Battling the Retail Apocalypse: What Worked and What Didn't

As the 2010s come to a close, BoF reflects on how the past decade transformed the fashion industry — and the culture at large. Explore our insights here.

NEW YORK, United States — In 2014, Pepper, a four-foot-tall robot with opposable thumbs, became a viral sensation after being unveiled by its creator, SoftBank Robotics. The humanoid machine could play music, chat with customers and answer basic questions about products.

At the time, SoftBank Robotics predicted Pepper would quickly become a fixture of global retail. A number of stores and brands tried it, including Uniqlo and specialty shops around the world. But the machine is rarely encountered by shoppers today beyond a handful of stores in Asia.

Brands have rolled out "innovation" after "innovation" as they navigate the so-called retail apocalypse, though few are as adorable as Pepper. Most, however, have failed to gain traction beyond pilot trials that generate a brief media blitz. Meanwhile, tens of thousands of stores have shuttered in the past few years as consumer spending shifted online and brick-and-mortar bound retailers struggled to adapt.

In addition to faddish technology like helper robots and magic mirrors, more enduring concepts — from omnichannel logistics to experiential retail — have reshaped how retail works.

In our latest series of stories looking back on the 2010s, BoF examines the gimmicks that backfired and the modifications that stuck.

The Concept: Chatbots

The Reality: Pepper was hardly the only viral retail tech spectacle to fizzle out in recent years. Many retailers adopted chatbots in 2016, followed swiftly by customer complaints about confusing and needlessly complicated interactions with AI-powered messenger bots. In 2017, Facebook scaled back on its chatbot efforts, with the technology reportedly failing to resolve 70 percent of requests. Many retailers abandoned the technology, including the direct-to-consumer brand Everlane.

In an email to BoF, Everlane said only a "very small percentage of customers" were using their Facebook-powered chatbots, so the brand decided to invest in other shopping conveniences instead, such as an integrated point-of-sale system that allows shoppers to check out with their in-store and online purchases in the same transaction, with free two-day shipping for the online orders.

The Concept: Virtual and Augmented Reality

The Reality: Around the same time chatbots rose to infamy, virtual and augmented reality became a hot attraction at retail tech conferences. J.C. Penney was an early adopter, unveiling a 2015 holiday campaign that attempted to lure shoppers into stores with Oculus headsets that delivered a virtual North Pole experience.

But the technology hasn't proven to be a major draw for the department store, which has seen its stock lose over 80 percent its value in the past four years. Still, brands continue to experiment. Earlier this month, Canada Goose opened a store in Toronto tricked out with multiple reality-bending experiences.

The Concept: Magic Mirrors

The Reality: Brands like Rebecca Minkoff and Ralph Lauren invested in so-called magic mirrors that assisted shoppers in fitting rooms. By tapping on a screen that doubles as a mirror, shoppers can call for a different size or colour, and an iPad-wielding sales associate will deliver the items straight to the door.

Tech for tech's sake has not worked.

But few retailers followed their lead. The mirrors were never deployed beyond Rebecca Minkoff's three stores in the US (out of 15 international locations) and are no longer in use today. Much like with the chatbots, shoppers still want a human to help them.

“Tech for tech’s sake has not worked,” said Kelsey Groome, managing director at retail consultancy Traub. “If it doesn’t work seamlessly, it could add more trouble for the consumer. When it reduces friction and the consumer has an easier path to purchase or engagement, that’s where tech is powerful.”

The Concept: In-Store Surveillance

The Reality: Stores have long used cameras to prevent shoplifting. Today, it doesn't stop there: retailers are using dozens of new technologies to track their shoppers' every move inside — and outside — stores. Bluetooth beacons, for instance, allow retailers to be notified once a shopper enters the store and to target that shopper with specific promotions based on where they browse. Meanwhile, companies including Saks Fifth Avenue and Adidas have installed so-called "smart cameras" inside their stores, which track customer movement and can estimate a shopper's age, sex and other personal information. Retailers can use the data to make decisions about what products to stock or how many people to hire to operate the store.

Data goldmine or not, early adopters of these tracking innovations have faced considerable backlash. Data collectors may say the information they glean is anonymous, but few can guarantee how it will be deployed over time. Two shopping malls in Canada, for example, began piloting facial recognition technology without alerting their shoppers. When they found out, the malls were pressured to end the trial.

The best kind of technology fades into the background.

So far, there are few regulations over retail data collection. This enables retailers and their technology partners to continue pushing the boundaries of customer surveillance. But consumers will continue to raise privacy concerns over the use of their information and shopping habits.

"Laws will be broken, rights will be violated, cases will be litigated and, in the end, as we always do, we'll adapt," wrote BoF contributor Doug Stephens.

The Concept: Supply Chain Automation

The Reality: Uniqlo has shifted its focus away from flashy, consumer-facing AI and automation, deploying the technologies in its supply chain instead. The Japanese retailer, under parent company Fast Retailing, said last year it reduced staff at one warehouse by 90 percent, replacing them with a billion-dollar automated system. Major retailers like Amazon and Walmart have also implemented automation into their supply chains, using robots to transport packages within their warehouses and fulfilment centres. Quiet Logistics, the company that powers the e-commerce operations for a number of direct-to-consumer brands, says that its army of software-controlled robots is 400 to 500 percent more efficient than a traditional manual warehouse.

"The best kind of technology fades into the background," said Oliver Chen, an analyst at Cowen & Co. "The future of retail technology is about driving down the boring stuff so you can invest in other things. The best technology at this point is supply chain driven."

The Concept: Going Omnichannel

The Reality: For most of the decade, retailers were obsessed with inventing the ultimate "omnichannel" model — arguably the biggest buzzword to come out of 21st century retail. Initially, omnichannel referred to a brick-and-mortar store adding an online sales operation. Many luxury brands that once feared e-commerce would diminish their aura of exclusivity, eventually released product online as well. Today, Chanel remains one of the few holdouts.

But building an e-commerce operation was just the beginning. Direct-to-consumer start-ups excelled at engaging consumers not only through email and social media but, increasingly, through brick-and-mortar storefronts too.

Direct-to-consumer darlings like Warby Parker and Everlane opened pop-ups in major cities, using physical touchpoints as a way for shoppers to interact with the brands and their products. It didn't matter if the transaction happened at the store. Instead, these brands were "channel-agnostic," a refinement of the omnichannel concept that placed the same value on online and offline purchases — even if it costs more for a retailer to sell online because of logistical costs.

The customer is really in charge, and the customer dictates how they're going to buy.

Many consumers no longer distinguish between shopping online and offline. They may start searching for a product online, try it on in a store, then buy it from their phone after they return home. In 2019, Nordstrom stopped reporting the performance of stores open at least one year, rejecting a gold standard for measuring a retailer's health.

“The customer is really in charge, and the customer dictates how they’re going to buy," said retail adviser Robert Burke.

The Concept: Click-and-Collect

The Reality: The channel-agnostic approach helps explain the increase in consumers buying online and picking up in a store, which is often called "click and collect" in the UK. Bloomingdale's, for instance, allows shoppers to filter online products by their availability for same-day delivery or in-store pickup so they can pick something out online and pick it up hours later.

Enabling click-and-collect often requires upgrading technology, from inventory management to order fulfilment. Zara is rolling out a platform to track its garments with radio frequency identification technology, which updates the availability of each item in any given store and on the website. This system grants Zara the ability to use its stores as storage and distribution centres for online orders, which speeds up deliveries as well.

The Concept: Experiential Retail

The Reality: While online shopping continued to accelerate, retailers scrambled to maintain foot traffic in physical stores, concocting elaborate installations, backdrops and activities to lure shoppers — and convince them to post about their experience on Instagram. Gap's Athleta offers fitness classes. Tiffany & Co. opened a cafe decked out in its signature blue. Makeup brand Winky Lux opened a pop-up mini-museum where shoppers could buy lip balm or snap a photo in one of seven Instagram-friendly rooms.

It's not about a flower wall. It's not about high tech interfacing.

But experience alone won't translate to sales. Tiffany's Blue Box Cafe, after all, has not fixed its problem of lagging sales among young consumers in the West. For many retailers, in-store experiences must be combined with services that make it easier to purchase.

“Consumers obviously want an experience, but that’s not so easily defined,” Burke said. “It’s not about a flower wall. It’s not about high tech interfacing. People want a human interaction, they want a human shopping environment, and they want to feel special.”