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Retailers revamp with a high-tech makeover

Anna is a digital image that functions as a virtual greeter at the Bay’s flagship downtown Toronto store.

michelle siu The Globe and Mail

Say hello to Anna, the Bay's virtual greeter who offers a glimpse into the future of retailing.

At 5 feet 8 inches in heels, Anna is a life-like digital image projected on a glass tower at the heart of the Bay's flagship Toronto store, welcoming passersby to its new interactive display of high-end gifts.

The department store's test of the svelte virtual employee, whose talking is prompted by sensors in the ceiling when people approach her, is among an array of high-tech initiatives that retailers are starting to embrace to help cut costs and pump up business.

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As merchants compete against deep-pocketed global titans, they're being forced to look for digital and automated options to buttress operations. Retailers such as clothier Gap Inc. and office supplies specialist Staples Inc. already are staffing their warehouses with thousands of robots, while a growing number of chains are moving their customers through self checkouts, sometimes handing them a scanner right in the aisle, resulting in labour savings.

British giant Tesco did away with the need for a store altogether by setting up a virtual one in a subway station in Seoul, South Korea last year. Commuters place their online orders by scanning QR codes on pictures of food with their smart phone.

Not all the techno-tests have sailed through flawlessly -- some grocers have dropped self checkouts because of errors and customer frustrations, while e-stores on Facebook have fizzled. But retailers such as the Bay continue to bet on high tech ways to make shopping entertaining, create a buzz and boost the bottom line.

"We're investigating, like all retailers, what's next for us," said Alison Coville, a senior vice-president at the Bay. "We're always looking for what's the next evolution ... Anna is there to stop you. It's intriguing when you see this attractive woman."

From digital signs to mobile shops, retailers' techno efforts increasingly are surfacing in the race to lure shoppers and run stores more effectively. The push to move customers through the checkout faster include Starbucks' recent launch of its digital wallet which allows shoppers to pay for their purchases by simply tapping their smart phones at a scanner. Retailers are counting on the initiatives to spur customers to shell out more and not scare them off with too many bells and whistles.

The benefits can add up. Robot labour in retailers' warehouses can speed up order processing as much as four fold to as little as 15 minutes, according to Kiva Systems in Boston, which supplies robots for major retailers such as Staples and the Gap.

Mobile payments can rev up a retailer's sales between 25 and 40 per cent, MasterCard has said. And customers who used handheld scanners to tally their grocery bill in the aisles of U.S. chain Stop&Shop shelled out as much as 10 per cent more than those not using the devices, the company said in 2010.

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"It makes things a whole lot easier," said Stephen Mader, a senior analyst at consultancy Kantar Retail in Boston who uses the handheld scanner when he shops at Stop&Shop. The grocer, which expanded the program to operate from mobile devices last year, offers customers with its loyalty card customized promotions.

In the process, it gets to track their buying patterns to help with its own purchasing and marketing. The self-scanning "helps drive customer loyalty," said Stop&Shop spokeswoman Suzi Robinson.

In Canada, the Bay introduced Anna last month to spotlight its new gift section, which consists of several video walls featuring such items as a $1,295 Versace watch and $1,190 iPod dock. Shoppers can purchase one of the products by touching the shelf it's sitting on with a QR code-embedded card; a real employee fetches the gift-wrapped item from a back room.

4D Retail Technology Corp poured hundreds of thousands of dollars developing the system but doesn't charge the Bay for using it in exchange for the prominent main-floor display space, Ms. Coville said.

She expects the system can lift sales 10 to 15 per cent in the gift section, while also encouraging shoppers to head to other departments of the store. "If it gets you a couple of percentage points of [sales]increases over time because shoppers are returning to the store -- or coming back and looking in other areas -- it's really more of a marketing tool than anything else."

The new tech tools aren't without their drawbacks. Older customers tend to shy away from digital schemes. The devices sometimes need technical updates. Anna was put on autopilot for a few days, simply smiling and blinking, to prepare for an upcoming upgrade.

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Laura Mingail, who passed by Anna last month, was impressed by her striking image. "She definitely does a good job at grabbing my attention." Still, Ms. Mingail appreciated that when she returned to the section last week there was a real sales person. When buying pricey jewellery or tech toys, "I'd rather speak to a human."

Editor's note: The online version of this story has been updated

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About the Author
Retailing Reporter

Marina Strauss covers retailing for The Globe and Mail's Report on Business. She follows a wide range of topics in the sector, from the fallout of foreign retailers invading Canada to how a merchant such as the Swedish Ikea gets its mojo. She has probed the rise and fall (and revival efforts) of Loblaw Cos., Hudson's Bay and others. More

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