In its second-largest acquisition, Amazon buys the company for $970 million.
Indiana University’s Raymond Burke gives thumbs up or thumbs down on new e-retail shoppint tools.
Seattle and Silicon Valley may be the hot spots where new web technologies are invented-but on their way to becoming retail applications, many of them will pass through a town far from home: Bloomington, Indiana. That’s where Indiana University Customer Interface Laboratory director Raymond Burke (right) has carved out a research subspecialty that couldn’t even have existed until a few years ago. Burke runs interference between technology vendors looking to develop the next killer retail application-and retailers trying to sort out what new technologies are worth taking on board.
Burke’s mission? To represent the consumer and separate what’s technologically possible from what customers actually want to experience when they go shopping.
The laboratory launched in 1997 as part of the Center for Education and Research in Retailing in Indiana University’s Kelley School of Business. Since then, Burke has looked at consumer response to leading edge online and offline technology applications that range from likely winners to those that colleagues admit privately are “kind of crazy.” Tech developers can dream up amazing things for software and electronics to do, but they often have no idea as to how their inventions will fare with retail shoppers. But after years of consumer research that began long before he arrived at IU in 1996, Burke does. For that reason, some ideas don’t even get through the door.
One company, for example, had developed a robot able to follow people around as they walked through a building. The developers, who designed it initially for museum and entertainment uses, wondered if it might have application in retail as well. But Burke chose not put it to the test in his laboratory; based on prior research, he already knew shoppers would find the application too intrusive.
His initial impressions aren’t always on target, however, and consumers’ reactions have surprised him more than once. A project that did make it into the lab was the test of an application for an online apparel store. The feature gave shoppers a current weather report and then offered suggestions on what to wear that day taken from the shopper’s own closet, based on stored purchase history. “I thought that was a neat idea, but when we showed it to consumers they gave it thumbs-down,” says Burke. “What feels hot to one doesn’t fee that way to another. Weather changes through the day. Having the computer tell people what to wear just didn’t work out.”
Burke stresses that his only role is to judge consumer response to the proposed applications. “We don’t get involved in developing the technologies,” he says. “But once they exist, we try to find the most promising application.” Burke gets as excited as a kid on the loose in a candy store when discussing what’s on the horizon and in his research laboratory in terms of new interactive shopping technologies.
But it isn’t the nuts and bolts of how they operate that he finds fascinating. The web’s interactive properties are simply a new way to get at what has always intrigued him. “I’m interested in consumer behavior and what drives decision making,” he says. “My research focuses on retail technology because it has the potential to change almost every aspect of the consumer shopping experience. It can enhance how we communicate with and entertain shoppers, collect marketing research data, develop new products, mange product assortments and price merchandise.”
Burke is the founding director of the laboratory, an arm of the Retailing Center, which launched in 1997 under initial funding from Sears, Roebuck and Co. The Center has since added charter members that provided additional initial funding and corporate sponsors who provide annual grants. Other charter members include Kohl’s Corp., Office Depot Inc., Target Corp., Federated Department Stores Inc., KPMG and Kurt Salmon Associates. Sponsoring members, including Spiegel Inc.’s Eddie Bauer Inc., Gap Inc., Alberston’s Inc.’s Jewel/Osco stores, NCR Corp. and shopping center developers Simon Property Group Inc., provide grants of $5,000 to $25,000 depending on the size of the organization. Sears continues to provide “substantial funding” under its initial commitment of more than $1 million over five years, says Frank Acito, chairman of the Kelley School’s marketing department and faculty chair of the Retailing Center.
While the faculty appointments of the lab’s and research center’s three-member staff cover their salaries, research projects require funding for expenses ranging from data collection and programming to local recruiting of consumer test panels. Retail members and sponsors also come up with extra cash for specific research projects. Last year, for example, Eddie Bauer kicked in an undisclosed sum beyond its yearly grant to fund an exhaustive look at how interactive technologies enhance or impede shopping online and offline. The Center and the lab looked at store, catalog and online venues, evaluating the functionality of various shopping interfaces, the availability of product information, use of personalization, the role of community, and channel integration.
Sharing is required
Retailers supporting research must agree to share the results: as an academic institution with the goal of advancing industry knowledge, the Center doesn’t do proprietary research. Findings from last year’s Eddie Bauer project, for example, were presented publicly in several industry forums. A KPMG-commissioned survey on interactive technologies a year earlier was distributed to the industry as a published report. Burke also has published articles on the lab’s work in professional journals.
The requirement that research findings be shared has caused Burke, who chooses projects for the laboratory, to turn down a fair number of proposals. “If there’s not much generalized information to come out of a project, if we can’t exercise some thought leadership in the retail industry, it’s not something we’re going to pursue,” he says.