased light output and therefore attracting more views on the high street or inside malls. Smaller in-shelf pop-up displays come and go. The list of failed examples in recent years is long. I keep documenting bad examples popping up in regular intervals on the streets of London, especially Oxford Street. It doesn’t take much to witness this yourself. Just position yourself near a digital signage display and observe people passing by… what do you see happening?

The intentions are correct, the choice of technologies mostly adequate, but unfortunately it is the implementation, the attention to detail, which is done so often wrong. It’s like visiting a restaurant with the most promising menu, but if either, or both the service and the quality of the actually served food does not live up the promise, the experience will be broken and the customer will not return.

As a friend mentioned in recent discussion, this industry (like many others by the way) is based on justification by powerpoint; eg. X million walk each year on Oxford street, that gives Y amount of potential eyeballs, will lead to Z amount of follow ups and hopefully initiate N conversions, which allows us to price this service at M Pounds Sterling … really? The only reasonably accurate figures in this equation is the number of people walking the street and the cost of the equipment included in M, the cost of the service.

Paco Underhill’s key insights:

• Too high-tech means its easily broken - We have witnessed many examples, including the Prada dressing room, fail under the burden of technology maintenance. We have heard of plenty recent examples at well known retailers -
• The customer is easily bored - Cool interactive video installations in public spaces seldomly attract repeat visitors-
• Poor placement because of no understanding of sightlines - who will stand still in the high street, twist their head sideways, to watch a video clip of something they otherwise can watch on TV. Who looks upwards to a monitor fixed to the ceiling when the products yoru are searching for are presented below eye level?-
• Budgets blown on hardware, software forgotten – How often do design companies receive last minute requests to fix up an installation that has been months in the making?- 
• Not enough customization for the local market
• Audio can induce employee sabotage - Most audio we have seen in public spaces, even when using hi-tech through the window loudspeakers is at a useful barely audible level to the passerby’s -
• Digital signage attracts and is within reach of “evil nine-year-olds” – An old saying in product development; if you want to test resistance to breakage and level of vandal proof just take your product to a primary school.

some of our insights:

• cost of long term maintenance is seldomly calculated into the overall service development of a digital signage installation.
• few designers understand the real implications to design for digital signage. It’s very different from designing for TV ads or banner ads on the web, where the user is at least partly engaged with an activity already in front of her. Digital signage designers need to have the senses of an architect to understand placement and relationships in space, and the sensibilities of a composer to understand timing, rhythm and  timbre.
• apart from understanding sight lines, few developers and in-house merchandising teams seem to understand that the placement of digital signage is part of an overal user experience, The signage is not just an add-on but an integral part of the shop floor lay-out.

Paco Underhill’s key recommendations – with some of our notes:

1. Our visual language is evolving faster than our spoken word. ”Our ability to process images has never been better, but our eyes have never been more tired.”

2. A lot of digital signage is still technology in search of an application. ”The problem with anything cool is that it is directly linked to ‘uncool,’”. “What may be cool to someone the first or second time may not be on the fifth or sixth visit.” ”There is a fascination with hardware, while the attention to messaging is misconstrued.” – A lot of interactive installations in public spaces, unless really well designed and engaging, turn out to be “one-trick-ponies” similar to the ubiquitous  projected water ripples which are triggered by your footsteps, which now can be found in random locations all around the world. - 

 3. We are now more time poor than we are money poor.“Those who design in-store media have a lack of understanding of the clock that is inside our heads,” - A typical 30 seconds TV ad is completely out of place in an environment where a message needs to succeed in a fraction of a second. In fact we are becoming increasingly adept to filtering surplus messages out of our environment and shield ourselves from unwanted information.

4. People are looking for universal applications. Instead, they should be more sensitive to the local issue. Content that may be relevant in one area of the country may be completely ineffective elsewhere.

5. Good digital signage should “create placemaking” and serve as a gathering point. - This is at the foundation of the type of new “retail” environments we, at dwb, are developing. Well positioned (interactive) displays can facilitate social interactions and become excellent places to present relevant messages in the most appropriate context. One of the recent examples we have described in an earlier post are the way finding kiosks scattered around the Westfield shopping centre in London. We need to create social interactions around digital signage, instead of providing just background noise. 

In the next post we will investigate recent examples of two of the largest retailers, Karstadt in Germany and Tesco in the UK, having problems with their pioneering digital signage networks. They could have saved a lot of investment had they listened to Paco Underhill in the first place.

In recent months two large European retailers announced that they were to close down extensive digital signage networks across hundreds of shops. What has happened to this much anticipated technology and what was the outcome of the initial marketing drive?We put together 2 use cases of Karstadt in Germany and Tesco in the UK:

Use case Karstadt Instore TV

September 2007: Karstadt press release  and   Karstadt Does Digital Signage

The German retailer Karstadt is to install an average of 45 flat screens in 52 of their top stores. If that is the case then 1 million customers could be reached daily…. The retailer plans to invest tens of millions in an “Instore TV” system. All 52 subsidiaries will be equipped with up to 45 big-screen LCD displays on which company products and commercials by partners will be broadcast. Wolf anticipates that the constant stream of multimedia will attract more customers to his stores. He also expects they will stay longer and, naturally, buy more.

March 2008: Karstadt Instore-TV mit konzeptionellen Schwächen   (Karstadt Instore-TV with conceptual weak-points) 

In this article the writer describes how a lack of follow through on the promise, breaks the whole experience. Instead of having dedicated messages, based on monthly changing themes, attached to specific location related to a particular product, video clips seem to pop up in random places, or all places simultaneously, eg an ad for Philips LED lamps shows up in the Jeans department. Another example is the lousy placement and integration of the displays in the overall concept of the stores. There is usually some broken monitors somewhere. The length and type of messages contained in the clips. Lack of opportunity to sit down and “consume” some of the messages. In fact he notes, he seems to be the only one watching. 

September 2008: Karstadt legt Instore-TV auf Eis (Karstadt puts Instore-TV on ice)

The article notes that the Instore-TV had aimed to promote lifestyle messages directly at the Point of Sale. The idea was to combine information produced by the brands related to the products on display and combine these with regularly changing in-house themes. 8 million Euro had been invested so far with an estimated return of 40 million Euro.

resume: from the outside it looks like a case of bad management communication across different layers within the organisation that led to not getting buy in from all parties involved and resulted in a confused implementation.

… and another use case Tesco:  Tesco TV later renamed Tesco Screens

March 2004 : Tesco TV launches adverts as you shop (source: independent.co.uk)

… Tesco TV will be available in 300 of the company’s 850 stores by the end of this year. Around 50 screens will be fitted in each of these shops in a move that will cost about £20m … A whole new channel, called Tesco TV, will provide consumers with the company’s own promotional material, as well as advertising from third parties, such as shampoo or petfood suppliers … The channel will also offer shoppers “helpful hints” on things like foods recipes and babycare, as well as news and weather updates. The television sets in a particular aisle will show material of relevance to the products available in that part of the store …

March 2004 : Small screen, big profits? Tesco leads the in-store revolution  (source brandrepublic.com)

… With the roll-out of its in-store television system this month, Tesco is hoping to circumvent the time lag and memory lapse problem by hitting up consumers right at point of sale…

… The screens will be in “zoned areas”: a power aisle (the central aisle from which all other aisles are accessed); the grocery aisle; health and beauty; beer, wine and spirits; home entertainment; counters (for instance the delicatessen); and the café. Each TV will show information that is directly related to the products in its area…

At  the time, the first sceptical voices were noticed: … you simply can’t just put up a screen anywhere and expect consumers to engage or advertisers to advertise … “You have to have a very well thought- out client strategy … “I’m very worried when I see new companies within the market putting up screens and not thinking if they are reaching the right target audience.” …

January 2006 : Tesco in-store TV falters over lack of advertisers (source brandrepublic.com )

… Major advertisers are understood to be unhappy about the network and have cited the placement and intrusive nature of screens as problems to be addressed … The original intention was for Tesco TV to divert revenue from TV advertising. But its sales house, JCDecaux, was forced to slash its rate card by 30% in early 2005 following poor take-up…

January 2006 : Tesco’s digital signage advertising network may be struggling (source: wirespring)

An excellent article analysing the Brand Republic notes.

The key points are yet again poor implementation on detail level;

Placement:  … Tesco analyzed their store traffic patterns when deciding where to place their digital signs, but traffic patterns can only tell you so much.  They might give you an idea of where shoppers tend to walk and where they frequently linger, but they won’t tell you which direction they tend to look (you can speculate to some degree, of course), or what other visual clutter is in the area.  Maybe the screen placement interfered with the shopper’s march through the store or their ability to search for products.  It’s also possible that there are simply too many screens in place and the overall effect is more harassment than promotion.  After all, Tesco TV’s 40+ screens per store is quite a bit more than most retail media networks employ…

Content: ...Bright colors and blinking messages might be attention-grabbing, but it can also grate the nerves after a while.  JCDecaux’s own content guidelines recommend creating spots that are 10 seconds long, with sound.  The cacophony of multiple screens running different clips combined with the rapid visual changes of several 10 second ads swapping out might have overwhelmed some customers…With regard to content, there are virtually limitless ways to make attractive, eye-catching segments that soothe and suggest, not chafe and coerce. 

The article concludes that Tesco should not give up, face the challenge, learn from its lessons and conduct some “solid” experiments, implement changes, before hopefully launching some successful digital signage applications in the future.

May 2006: Signs of the times: digital signage industry    (source : canadianbusiness.com)

 U.K. grocery chain Tesco, however, is a great example of a digital signage screw-up. Tesco installed screens in half its 100 stores. But the program has been temporarily suspended: “Too many screens, in less than optimal locations,” … Research indicates shoppers look at digital in-store screens for an average of 2.5 seconds. The medium may be the message, but it better be clearly on display…

This is the most significant business analysis i’ve read so far;

Mr Spicer, DW + Partners, suggests digital signage’s power has nothing to do with ad revenue. Instead, he thinks retailers should use this strategic tool “to drive consumers into purchasing categories they weren’t going to consider, like higher-margin private-label products.”

July 2007: Tesco TV to become Tesco Screens   (source: digital signage news)

… management group’s realization that digital signage isn’t like TV, it’s like POP displays, and their changes in relation to this have yielded spots that have driven advertised products an extra 5-25% … (dooh :- ) )... “You can forget about the idea that the audience is going to put anything like the cognitive effort they put into a 30-second TV spot when they’re in-store,” though he did note that “referencing a pre-existing TV spot is fine.” …

…Too many others would have simply pulled the plug and written off the network as a giant capital loss, but Tesco recognized that while the potential of the thing was still good, there was a problem with its execution and management. From the looks of it, the significant steps they’ve taken to try and fix them are starting to pay off…

… And then, half a year later, news came that Tesco was about to remove the Tesco Screens from their stores.

February 2009 : Kinetic View: Tesco TV To Close: The End Of An Era?  (source: dailydooh.com)

… It didn’t matter about the location; the concept of screens above head height, running TV-style content, with sound, to people on the move in focused ‘shopping mode’ in the busy, distracting, crowded supermarket environment is flawed” … However much Tesco may have been able to leverage big brands to spend, ultimately the effect on sales was going to be measured. If the brands that trialled the network had got the sales uplifts they wanted, they would have invested in numbers … The costs of the network infrastructure and the need for bespoke programming made the service uneconomic for Tesco…

Interesting is that this article is written from within the industry and still advocates digital signage networks without offering concrete examples of services that have created a measurable ROI. I believe there must be successful examples and I am looking forward to experience them myself.

March 2009 : Dunnhumby says Tesco screens were getting old (source : screens.tv)

As reason for removing Tesco Screens from the stores Dunnhumby (the content management group for the screens) was quoted: “The decision has been taken as much of the equipment is reaching the end of its operational life”

March 2009 : The failed strategy that drove Tesco TV  (source: marketingmagazine.co.uk)

… Five years on, and Tesco has finally pulled the plug on the service, subsequently renamed Tesco Screens, leaving its stated ambition of attracting 5% of TV ad revenue seem rather hubristic …Tesco [launched] Tesco TV in 100 stores and invested in 5000 widescreen TVs that were suspended from the ceilings of the aisles – or retail zones – showing a mixture of relevant editorial and advertising. The network’s selling point was that it had a reach of 27% of all supermarket shoppers, equating to 200m shopping trips a year…

quotes: 

…’If you put a screen where people don’t look at it, showing content that requires people to be still, it doesn’t work’ …

…Another downfall was the assumption that advertisers would run the same ads in-store as on TV. This seemed to be predicated on a misconception that consumers had the same level of engagement when shopping as they did in front of the TV at home…

…Sound was also a major problem – early anecdotal evidence suggested that some shoppers and Tesco staff found the ads an irritation, perhaps not helped by the frequency with which they were shown…

…Given that Tesco Screens was trying to attract brands’ TV budgets despite in effect being an outdoor retail medium, there was also confusion over which pot its sales agent, JCDecaux, should target…

… the real issue was that consumers weren’t interested in the first place. ‘If consumers had really liked the service and it had driven sales, agencies would have found a way to make it work.’ …

The conclusion is that Tesco hastily developed the in store TV network without having fully understood, nor experimented sufficiently with prototypes to learn from customer behaviours before rolling out the service. 

It seems there are plenty of companies out there still selling the same digital signage approach to unassuming marketing managers at different companies, that have not learned, or are not familiar with these examples. It’s interesting to see that the digital signage industry’s reports on the failing of these cases is rather meager, compared to the announcement of yet another grand marketing scheme, when it all initially kicked off.

And now we are going to look out for successful implementations based on measurable ROI’s … Who and What has been watched Where? Any suggestions are greatly appreciated.

Post Scriptum : Freeview porn appears on Tesco TV screens

In the next few years we will see various types of consumer electronic devices all look like thin black boxes being defined by the size and proportions of the displays that characterise their shape. In traditional retail settings it will be increasingly hard to sell these products based on some imperceptible quality differentiations related to “improved” display or audio qualities.When towards the end of the last century products started shrinking in response to the miniaturisation of components , the old mantra “form follows function” didn’t work anymore. The outer shape of products used to be dictated by the arrangement of the internal functional components. But once mechanical components were replaced by electronics, there was not much left to follow.

In the early eighties a few designers made some last critical statements about the disappearance of the physicality of products. A good example was the radio in a bag by Daniel Weil, clinging on to components that soon were rendered invisible.

Radio in a Bag, 1982, Daniel Weil

In the eighties postmodern philosophies were brought into play to justify shapes that indicate how to interact with products. Designers sought an explanation of functions in the semantics of form, making products understandable and easier to use. Different approaches were applied to instill meaning into new behaviors enabled by electronic and soon digital functions.

One of the best examples was the Phonebook prototype by Lisa Krohn and Tucker Viemeister, which won the Neste Forma Finlandia price 1987. It is a digital phone based on the principle of a file-o-fax , combining functions like a basic phone, an address book and an answering machine. Each function is accessed by turning pages exposing only the required interface elements for each application. In retrospect these products were longing for a past, not ready for a future yet to come.

Phonebook, 1987, Lisa Krohn & Tucker Viemeister

Extreme design-sketches emerged in the quest for form at consumer electronic corporations around the world. Most impressively a personal sound system player, created during a workshop at Philips Corporate Industrial Design, in the shape of a head, called Beethoven. The expression of the design went beyond the pure functional requirements of the audio system. The mouth was to hold an audio cassette. The ears were to adjust the volume, in place of the eyes was a display, the hair hid the loudspeaker, the power switch looked not unlike Harry Potter’s scar.

Beethoven, personal audio system, Philips CID, 1980. image: past tense, future sense; bis publishers 2005

One outcome of this quest was the unexpectedly successful Philips Roller Radio, which stood out from the boxy, tech looking, metall finished appliances common amongst consumer electronic brands in those days. This radio was explicitly designed to appeal to the youth market. The loudspeakers were clearly separated from the main body holding the radio tuner and cassette player. The handle expressed portability. The back revealed bulges underneath which the batteries fitted. The bright colors and shiny plastic finish created a distinct youthful contemporary look and feel. As the story goes, the initial proposal was refused several times by top management, who couldn’t believe that such a radically different approach could sell beyond the required quantities to break even. The development team managed to secure initial orders in opposition to the opinions of management and  production began. Against all odds, sales soon exceeded the wildest expectations.

Roller Radio, Graham Hinde, Philips Corporate Industrial Design, 1981….and later versions from the Moving Sounds series,

Link kindly provided by picasaweb.google.com/vedodesign

Soon a next generation was created to jump on this success. Interestingly the second Roller Radio, a basic restyling exercise of the original, turning the cylinder shaped speakers into spheres, didn’t manage to continue the success of the first. Instead of applying this new thinking to a wider range of products, Philips lost the initial momentum they had created. Their competitor  Sony was more successful at capturing this new design spirit, creating a line of products that lasted well over a decade around the ranges of My First Sony in bright primary children’s colors, with expressive interface elements, and the Sony Sport series based on highly visible yellow hues and a rugged look and feel, products that could withstand a rough handling. One of the main decisions was to sell these products outside the common consumer electronic retailers and place them in toy and sports stores, where they could be discovered within the context of their intended use.

My First Sony, mid-eighties

Philips soon followed suit, with the Moving Sounds line, in stark yellow with brightly coloured highlights, trying to catch up in the niche they had created in the first place, but failed to keep innovating. In the end Philips never really managed to sell these products outside the established consumer electronics markets.

A decade later, with the arrival of the tiny MP3 players, opportunities for expressive physical design shrunk together with the smaller spaces left for cover art, when music media moved in succession from vinyl sleeves to CD cases and almost vanished with various digital audio formats distributed over the internet. For many years diminishing form factors and the improved portability were sales features in their own right. But as mentioned in another post ,  once the design passes a critical minimal size, one has to design around the only requirement left, in this case that of the battery.

In recent years we see products converge at two ends of the design spectrum. On the one side we find the rationalized multi-functional devices, which, like a chameleon, will change their skin to adapt to whatever context they are required to operate in. On the other side we find highly expressive appliances, quite often devices with a singular functionality, providing an entertaining one-liner for marketeers to create advertisement buzz. One of the best recent examples in this category is the Sony Rolly.

Sony Rolly, MP3 robot, 2007

The Sony Rolly is a robotic loudspeaker accessory  that can play MP3 files, streams music wirelessly via bluetooth and can be programmed to react to the music with colour changing LEDs and motion created by its wheels and ear-like sound reflection flaps. These are the products that tell a simple story, display astonishing behaviours and are easy to sell … it’s oh so cute! But it’s hard on the shop floor; these products require constant attention from a sales assistant, even when they are placed under a transparent dome by the entrance to the shop. On the other hand, once you are shown a sample, their expressiveness is so infective, that they almost sell by themselves.

Things look different at the other side of the spectrum. These products have typically an almost square shape, with few physical controls and are defined by what occurs on their displays. When their displays are switched off, as it often happens on the sales floor, there is little story to tell. When the first digital photo frames appeared in the late nineties, till well into the first years of the popular Philips and Kodak digital picture frames, around 2005, it took retailers quite some time to realize that it would be a good idea, to take a sample of a frame out of the box and have it actually switched on in the shop. When we had the dwb pilot store in 2006, we were amazed to find most retailers across Europe to have hardly any working displays in their stores for customers to experience.

Things radically changed in 2007. When the iPhone arrived in the shops, over thirty five working units were placed on the display tables in the Apple flagship store on Regents street in London. People walked in to the Apple stores to just try the iPhone and form their own opinion. Customers came to see and touch the iPhones themselves, they were amazed by the physical behaviors build into the graphic user interface, sliding windows with a flip of their fingers, page movement mimicking physical inertia, tilting the device in all directions to move virtual glass marbles around the screen. Most mobile service providers at the time (an still these days), were showing only non-working phone dummies of different brands lined up along the walls of their high-street stores. I still have the feeling that retailers are almost afraid, apart from having their samples damaged, to show the awkward interfaces that contradict the hype created in the advertisements which promote new features in each successive new phone evolution.

By now many companies bring many, virtually similar products to the market. Switched off they are almost indistinguishable. They behave quite differently under the hood.

Apple iPhone, Samsung F700, LG Prada, RIM Blackberry Storm

Computing and display technologies have reached a level of maturity that almost any product can be created out of a choice of the same set of components. The cheapest and least risky option, offering most flexibility for consumer electronic manufacturers, is to produce different appliances assembled  from the same components. These products are only set to perform particular functions once they leave the manufacturing floor. Either the functionality is locked into the product’s firmware or the user can install the desired functionality at a later stage. The introduction of cheap precision touch displays and photo realistic graphical user interfaces has taken functional flexibility even a level further. These products are the result of so called rationalisation of the manufacturing process, wrapped in neutral, often black frames, holding an LCD or other display in one of the common formats. Software will make these devices behave in any way the market requires.

It’s similar to the eighties, when United Colors of Benetton created white jeans as blanc canvasses in the manufacturing process, which then were coloured only at the last moment, to suit the demands of a particular geographical market. In the same decennium was rather costly to adapt consumer electronic products to fit market requirements . An appliance platform, for example a portable cassette player like the Walkman, retained almost the same configuration of  internal components for a few years, whilst the outside was restyled on a regular basis like a dress following the fashion of the day. Tooling costs to create the molds for the outer shell and the cost of distribution, generally required sales guaranties of at least hundred thousand units in the low to mid price segments.

iPhone skins

Now the dress is the software that creates the look and feel of the application on the surface of the display and can be exchanged at a moments notice. Development, production and distribution costs have diminished and prices can now be calculated on very different business models and in direct response to market opportunities. Little work, apart from the detailing of the back of the display and the specification of materials, is left for traditional industrial designers to do.

Tilt, shake and other interface mechanisms have emerged out of the research labs, offering alternative physical experiences, instilling a whole new sense of excitement in designers. The Wii and iPhone, and before the iPod click wheel, have created a popular introduction to gesture based interfaces, demonstrating responsive feedback behaviours, applying “natural” physical effects like flipping and inertia, similar to the ones we are accustomed to in the real world, to improve usability expectations of an interface. Minority Report type interfaces, perhaps not the most desirable, which till recently have been confined to experimental prototypes in labs, are now appearing in professional applications. We are just waiting for a few more years until the prices become low enough, that we will see them feature in consumer interfaces. As new “cultures of use” emerge we are creating opportunities to form a language of gestures, similar to the conventions of “right-clicking” and standardised keyboard shortcuts. Currently designers are coming to grips with requirements to design affordances into these gesture based interfaces which indicate how to interact with them.

These products featuring behavioral interfaces wont sell in closed boxes on shelves in supermarkets. They may be demonstrated in videos, but in the end the most convincing way to be introduced to these products is to experience them for real. More about this in another post.

At DWB we are investigating how we can create innovative physical environments to discover, learn, subscribe to, and/or purchase these new breeds of software dresses and behaviour based products. We are interested to create retail conditions in which innovative physical consumer electronics type devices can be introduced to potential customers. Conditions that normally cant be found in large “pile’em high, sell’em cheap” type retail environments.

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The state we are in …

It’s time for new “features” ?

Products that connect the physical with the social on the web, create innovative opportunities for retail.A new type of product has emerged in recent years, starting with the introduction of Nike+ together with Apple iPods in 2006. These devices link to the accumulated statistics of an activity over time and share these with an online community.

You may call them mash-up devices, taking a range of sensors, attaching meaning to the extracted data and linking these to other information and more importantly to various social networks based around shared interests. Some call them social objects.

Interestingly these physical linked devices are initiators for commercial transactions, partly based on social pressure, recommending products and services based on the patterns gained from the user’s activities.

Here are some examples:

 Nike+ and iPod

nikeplus.nike.com

I recently had the pleasure of meeting Ray Riley, one of the driving forces behind the project. What Nike Plus did is to combine insights from early adopters who used for example GPS technology and heart rate monitor, to create their own tracking tools to log distances and speed during excercise. Nike used these insights to develop a low cost accelerometer and paired these with an established and ubiquitous device, the iPod, already used by many athletes, to facilitate data exchange with computers and an online service. It allows users to visualize their progress and set new targets. On the back of it, this application establishes a continuous relationship with the Nike brand. It offers regular updates on products for runners including sports gear and nutritional additives like vitamins depending on your workout requirements. In a few years they established a huge community of runners, encouraging each other and competing in virtual sports events around the globe. 

Snifftag 

www.sniftag.com

So around comes a company that uses a similar accelerometer, attaches it to a dog’s collar and then adds, in their words a low powered active RFIDs with a proprietary radio protocol, to communicate with other Tags. When two dogs wearing SNIF Tags are within close range of one another, the tags automatically swap unique identifying codes, recording the encounter and relaying it to a server when the dogs return to a connected SNIF Base Station.

The company has a great strap line “Tails told, Friends Made” ; “Monitor your dog’s activity while you’re away. Keep in touch with his friends and yours. Share helpful information and pet tips online. And get connected to your community. It’s hi-tech, it’s hi-style, easy to use, and completely customizable.”

You can guess where this is going. Combining the activity level with the pedigree of your do, recommendations will be offered about how much and what to feed your dog. The dog colar becomes a innovative shopping basket in disguise 

This is more sophisticated than the way we currently exchange business cards in the corporate world. Where is the version that clips on to a tie or cufflink or goes well with a ladies handbag?

Actually this has already been applied on a mass scale  …

Clickables: Walt Disney Pixie Hollow, Fairies friendship charms 

disney.go.com/fairies/  Clickables™ technology

Roll over princesses and princes, if you have not noticed it hase been all things fairies for the past few years in the world of Disney. With this new direction came a whole set of technologies linking the virtual and the real together in a continuous social network. Disney extended play in the virtual world of Pixie Hollow.

Connecting Pixie Hollow to the real world are Clickables. Pixie Dust eJewelry Collection includes a magical jewelry box, a charm bracelet and exclusive Disney Fairies charms powered by Clickables™ RFID technology. When a girl touches a charm to the center of her jewelry box, which is connected via a pc to the internet, Pixie Dust sparkles and music plays as the jewelry box comes alive. Each charm unlocks a unique fairy gift at www.PixieHollow.com, including exclusive clothing, and décor for their online avatar. The friendship eCharm bracelet is connected to an online avatar that lives in Pixie Hollow land. A profile of the avatar, messages and gifts can be stored offline on the bracelet and can be shared with others just by touching the bracelets together. They glow, and the transaction is complete. Very magical indeed. 

All this includes a virtual currency, virtual gifts and real jewellery and other merchandise. It comes with a handheld electronic game. Points earned in the offline game can be turned to Tink Points for buying virtual goods or completing quests. It all sumes up to an integrated retail strategy, created by a team selected from marketing, technology, design, even finance and lawyers, coming together to form a holistic vision and unified implementation.

You can expect this technology to roll out across different themes and Disney brands in the near future.

Webkinz

www.webkinz.com

A lower tech predecesor is the popular Webkinz. Using cuddly soft animal toys to represent a link to a virtual world.  Each toy comes with an unique 8 character ID allowing users to access the virtual alter ego of their stuffed pet and start playing in an online world.

A summary from wikipedia : Each Webkinz stuffed animal and Webkinz accessory comes with an 8-character code. By registering this secret code on the Webkinz website, the customer “adopts” his pet in the virtual Webkinz World. The Webkinz World is an online play area with its own economy. The user receives money, called KinzCash, by adopting new pets, playing online games, answering general knowledge questions, and through daily activities. With each Webkinz toy purchased, more money, rooms, and items are added to the user’s account. Accounts expire within one year, unless another Webkinz animal is purchased.

Users can spend their KinzCash at what is called the W Shop, where they can purchase food and clothing for their pet, items for their pet’s room or to build additional rooms onto their house, or outdoors areas etc. Users can decorate a room for their pet with pre-made themes, or mix and match their own furniture.

The online world also contains many rare or exclusive items. Some of these items are obtained by registering other Webkinz accessories purchased in the real world. Each type of pet gets a special food available exclusively for them. Also, a Pet of the Month is announced at the beginning of each month. If a person registers the announced pet in that month, they will receive other exclusive items. 

This fascinating approach is the basis for many similar formulas, creating a continuous set of incentives to engage in a virtual economy and linking it back into real world transactions.

Barcode Battlers 

Barcode Battlers wikipedia

It all reminds me vaguely of the pioneers of it all; Barcode Battlers. A Tamagochi type game launched in Japan in the early nineties and was based on in-game strength or energy for each of the battling characters derived from scanning barcodes found on real consumer goods. In fact you battled one barcode against another. The game was so popular that when some barcodes of obscure products were found to be very powerful these products instantly sold out in the supermarkets. Thinking of it,  it makes for an interesting retail strategy ;-)

eco:Drive Fiat 

Using sensors to measure your impact on the environment and helping you to adapt your behaviour according to insights into your usage patterns is another big area for innovation.

www.fiat.com/ecodrive/ 

eco:Drive works using Fiat’s Blue&Me entertainment and communications system. Plugging any USB key into the Blue&Me port allows eco:Drive to record detailed information about the vehicle’s efficiency and your driving style during a journey. The information is tranfered by plugging the USB key into your computer when you’ve finished driving.

Users can analyse fuel consumption and emissions for each journey made, and receive advice on how to drive more efficiently, reducing their impact on the environment. eco:Drive will give you a score out of 100 – your eco:Index – to show how efficiently you have driven, based on your acceleration, deceleration, gear changes and speed.  A series of tutorials will help you to improve your score, showing you how to perfect your driving using detailed information from your own journeys.

Drivers who start eco:Driving can expect to improve their driving efficiency by up to 15 per cent. That means a 15 per cent reduction in CO₂ emissions and in fuel costs. Fiat has also created ecoVille, a unique online community populated by all eco:Drivers from around the world. Users will be able to share tips, watch the community grow, and see just how much CO₂ they are all saving together.

ecoDrive is an evolution of the Blue&Me platform, developed by Fiat Group Automobiles in conjunction with Microsoft and first installed in the Fiat 500 and Grande Punto. The system is open for feedback from users for future improvements. Most importantly it creates a really useful, continuous relationship between the customer and the Fiat brand. More sincere than any customer relationship message received as regular email newsletter ever can do.

Wattson by DIY Kyoto

This same principle can be applied to your home. The Wattson launched by DIY Kyoto in 2006, helps you to investigate your electricity usage in your home down to cost of operating individual appliances.

www.diykyoto.com

DIY Kyoto’s aim was to develop a product that although it fulfills a very technical function, looks and behaves like a stylish interactive piece of furniture that lives well in the surroundings of your domestic environment; very different from the engineered electric meter you would expect. As such it has become one of the first high tech products that is being sold in interior and design shops. It tells a story about being actively engaged with managing your carbon footprint.

When we first showed one of the initial production models of the Wattson as part of the dwb showroom collections, we realized that it not only works to convince people to save energy, but in fact that it could very well serve eco-aware home owners, who already would be applying energy saving strategies, to show-off  their eco-credentials by demonstrating the efficiency of the appliances, solar collectors, double glazing etc they had invested in.

EasyBloom 

Put together a temperature, light and humidity sensor, combine it with a data analyzing algorithm first used on a Mars mission, package it in the suggestive form of a flower and you get easyBloom. Place the device for a few days in the soil in your garden, in a location where you would like to grow some plants, and once connected back to the internet with its integrated usb plug, it will inform you about the type of plants recommended for the conditions found at that spot. 

www.easybloom.com

This is seriously clever design. Not only does this little appliance help you to remove anxiety about what plants to choose, but it actually links you directly to websites of garden centres and at a later stage even supplies you with information about fertilizers and where to order them. Now this is what we mean with innovative retail solutions; it’s a contemporary update to the Gillette model: give away the handle almost for free and people will come back to purchase the razor blades. It is a high tech product that lives easily in the surroundings of a garden center or a flower shop. It’s design makes a perfect lifestyle gift. 

There are many more examples appearing each week. For me these type of products represent real opportunities for design and will lead to new design languages.

So where is this leading in the future, it’s easy to start brainstorming:

… Musical instruments that sense skill and style and link you to similarly skilled musicians within your locality and offer music lessons or instrument upgrades.

… Houses that compete on their eco-credentials with others within the community, based on a  handicap level, similar to a handicap levels applied to sports like  Golf or Sailing. The handicap could be calculated on the type of building, the amount of rooms, the volume, type and amount or surface area of windows, type of heating etc.

… Mobile devices that sense your location and activity and link you to … (there are many of these)

… Soon we are likely to see all kind of iPhone accessoires emerge, similar to the current iPhone App for Nike+. This will be sensors and devices that send all kinds of messages to be displayed in a lifestyle management type dashboard app on your iPhone.

So why not try something yourself. Some tools to get you started are available at …

Pachube

 Usman Haque   started an online project that encourages people to make their data from all kinds of sensors, spread around the world, publicly available and stimulate all kinds of mesh-ups and he hopes will lead to new applications and services.

www.pachube.com  

Pachube is a service that enables you to connect, tag and share real time sensor data from objects, devices, buildings and environments around the world. The key aim is to facilitate interaction between remote environments, both physical and virtual.

Both landline and mobile networks have already been carrying for the past decennia, invisible to the public eye, an enormous amount of data from commercial sensors and controllers like security and farming applications. Only now they become affordable and accessible and we start experiencing these on a personal and consumer level. These are exciting times and I am looking forward to be surprised by new types of products and services to emerge.