Since e-commerce began threatening stores last decade, retailers have been trying to make their locations operate more like the web. Yet despite splurging on the latest bells and whistles, they’ve mostly failed and fallen further behind their online rivals.
Recent efforts—such as QR codes, which call up merchandise information when scanned with a smartphone, and internet kiosks, where shoppers can browse a retailer’s online store—are either too far ahead of, or behind, shoppers technologically, so they haven’t been embraced, says Brendan Witcher, an expert on retail strategies at Forrester. Plus they do little to improve the actual shopping experience, he says. “If you just deliver tech for tech’s stake, people will test the novelty of it, but it won’t stick.”
Oak Labs, a startup founded in 2015 by former EBay executives, is focused on fixing what’s wrong with brick-and-mortar retailing. The San Francisco-based company started with the dressing room, which seemed as good a place as any given that shoppers have long complained about its lines, lackluster service, and bad lighting. What happens inside those few square feet of real estate matters—a lot, in fact: Shoppers who use fitting rooms are almost seven times more likely to make a purchase than those who simply browse the sales floor, according to research by Alert Tech.
Oak Labs’ first product is a dressing-room mirror that can offer an experience like this: A woman enters with jeans and a blouse. Sensors read the radio-frequency ID tags on the clothes and display the items on a touchscreen embedded behind the glass. A recommendation engine—like those ubiquitous online ones—suggests complementary pieces such as shoes and a belt. The customer can choose a language other than English and adjust the lighting (options might include “dusk” and “club”). If an item doesn’t fit or the color isn’t right, she taps the mirror, which triggers a request on store clerks’ mobile devices. The technology isn’t designed to replace salespeople, says Healey Cypher, Oak’s chief executive officer and a co-founder: “We want to make their jobs easier, make them more effective.”
Retailers can buy one of Oak’s mirrors for $25,000 (the price falls for larger orders) and pay a monthly licensing fee for the software. Or they can sign a five-year contract and pay $7,000 to $9,000 a year. The mirrors are being tested by a handful of upscale retailers, including Ralph Lauren and Rebecca Minkoff. Early results show that people buy more while spending less time in the dressing room, Cypher says.
Those stats may improve as the company rolls out a feature in coming weeks that allows shoppers to wave their phones in front of the mirror and make a purchase using Apple Pay or Android Pay. If an item isn’t available, a customer can access the retailer’s website with a few taps of the mirror, purchase it, and have it delivered. “There is that shopper who wants a private, anonymous experience of self-service,” says Rebecca Minkoff co-founder and CEO Uri Minkoff. “That’s the e-commerce experience. Why not carry that into the store?”
This type of technology could help stores catch up to data-rich e-commerce. Rebecca Minkoff, which has Oak’s mirror at two of its shops, learned that a leather jacket was tried on 70 times in a week but never purchased. Half the shoppers asked for a different size using the touchscreen, meaning there was a fit issue. “You can really learn some truths other than what’s sold,” says Uri, who, along with his sister, has a small stake in Oak Labs and advises the company.
Even with the promise of new data and a sales boost, the likelihood of a product such as this going mainstream remains an open question, says Forrester’s Witcher. Amazon.com made a splash last year with plans for a store that eliminates checkout altogether, but the e-commerce giant has money to burn.
At the Rebecca Minkoff store in downtown Manhattan, sales associate Mercedez Yasmeen says the mirror has been a big advantage. Introverts love that they aren’t bothered, and extroverts love showing off the mirror to the point that they’ll have “Snapchat parties” in there, she says. And the language options are a big help when tourists visit the store. On a block that includes luxury titans Louis Vuitton and Fendi, “it’s nice to have something that sets us apart,” she says.
Growing optimism about the next iPhone has propelled Apple Inc. to record highs. Halfway around the globe, a lesser-known Taiwanese company is riding that same wave of euphoria.
Hon Hai Precision Industry Co., the main assembler of the U.S. company’s smartphones, has gained 29 percent in the past year, with its shares touching a decade-high on optimism about Apple’s 10th anniversary iPhone. That’s helped the biggest company in Foxconn Technology Group defy a flat-lining mobile market on expectations Apple will use the anniversary to introduce its most advanced and popular device yet.
Then there’s Terry Gou, who’s re-tooling Foxconn for the future. The billionaire founder’s installed robots throughout a juggernaut that spans China to Southeast Asia to shore up its manufacturing prowess, while investing in emergent fields from virtual reality to artificial intelligence. He spearheaded the acquisition of Sharp Corp., transforming the ailing Japanese giant into a company that’s tripled in value and is now jointly investing billions. Underscoring the revival underway, Sharp on Friday raised its annual operating profit forecast by 27 percent.
The Foxconn group is now considering building a display-making facility for upwards of $7 billion with Sharp in the U.S., potentially creating tens of thousands of American jobs during President Donald Trump’s first year in office.
“In the long run, Hon Hai will become a multi-faceted conglomerate as the company’s obviously making bets in emerging sectors like robotics and Internet of Things,” said Annabelle Hsu, an analyst with IDC in Taipei. “The main areas where Hon Hai is cooperating with Apple are seeing slower growth -- think smartphones and tablets. Hon Hai has to find emerging sectors where growth rate is high. They are good at this.”
Hon Hai’s shares, which have gained about 8 percent this month, were barely changed on Monday in Taipei.
Foxconn’s approach isn’t encroaching on its best client’s turf so far as it gets away from being an assembly business that relies on cost-efficiency. While Sharp is barely relevant in smartphones, it has valuable display technology that Apple uses, plus an enduring name in consumer electronics that may propel Gou’s ambitions of moving up the value chain.
Hon Hai, as part of a Foxconn consortium, bought control of Sharp last year and the Japanese company is showing signs of life after years of getting pummeled by Korean rivals. The pair are jointly building a 61 billion yuan ($8.9 billion) liquid-crystal-display factory in the southern Chinese city of Guangzhou that by 2019 will crank out next-generation displays for TVs. The Japanese company has set aside 200 billion yen ($1.8 billion) for developing organic light-emitting diode display facilities, staking a claim on a technology Apple’s expected to adopt in future iPhones.
Foxconn and Hon Hai’s diversification effort, coupled with iPhone exuberance, has helped its share price remain resilient in the face of bad news, closing at NT$90 on Friday. Last month, the company recorded its first annual revenue decline in history. With the next iPhone not expected until the second half of the year, analysts are projecting that Hon Hai will soon report its first annual net income drop since 2008, a year after the iPhone debuted.
Apple, which accounts for half the company’s revenue, played a pivotal role in the stock’s recent buoyancy. The U.S. company this month reported stronger-than-expected iPhone sales during the key holiday quarter. While the iPhone 7, introduced in September, failed to convince as many existing customers to upgrade as its predecessor, it did attract new smartphone buyers. That bodes well for the iPhone slated for later this year.
This month, analysts at Citigroup Inc., Nomura Holdings Inc. and HSBC Holdings Plc upgraded Hon Hai to a buy rating. William Yang, an analyst with Citi, wrote in his report that its valuation hasn’t quite reflected the full impact of the new iPhone, particularly if it becomes the sole assembler for an OLED-equipped device.
“Though a strong iPhone 8 launch may seem obvious, we don’t believe that the market has fully priced in the prospects of a significant pick-up in iPhone shipments this year,” Yang wrote. “After its good progress on investment in Sharp, Hon Hai can also offer more components such as finger-print sensors and camera modules for both iPhones and iPad.”
In the short run, Hon Hai’s still grappling with the slowdown in its key markets: mobile and PC. Revenue is projected to slip about 3 percent in 2016, and net income 13 percent. But earnings growth could rebound to 12.2 percent this year, the average of analysts’ estimates compiled by Bloomberg.
Apple could sell 20 million to 23 million iPhones during the December quarter in China alone, Counterpoint Research estimates. That’s about 20 percent higher than the roughly 17 million it managed when Apple debuted the iPhone 6S and iPhone 7 in previous years, a major boost for the company in its single largest market outside of the U.S.
“We are expecting a completely new iPhone with new designs and technologies used,” said James Yan, a research director for the consultancy in Beijing. “That will greatly increase sales.”
Source: https://www.bloomberg.com