10/29/13

In Amazon’s shadow, launching a new kind of web-enabled store

An app makes jeans arrive via a chute in store fitting rooms.

Paul Demery , Managing Editor, B2B E-commerce

After spending years as one of the technology whizzes behind the growth of e-retail powerhouse Amazon.com Inc., Nadia Shouraboura set out to bring the wow of Internet-enabled shopping into a physical store—in effect, do something Amazon.com can’t do because it doesn’t operate bricks-and-mortar stores.

After all, she says, you can only go so far in making online shopping great for things that many shoppers want to physically try on, like jewelry and apparel. “Printer cartridges—you can’t beat the online shopping experience,” says Shouraboura, who was technology vice president, global supply chain and fulfillment, at Amazon from 2004 until August 2012. “But for when you have a product that a customer needs to touch and feel and try on, I wanted to merge the physical and virtual realities.”

That required her to identify problems that in-store shoppers face, and then figure how to apply web technology to smooth out the wrinkles.

In April 2012, Shouraboura and her partners launched Hointer Inc., a retail technology company as well as a retailer with offices and a test store within blocks of Amazon’s Seattle headquarters, and set out to devise a new way of shopping in stores for apparel. They chose to start with denim jeans, figuring that, for many shoppers, jeans are often the toughest item when it comes to finding the right style and fit.

For a store customer shopping for jeans, she says, the biggest shopping inconvenience often is in the fitting room. After a customer works her way through crowded store racks and shelves and lugs a bunch of jeans to try on, she typically has to repeat the chore before finding the right pair, taking several trips in and of the fitting room. “If you’re naked, you have to yell for help,” Shouraboura says. “Or get dressed and go and to get another item.”

Not anymore. In fitting rooms Hointer designed and installed in a pop-up store operated by the Dockers unit of jeans brand manufacturer Levi Strauss & Co. in New York City, as well as in two Hointer test stores in the Seattle area, shoppers in specially configured fitting rooms use mobile shopping devices to view jeans they scanned or ones recommended by the app, click a pair to try on, wait about 30 seconds and—whoosh, plump—the pair arrives on a fitting room counter through a chute from a back-room warehouse. If the pair isn’t right, the shopper simply puts it in another chute to send it back to the warehouse, then clicks for another pair to arrive. The fitting rooms are also outfitted with wall-mounted tablet computers on which the shopper can also log into her app, freeing her from holding her smartphone while trying on garments.

Shouraboura describes the ability to choose among items recommended by the app, as well as those a customer had scanned, as similar to the personalized shopping experience on Amazon.com, No. 1 in the Internet Retailer Top 500. “But we do it in-store, which is a richer experience,” she says.

Hointer has avoided much marketing while it tests its new store format, and initial traffic to the test stores got off to a slow start before mentions on apparel blogs and other social media outlets started driving in customers, Shouraboura says. Now Levi Strauss is considering rolling out the Hointer technology in several of its stores next year for apparel lines including shirts, pants, jackets, shoes and accessories, she says. And Hointer’s Seattle test store, open for about a year, has so many customers from Amazon’s nearby office campus that Hointer offers free shipping to Amazon employees for items the store doesn’t have in stock, she adds. Amazon declined to comment when asked if Jeff Bezos, its founder and CEO, or any other Amazon personnel have shopped the Seattle store. A spokesman for Levi Strauss says the company is “doing a deep dive” into its work with Hointer and will continue to discuss its potential future with it for the Dockers business.

Shoppers that have used Hointer’s fitting rooms have tried on more than five items on average per visit, and have shown a high conversion rate, Shouraboura says, without being more specific.

The Hointer technology system works like this: When a shopper enters a store, signage and store personnel encourage her to download a Hointer app to her smartphone (nearly all store visitors do, Shouraboura says), then use the app to scan the labels of any jeans they’re interested in as they browse the store. Jeans are neatly hung from overhead lines, one sample size per style, freeing the store from cluttered shelving and racks.

Instead of lugging jeans around the store, a shopper simply carries her app into the fitting room to select and receive pants to try on among those she had scanned, plus other items automatically recommended by the app.

The software behind the app is hosted by Hointer in Internet or “cloud-based” servers. As a shopper clicks to receive a pair of jeans, the cloud-based system routes her request to her store’s back room; a worker then sees her request and her fitting room number on a computer screen, grabs her selected garment from a rack and places it in a chute that uses gravity to deliver her jeans. If the store’s backroom warehouse is out of stock, the cloud-based software can route the request to another store or a distribution center for delivery to the shopper’s home address. The shopper views the home-delivery option on the app, and can either accept it or keep shopping for other jeans. Once a shopper decides to make a purchase, she can use a store kiosk for self-checkout of in-store items, or use the app to complete a home-delivery order.

The cloud-based software also lets the retailer’s personnel to access the app to view the items a shopper is selecting, and input additional product recommendations, Shouraboura says. The system uses RFID, or radio frequency identification, technology on garments and in the fitting room chutes to record which items shoppers are selecting and eventually buying, and which ones they’re returning to the back room. Retail managers can log into the system from anywhere to check on inventory levels and sales, Shouraboura says. 

Hointer developed its cloud-based database software and designed its overall technology system in-house, she says. It uses technology from Amazon Web Services to host its software on the Internet, and it works with Internet networking technology from Cisco Systems Inc. to connect its system to retail stores.

Jon Stine, director of Cisco's Internet Business Solutions Group and retail consumer products, says Hointer’s system shows how retailers can use Internet technology in new ways to improve operations and boost sales. A recent study by Cisco of more than 7,000 companies across several industries, he adds, found that retailers and wholesalers had the most to gain from new Internet-connected systems. “Retail leaves more on the table than any other industry,” he says. Based on interviews with retail executives on their use of Internet-connected systems, such as cloud-based systems that show sales and inventory levels across a retailer’s stores and web sites, Cisco estimates that retailers will lose out on $99 billion this year alone in lost sales and operating efficiencies. 

Topics:

Amazon.com, apparel, cisco systems inc., fitting room, Hointer Inc., in-store shoppers, Jon Stein, Jon Stine, Kiosk, Levi Strauss, Levi Strauss & Co., Levi's, Nadia Shouraboura, warehouse

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