The Digital Retail Theater: Shopping’s Future To thrive in a digital world marked by heightened consumer expectations for hyper-personalization and instant gratification, retailers are experimenting with augmented reality, virtual reality, 3-D modeling and other related technologies. Our digital retail theater (DRT) concept can stoke brand loyalty and create more immersive, unique and emotionally engaging/rewarding shopping experiences.

Executive SummaryDigital technology advancements have driven “e-shopping” to a new level, enabling consumers to more effectively interact with brands, search for information, try products, communicate with other customers and, perhaps most impor-tantly, to buy in real time. The advent of mobile apps and related technologies has turbocharged e-tail globally. As a result, global e-commerce will further increase by 22.7% year over year in 2016, to $2 trillion.1

As the digital world turns, online retailers are aggressively moving to increase their overall market share, while physical retailers try to hold their ground and stay viable. To achieve these objectives, both types of retailers are focused on experience-based value delivery for customer engagement and retention. A recent McKinsey & Company2 study notes: “Improved customer journeys has the potential not only to increase customer satisfaction by 20% but also to lift

revenue of retailers by up to 15% while lowering the cost of serving customers by as much as 20%.”

The dichotomy between online and physical shopping experiences is clear. Physical retailers provide customers instant gratification and shopping thrills, but restrict them to limited product options and expose customers to chaos and shopping fatigue. While online retailers focus more on the convenience of unlimited product choices, they lack the tangible excitement of hands-on, touch and feel, social shopping and instant gratification.

The shortcomings of both physical and online retailing is slowly being addressed by technolo-gies such as augmented reality (AR), virtual reality (VR), 3-D modeling and app-based mobile shopping. These technologies hold the potential to enable online and physical retailers to bridge the gap and merge these two modes of selling

cognizant 20-20 insights | july 2016

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Figure 1

Physical World Retail DRT: A Visual Representation

into a single, integrated platform. Built upon this technology stack, we have proposed a concept called the “digital retail theater” (DRT), which we believe offers the possibility of delivering unique, personalized and emotionally engaging shopping experiences to customers of both physical and online retailing worlds.

Digital Retail Theater: A ConceptTraditional retail theaters introduced visually stimulating and interactive shopping experiences to in-store customers. DRT leapfrogs the tradi-tional retail theater by embracing new digital technologies that are socially engaging and deliver more immersive and personally gratifying shopping experiences that address the needs of both in-store and online customers.

DRT conceptualizes a virtually simulated and interactive platform, powered by AR, VR and advanced 3-D technologies. It enables online retailers to replicate the thrills of an in-store experience while augmenting physical retail stores with the convenience of an integrated, in-house virtual platform to drive an enhanced social shopping experience.

Whether sitting at home or in a store, customers can create an avatar (virtual self) using DRT. For example, the avatar can walk into a virtual retail store, personalize products per a customer’s pref-erences, try them on and get live assistance from a salesman. Customers can interact with peers in their inner social circles to get product recom-mendations, pricing advice and social confirma-tion on their purchase decision. In our view, highly

VIRTUAL PRODUCTS ZONE EXPERIENCE ZONE VIRTUAL SIMULATION OF RETAIL THEATER

PHYSICAL PRODUCTS ON DISPLAY PROTOTYPING ZONE

Customers can scan the tags of physical merchandise and use the experience zone to virtually try them

on themselves.

Customers can customize the products (shape, size, design, colors, fit, etc.) according

to their needs.

Virtual products zone provides infinite product shelf to retailers and convenience

and variety to customers.

Without using trial rooms, customer can conveniently try on

multiple products virtually.

Virtual simulation provides a stimulating and engaging experience of the entire

retail store to customers.

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Figure 2

Online Retail DRT Implementation

Use any of your mobile devices for entering into DRT.

Customer can digitally checkout the selected

product.

Enter DRT and create your avatar.

The selected product can be shared on social network for feedback.

The avatar can browse through the product options from the catalogue and can try them on themselves.

Use your avatar to walk into the virtual retail shop and browse through the

whole product assortment.

Customer can digitally checkout the selected product.

Customers can share try-on images to their friend circle for social validation and feedback.

With the use of AR, DRT offers a virtual try-on option for the selected products.

Open DRT (website or app) on the laptop/handheld device.

DRT uses the device camera to take anthropometric measurement and stores it for your shopping.

Product catalogue displayed to the customers to select the style and color.

VIRTUAL REALITY

AUGMENTED REALITY

gratifying social shopping helps to generate more uniquely fulfilling shopping experiences.

Interestingly, DRT is closer than most observers think. In fact, many retailers are already investing in the emerging technologies that are funda-

mental DRT building blocks. A deep dive into the available technologies and supporting infrastruc-ture reveals the proximity of the emerging DRT technology stack and its application (see Figures 1, previous page, and 2).

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The Digital Retail Theater’s Technology LandscapeOver the past few years, technologies centered on mobile computing, wearable devices and supporting infrastructure have experienced exponential growth (a CAGR of ~36% for smart-phones for the period 2007 to 20153 and ~31% for wearable devices, from 2013 to 20154, based on number of units shipped). This has propelled developments around AR, VR and 3-D avatar technologies. Retailers are experimenting with these technologies by creating either virtual stores or digitizing the trial-room functional-ity to deliver a better and enhanced shopping experience to their customers.

However, these experiments and developments tend to occur in silos. By taking a more integrated approach, retailers will be able to provide a more differentiated and enriching customer experience. Our DRT concept is premised on applying these technologies in a way that delivers an integrated, seamless, interactive and socially-connected buying experience.

As illustrated in Figure 3, the digital technology landscape already exists to support the building blocks of the DRT concept. This foundation provides the horsepower to enable heavy data processing and imagery.

Through interlinking of technologies, DRT can be built to enable 3-D avatar models embedded within an augmented reality experience, creating an online platform for in-store shopping. Similarly, with a combina-tion of virtual reality and a 3-D avatar, physical retailers can create an online replica of their stores to offer convenience shopping with a wider product catalogue.

As the foundational technologies percolate, some retailers have built stand-alone prototypes that hint at DRT’s near-term promise. For example:

• Ted Baker,5 a British luxury clothing retailer, is providing a virtual platform for its customers to use as they move around the store, examine various product options, consider feedback and add product to their cart. Its virtual store also enables customers to share products with friends.

• A Tommy Hilfiger6 outlet on Fifth Avenue in Manhattan offers shoppers “the best seats in the house” for the New York Fall Fashion Show, delivering a 360-degree view for those customers using Samsung GearVR headsets.

• The IKEA7 VR Experience brings the user a virtual IKEA kitchen in real-world size. Using an HTC Vive headset, consumers can use the app to explore and customize kitchens

Figure 3

Digital Retail Theater: Technology Landscape

Technology Pillars

(Devices and Algorithms)

Carrier of Technology

TECHNOLOGY ENABLERS

Tablet Computing

OpticalProjection Systems

Eye Tap/LaserEye Tap

Six Degrees ofFreedom (6DOF)

Optical Sensors

Virtual RetinalDisplay (VRD)

Accelerometer –Gyroscope

Sensors Embedded in Peripheral Device

Simultaneous Localization

and Mapping (SLAM)

Head-Up Display (HUD)

Speech RecognitionSystems

Augmented RealityMarkup Language

Head MountedDevices (HMD)

Smartphone

Digital Camera

Gesture RecognitionSystems

ImageRegistration

MEMS

MobileComputing Devices

Head Mountedand Eye Gears

Tracking

Input Devices

Algorithms

4G/LTE Wi-Max High Speed Broadband

(VDSL and VHDSL)

ONLINE AND PHYSICAL RETAILERS BUYER

Augmented RealityVirtual Reality

Avatar3-D Modeling

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according to their preferences.

• Lenskart, an online eyewear retailer, and Ray Ban8, a maker of eyeglasses, are employing AR to allow customers to virtually try multiple frames and glasses before buying them.

• Using VR, Royal Caribbean9 is changing the way people cruise. Its technology tour allows customers a view into the world’s most advanced ship and access to virtually every part of the cruise experience. With just a few clicks, viewers can travel across the zip lines, see acrobats training in the Aqua-Theater and browse some of ship’s unique dining experiences.

• Aditya Birla10 group’s fashion portal abof.com has introduced a new 3-D trial room. It allows users to create their 3-D avatars resembling their body type and try on various outfits.

These examples offer solid proof of DRT’s potential to deliver value to both customers and retailers. What follows is a deeper dive into the key benefits that make DRT a differentiated offering.

Benefits of Digital Retail TheaterRetailers are strategically shifting their focus to continuously improve customer experience to differentiate and gain competitive advantage.

DRT would enable retailers to stand out from the competition by aligning their unique selling propositions (USPs) according to the customer’s buying preferences. At the same time, it will offer and expose customers to new and better shopping experiences each time they consider buying a product. DRT’s benefits can be broken down by retailer and consumer advantages (see Figure 5 next page). Figures 6 (page 7) and 7 (page 8) offer case illustrations that reveal how DRT could potentially enhance online and physical world shopping.

Retailer Benefits

• Customer loyalty: A visually stimulating, per-sonalized shopping journey and an enduring customer/brand experience would increase a retailer’s product mindshare and increase brand recallability. This is substantiated by a Monetate study11 which revealed that “40% of consumers buy more from retailers who personalize the shopping experience across channels.”

• Customer-driven innovation: DRT simplifies participation of customers in new product design, prototyping and pilot testing. Retailers can cost-effectively experiment with multiple product and store concepts in a shorter time span. It also further enhances

Figure 4

The Attributes of a Digital Retail Theater

Augmented Reality

• Combines traditional retail experience and e-commerce.

• Provides better and quicker product try and buy options.

• Shortened product buying cycle.

• Improves conversion rates and reduces returns for products.

Virtual Reality

• Enhanced replicated walking into the store experience.

• Provides a closer real world “product,” “services” and “place” experience in a digital realm.

• Enables new product and new in-store launches.

3-D Avatar Modelling

• Can be integrated with multiple technologies like AR/VR.

• Seamless and integrated shopping: a single Avatar model can be used across the whole store.

• Provides interactive, assisted and social shopping experience.

Ph

ysical Retailers

Online Retail Theater

On

line

and

Ph

ysic

al R

etai

lers

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the existing concept selection process by helping retailers and marketers to track and analyze customer kinesis at various touch points. Along such lines, P&G12 engages consumers through a digital “virtual wall’ for product testing and prototyping.

• Reducing sales leakage: One of the DRT’s key features is to provide product volume visibility at any of the connected stores. Customers can browse product through a virtual store at one location and order a product which is available at any other store. Retailers don’t have to worry about lost sales due to product stock-outs.

• Efficient distribution: DRT would enable optimized supply chain planning, reducing dependency on the last mile product distri-bution challenges. With its ability to allow users to view products beyond the box, DRT can boost conversion ratios while minimizing product returns, resulting in reduced reverse logistics costs.

Customer Benefits

• Rationalized product selection: DRT facili-tates easy browsing of digital and interactive product catalogues. Customers can view and try products on themselves with the use of 3-D and AR anthropometric techniques (i.e., the scientific study of the measurements and pro-portions of the human body), thus resulting in

right product selection and reducing impulse purchases.

• Social confirmation and appreciation: Using DRT, customers can engage and interact with people in their trusted circle for product selection and purchase. It helps customers obtain an instant second opinion and confir-mation on product short-lists. Additionally, they can also share their try-on images to get social appreciation at the time of purchase.

• Immersive shopping experience: DRT orchestrates personalized and interactive retail ambience, virtually created aisles and 3-D product displays for immersive and multi-sensory shopping experiences. DRT iteratively adapts itself to its customer’s buying behavior and market trends to maintain freshness and “wow factor” in their shopping experience.

Looking ForwardClearly, the digital economy is shifting the balance of power from retailer to consumer. Consumers are easily distracted by the endless array of online shopping options and spoiled by e-tailing’s seemingly unlimited choices. They expect more engagement and entertain-ment throughout the entire shopping journey. They are not just seeking products, but want a memorable shopping experience. With the decline in in-store customers’ footfalls, and

Figure 5

DRT at Work

DIGITAL RETAIL THEATER

Gratifying Shopping Experience

Social Confirmation and Appreciation

RationalizedProduct Selection

Efficient Distribution

ReducesSales Leakages

Customer Driven Innovation

Customer Loyalty

CU

ST

OM

ER

S

RE

TA

ILE

RS

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Figure 6

DRT in the Physical World: An Illustrative View

Jennifer - A millennial customer is based out of Boston.

Jennifer decides to visit the same brand’s store located in Boston.

Inside the store, she finds an interactive console that continuously displays different dresses that were worn in the fashion show.

She is in search of a particular dress that was recently displayed in one of the brand’s fashion show event in London.

The console helps her identify and select different apparels that the models were wearing in the live fashion show.

She creates her own avatar and tries different varieties of apparel on it.

Console also has a virtual salesperson with whom Jennifer can interact and decide on apparel that would look good on her.

With the ability to instantly identify the dresses that looks good on her,Jennifer makes multiple other purchases that would complement her dress.

The console also gives her an option to share her final purchase with her friends through multiple social media channels.

Jennifer’s ability to instantly buy the items she had in mind, and to see how she looks in them via the interactive console was a new and unique experience for her. She orders the items, which will be shipped to her home from the store.

increased competition among online retail players, retailers must reposition their stores as destinations that mix product assortment with entertainment experiences to attract customers. As a result, they have to redefine the way they engage with their customers.

DRT empowers retailers to design unique experi-ences for customers by aligning their USPs with customers’ shopping preferences. Retailers can better understand their customers’ wants by using the data collected at various DRT inter-

action touch points. This would help them to provide a hyper-personalized shopping envi-ronment. At the same time, via DRT customers can maximize their return on shopping efforts through right product selection. They can enhance and add joy to the shopping experience by engaging with their inner social circle and receiving instant appreciation on their purchase decisions. In totality, DRT offers a mutually rewarding selling and buying experience to both retailers and customers.

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Figure 7

DRT at an Online Store: An Illustrative View

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Paul receives a product promotion link.

The avatar can try on these clothes virtually and show the user how they would look on them.

To get more information on the product, Paul interacts with a virtual salesperson (through live chat, IM, etc.).

Paul makes the purchase and chooses among multiple delivery options: COD, credit,online wallet

Paul can also share his purchase on multiple social media and get instant gratification.

Each avatar can browse the virtual mall and interacts with each other (just how they would in the real world).

Everyone can customize their avatars and the theme of the virtual mall.

Paul shares the link with his friends and receives their feedback on the product.

The link in the message takes everybody to a virtual store located in a virtual mall and each one has an Avatar for them.

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Footnotes1 Worldwide retail ecommerce sales: Emarketer’s updated estimates and Forecast through 2019,” Dec

2015, http://www.emarketer.com/public_media/docs/eMarketer_eTailWest2016_Worldwide_ECommerce_Report.pdf.

2 “The three Cs of customer satisfaction: Consistency, consistency, consistency,” March 2014, http://www.mckinsey.com/insights/consumer_and_retail/the_three_cs_of_customer_satisfaction_consis-tency_consistency_consistency.

3 “Number of smartphones sold to end users worldwide from 2007 to 2015 (in million units),” Statista, 2016, http://www.statista.com/statistics/263437/global-smartphone-sales-to-end-users-since-2007/.

4 “Number of wearable devices sold to end users worldwide from 2013 to 2015; forecasted till 2018 (in million units),” Statista, 2016, http://www.statista.com/statistics/302500/wearable-technology-worldwide-unit-shipments/.

5 Ted Baker and Moore, 2016, http://virtualstore.tedbaker.com/ted-baker-uk/uk/moore/#scene-000&h=37&v=-8.7&f=120.

6 “Hands-On With Tommy Hilfiger’s In-Store Virtual Reality Catwalk Experience,” October 2015, http://www.forbes.com/sites/rachelarthur/2015/10/25/hands-on-with-tommy-hilfigers-in-store-virtual-reality-catwalk-experience/#37bdcca3128a.

7 “IKEA Launches Pilot Virtual Reality (VR) Kitchen Experience for HTC Vive on Steam,” April 2016, http://www.ikea.com/us/en/about_ikea/newsitem/040516_Virtual-Reality.

8 “The ultimate augmented reality experience which lets you virtually try-on the latest Ray-Ban styles,” 2016, http://www.ray-ban.com/india/virtual-mirror.

9 “Royal Carribean,” http://www.royalcaribbean.co.uk/google-street-view-cruise-ship/.

10 Aditya Birla’s abof.com launches 3D trial room for online shoppers,” November 2015, http://indianexpress.com/article/technology/tech-news-technology/aditya-birlas-abof-com-launches-3d-trial-room-for-online-shoppers/.

11 “The Tipping Point for Personalized Website Experiences,” 2016, http://www.monetate.com/blog/the-tip-ping-point-for-personalized-website-experiences/.

12 “Inside P&G’s digital revolution,” November 2011, McKinsey, http://www.mckinsey.com/industries/consum-er-packaged-goods/our-insights/inside-p-and-ampgs-digital-revolution.

References

• “In the World of Customer Experience Management,” July 2015, http://www.firstsource.com/blog/trend-ing-now-world-customer-experience-management/.

• “Try Clothes On A 3D Avatar Of Yourself,” August 2014, http://techcrunch.com/2014/08/04/fitle-will-let-you-try-clothes-on-a-3d-avatar-of-yourself/.

• “The Next Thing In Online Shopping? Avatars, Say Qvit.com Founders,” September 2013, http://www.huff-ingtonpost.com/2013/09/30/avatars-online-shopping_n_3982675.html?ir=India&adsSiteOverride=in.

• “Retail’s new reality: Invisible shopping centers and virtual assistants,” April 2015, http://www.cnbc.com/2015/04/24/retails-new-reality-four-ways-technology-can-boost-sales-commentary.html.

• “Westfield and Inition use Oculus Rift virtual reality to showcase future of retail,” April 2015, http://www.ibtimes.co.uk/london-westfield-inition-uses-oculus-rift-virtual-reality-showcase-future-retail-1494812#.

• “3-D Tech Lets Online Shoppers ‘Try on’ Clothes,” May 2013, http://www.entrepreneur.com/article/226091.

• Paul Hemp, “Avatar-Based Marketing,” Harvard Business Review, June 2006, https://hbr.org/2006/06/avatar-based-marketing.

• “Go inside Abbey Road Studios with Google’s virtual tour,” April 2015, http://www.factmag.com/2015/04/15/go-inside-abbey-road-studios-google-virtual-tour/.

• “Korean retailer Shinsegae creates 3D avatar of you in store,” http://retail-innovation.com/korean-retail-er-shnsegaes-creates-3d-avatar-of-you-in-store/.

• “Burberry unveils ‘Retail Theater’ concept in flagship stores,” September 2015, http://www.utalkmarket-ing.com/Pages/Article.aspx?ArticleID=18855.

About Cognizant

Cognizant (NASDAQ: CTSH) is a leading provider of information technology, consulting, and business process services, dedicated to helping the world’s leading companies build stronger businesses. Head-quartered in Teaneck, New Jersey (U.S.), Cognizant combines a passion for client satisfaction, technol-ogy innovation, deep industry and business process expertise, and a global, collaborative workforce that embodies the future of work. With over 100 development and delivery centers worldwide and approxi-mately 233,000 employees as of March 31, 2016, Cognizant is a member of the NASDAQ-100, the S&P 500, the Forbes Global 2000, and the Fortune 500 and is ranked among the top performing and fastest growing companies in the world. Visit us online at www.cognizant.com or follow us on Twitter: Cognizant.

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About the AuthorsAmit Morya is a Senior Manager within Cognizant Business Consulting’s Communications and Technology Practice. He is a Certified Project Management Professional and Agile Certified Prac-titioner, with over 11 years of strong consulting experience in the areas of product and program management, digital transformation and IT strategy. He holds an MBA from the Indian Institute of Foreign Trade, Delhi, and a B.Tech from Indian Institute of Technology (BHU), Varanasi. Amit can be reached at Amit.Morya@cognizant.com | https://www.linkedin.com/in/amit-morya-2463041.

Abhinav Nigam is a Consultant within Cognizant Business Consulting’s Communications and Technology Practice. He is an Agile Certified Practitioner and has five years of experience in business process reengineering, IT strategy and management consulting. His functional expertise includes program management, digital transformation, business process reengineering and business analysis. He holds an MBA from the Indian Institute of Management, Indore, and a B.Tech in computer science from Dhirubhai Ambani Institute of ICT. Abhinav can be reached at Abhinav.Nigam@cognizant.com | https://in.linkedin.com/in/abhinavnigam9 .

Faiz Rehman is a Consultant within Cognizant Business Consulting’s Communications and Technology Practice. He has eight years of experience in IT strategy, management consulting, business process engineering, analytics and supply chain planning. He holds an MBA from Narsee Monjee Institute of Management Studies, Mumbai, and a B.Tech in electronics and communications from Uttar Pradesh Technical University. Faiz can be reached at Faiz.Rehman@cognizant.com | https://www.linkedin.com/in/faiz-rehman-0a5243a.

Amit Kumar is a Manager within Cognizant Business Consulting’s Communications and Technology Practice. He has over nine years of work experience in the areas of business consulting, program management, product management, business process reengineering and business analytics for technology and supply chain organizations. He holds an MBA from National Institute of Industrial Engineering (NITIE), Mumbai, and a bachelor’s degree in electronics and communications engineer-ing from Birla Institute of Technology, Mesra. Amit can be reached at AmitKumar.K@cognizant.com | https://in.linkedin.com/in/amit-kumar-2a644114.

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About Cognizant Business Consulting

With over 5,500 consultants worldwide, Cognizant Business Consulting offers high-value digital business and IT consulting services that improve business performance and operational productivity while lowering operational costs. Clients leverage our deep industry experience, strategy and transformation capabilities and analytical insights to help improve productivity, drive business transformation and increase share-holder value across the enterprise. To learn more, please visit www. cognizant.com/consulting or email us at inquiry@cognizant.com.