SANTA CLARA, CA - Nola Donato has seen the future of retail, and it is in a Magic Mirror.
The Intel scientist has designed a high-tech mirror that shows how clothes look on a consumer who simply stands in front of an LCD monitor. Parametric technology simulates body type and how fabrics fit - based on weight, height and measurements.
Think of it as a digital fitting room. The concept is three to five years from fruition but could open the door for Intel in the retail market.
The convergence of smartphone technology, social-media data and futuristic technology such as 3-D printers is changing the face of retail in a way that experts across the industry say will upend the bricks-and-mortar model in a matter of a few years.
"The next five years will bring more change to retail than the last 100 years," says Cyriac Roeding, CEO of Shopkick, a location-based shopping app available at Macy's, Target and other top retailers.
Within 10 years, retail as we know it will be unrecognizable, says Kevin Sterneckert, a Gartner analyst who follows retail technology. Big-box stores such as Office Depot, Old Navy and Best Buy will shrink to become test centers for online purchases. Retail stores will be there for a "touch and feel" experience only, with no actual sales. Stores won't stock any merchandise; it'll be shipped to you. This will help them stay competitive with online-only retailers, Sterneckert says.
Branding strategist Adam Hanft says this all might sound futuristic, but much of it is rooted in reality. He says satellite stores will open in apartment buildings and office centers. FedEx and UPS will delve deeper into refrigerated home delivery. Google trucks will deliver local services. Clothing - even pharmaceuticals - will be produced in the home via affordable 3-D printers.
"Every waking moment is a shopping moment," says Steve Yankovich, head of eBay's mobile business, which expects to handle $10 billion in transactions this year. "Anytime, anywhere."
Game-shifting tech - such as smartphones, location-based services, augmented reality and big data, which makes sense of all the data on mobile devices and social networks - will most assuredly upend several multibillion-dollar retail markets, forcing retailers to adapt or die, say venture capitalists and analysts.
Eventually, 3-D printers will let consumers produce their own towels, utensils and clothes. While in their infancy, the devices have been used to print hearing aids, iPad cases and model rockets, says Andy Filo, an expert on 3-D printers. The technology is several years away, however, from being widely available and affordable, he says.
And almost all of it will be paid with ... your phone.
"Cash will still exist, but no one will use it," says Jim Belosic, CEO of ShortStack, a self-service, social-media platform that lets users create custom Facebook tabs. "Carrier payments and the swipe of a smartphone will do the trick."
Technology advances won't just change the physical appearance of stores for consumers, but should transform the retail workforce into more of a customer-friendly field, too. Retailers who don't adapt quickly and successfully risk losing out, Sterneckert says.
What might this evolution mean for the nation's malls and shopping centers and people whose paychecks depend on today's retail model? Experts aren't predicting the end of the in-store experience, but it stands to reason that as with other industries, technology might improve efficiency while setting retailers on a path toward a leaner workforce.
Just as online retailers led a revolution in retail shopping in the 1990s, bricks-and-mortar retailers are ready to use technology to fight back.
By the time you walk into a store in the near future, the employees there will probably know what you want to buy, based on information on your trusty phone or tablet. Merchants will know your gender, age, race and income, analyst Sterneckert and others say.
Once you're inside, imagine waving your smartphone over products and seeing what's inside. Holding the phone over a DVD's bar code might activate a movie trailer on the phone's screen, for example.
All of this will be made possible with so much personal data on smartphones, and the ability of merchants to parse it to gauge who is just browsing and who's on a mission to buy. The clerk greeting you at the door will be able to make targeted suggestions. Sound Orwellian? All of this is done online today through search engines and cookie technology. Putting a personal touch on one's in-store experience could mean big bucks for bricks-and-mortar retailers, according to John McAteer, head of retail at Google.
There might be less merchandise inside, as bricks-and-mortar stores offer only special products that distinguish them from Web competitors.
"The first 15 years of online shopping was about making it easier for people to find and purchase items they were looking for," says David Fisch, director of platform partnerships at Facebook, which is working closely with retailers. "Now, it's about helping you find what you may not know about, based on your social (media profile)."
With computer chips seemingly embedded in everything - goods, smartphones and the like - merchants will not only know what's in your shopping basket, but what you plan to buy next.
Target, for example, already combs shopping data via purchases, e-mail, activity on Target.com accounts and more to determine which customers are pregnant, so it can sell goods popular to them such as orange juice, according to journalist Charles Duhigg, who outlined the practice in his book, The Power of Habit.
"There is a trade-off between privacy and convenience, which I think will only accelerate," Duhigg says. "People always choose convenience and don't realize the cost of privacy."
Target spokeswoman Molly Snyder acknowledges it uses "research tools that help us understand guest shopping trends ... (but) we take our responsibility to protect our guests' trust in us very seriously."
Increasingly, where one shops will be irrelevant. Phones and bar codes will let consumers shop from their kitchens - a digital screen on a refrigerator, for example, will allow orders from home, with a delivery service dropping off the produce. "A screen is a screen is a screen," says Jill Puleri, of IBM's Global Business Services retail-consulting practice.
At the CeBit computer trade show in March in Hanover, Germany, an exhibit of a futuristic airport gave new meaning to duty-free shopping. Within a few years, travelers will be able to touch a store window containing a digital menu to order goods for shipping.
Subways in South Korea, the United Kingdom and elsewhere already contain virtual stores in which consumers wave their smartphones at bar codes to order. The goods are delivered before the commuter arrives home.
"Retailers are asking the question, 'How do we address the demand for now?' " Gartner's Sterneckert says. "Customers want their goods by the time they get home from work."
Driving the future
All of this will be possible within several years because of:
•Smartphones. Location-based services and the growing adoption of Near Field Communication - a wireless technology standard for one-tap payment - will turn consumers' phones into stand-ins for credit, debit and loyalty cards, says Bill Gajda, head of mobile at Visa. Meanwhile, Nordstrom, among many, is phasing out cash registers this year in favor of smartphones with store-designed apps for purchases and inventory.
•The death of cash. If credit cards diminished use of cash in the 1950s, powerful smartphones and tablets will hasten its demise. Both are reshaping the relationship between merchant and customer as newfangled wallets, and each is edging toward becoming credit card readers and (cash) registers.
"Cash has dug in its heels for small-value transactions, but with the arrival of each new tech offering (providing) an alternative way to pay for little stuff - text your parking payment, Starbucks mobile app, Square, etc. - cash is being further and further marginalized," says David Wolman, author of the book The End of Money.
•Augmented reality. The increasingly popular technology adds a visual layer of information on top of surfaces such as a mirror. One breakthrough might come at the mall, with AR mirrors that let consumers shop based on data projected on glass, say social-media experts such as Brian Solis.
Another intriguing option is Google Glass, which puts computer-processing power, a camera, a microphone, wireless communications and a tiny screen into a pair of lightweight eyeglasses. Ultimately, Google hopes the "smart" glasses - which are a few years away - will be able to access information in real time, including the ability to identify locations and provide additional information about your whereabouts.
Harnessing social media
As smartphones and tablets grow in popularity, retailers are trying to get their hands around Facebook, Twitter and social media, and cater to consumers, says Niraj Shah, CEO of Wayfair, an e-commerce company that recently passed Crate & Barrel to become the No. 2 Internet retailer of home products. It racked up a record $500 million in revenue last year.
Only 8% to 13% of retail shopping in the USA is done online. Impressive as future retail technology might look, it will take good old-fashioned customer service to boost those figures, says Will Young, who heads Zappos Labs.
Some of that will come because of original editorial content from commerce sites such as Zappos, Fab.com and Etsy that offer shoppers advice on products and services. Zappos has beefed up its content with advice on fashion, trends, outfits and lifestyles.
Software giant SAP's "clienteling" application, for instance, lets Burberry track and analyze customers' buying and browsing patterns, giving sales reps the information they need to instantly make specific recommendations tailored to that person's taste. For the first time, retailers can offer consumers the same personalized experience in the store that they're used to when shopping online.
In the physical world, the same rules apply. Consumers won't need a smartphone to get an interactive glimpse of what they want. Digital billboards on every conceivable surface will do the trick.
Thin, energy-efficient LED displays are being tested to show video on everything from a curved wall at the NASCAR Museum in Charlotte to subways and airports. China, home to some of the world's largest buildings, is a prime candidate for even larger displays.
"The pace of change has never been faster," says Google's McAteer. "The big question is (turning) physical stores into a showplace, distribution center and place for consumers to have fun."