By Mary Wagner
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.
Some surprises
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.
He maintains a tight focus on research that sheds light on how developing technologies affect the consumer’s experience. For while online technologies may afford the opportunity for a host of interactive shopping tools and a gold mine of customer data for merchants, they wont’ be welcomed or even used by consumers unless they enhance the shopping experience. That said, there’s no shortage of technology vendors ready to put their ideas to the test. To that end, the lab brings in consumers and shows them the proposed applications. It looks for winners in such behavioral measures as the effect on consumer price sensitivity, loyalty and repeat purchase. It also looks at attitudinal measures such as customer satisfaction and intent to shop again using the technology.
The results effectively ax some proposed retail applications, sometimes pointing the developers toward other industries. Others, more promising in the retail environment, go back to the drawing board for refinements. Take 3-D shopping, for example. More than simply rotating a product image online for a 360-degree view, 3-D environments also can immerse online shoppers in a virtual mock-up of a store, letting them move through aisles and past shelves of product in the type of navigation already familiar to online and video gamers.
Burke’s laboratory has worked extensively on 3-D shopping applications. And while his lab doesn’t develop the technology, it does develop the applications and it has co-developed a 3-D application with Intel. That application gave users a virtual display of shelved grocery store products similar to what they’d see in a supermarket. The web, though, made a few extras possible. For example, shoppers could filter the shelf display based on their preferences—if they wanted to view only low-fat or low-salt products, for instance, the virtual shelf was stocked accordingly. The online depiction of products in shelf display, Burke found, provides visual context that helped shoppers accustomed to buying in a store find products and make decisions more quickly.
The recognition of familiar brands next to those of competitors on the same virtual shelf also encouraged shoppers to buy the product more than if they’d seen the product described in text or viewed in on the screen in isolation, Burke adds.
Overcoming price resistance
Tests also showed that consumers were more price sensitive when exposed to a 2-D text-based shopping interface than they were in a 3-D environment. That’s because when presented with the more limited information of a text message, consumers had less to base their choices on, making price stand out as a key driver. The richer environment of 3-D provided additional information on which shoppers could base their decisions, diluting to a degree the effect of pricing.
With those learnings about 3-D, online 3-D store simulations might one day find application in the web sites of big-box stores that consumers visit frequently enough to know the layout, Burke suggests.
However, immersive 3-D environments face some barriers in the lack of broadband access in most U.S. households. Navigation is another barrier: Burke says there’s little standardization among the different developers of 3-D shopping environments as to navigation. Mass retailers have so far done little if any broadscale testing of this application, Burke says.
But online boutiques and higher end-retailers have already moved to adopt a second 3-D application that Burke also has reviewed in the lab: one that strives to create an online experience that’s rich and engaging, like a video game. “In the first type of 3-D application, there’s more of an emphasis on the realism of the environment and making shoppers see what’s familiar to them. The second application seeks to create retail theater, drawing people in and potentially increasing impulse purchases,” Burke says. “You use the same software to create both applications.”
It’s human behavior as much as technology that makes one application a winner for shopping while another strikes out—something Burke keeps top of mind while figuring out which ones have the stuff to become retail shopping tools.
Whether surveying retail sites to determine which tools consumers like or going in-store or online to test applications, Burke’s work puts the consumer at the table. “We hope, through our research, to help the retail industry hear the voice of the consumer and to identify the most promising application of new technologies for specific product categories and consumer segments,” he says. l
mary@verticalwebmedia.com
Raymond Burke
l Experience
1997
Founding director, Customer Interface Laboratory of the Center for Education and Research in Retailing at the Kelley School of Business, Indiana University
1996
E.W. Kelley Professor of Business administration at Indiana University’s Kelley School of Business
1991
Associate professor, Harvard School of Business, Harvard University
1985
Assistant professor, Wharton School of Business, University of Pennsylvania
l Education
Ph.D., psychology and marketing,
University of Florida, 1985
