The Amazing Race: Differentiating the In-Store Experience

Navigator Edition: April 2015
By: John Grund and Allison Brenner

By our own admission, First Annapolis typically applies a payments lens to almost everything we do – it is in our DNA.  However, that type of approach can be myopic and lead one to focus on payments alone and lose sight of where the underlying retail market is going.  In this article, we try to work backwards and highlight certain retail concepts to get a read on how the combination of technology advancements, store configurations, and customer behaviors are re-shaping the direction of retailing.  That type of exercise leaves a lot of white space to work with in terms of how payments will have to evolve to integrate with fundamentally different shopping experiences and new business models.  The pace of change is unprecedented and there will be plenty of fits and starts (e.g., wallets, wearables, etc.).

The examples below highlight a few trends with respect to innovation in the retail sector.  We purposely focused on store-based innovation given the rage of omni-channel initiatives and the number of competitive moves being made.  It is quite clear that the future will be a far cry from your mother’s shopping trip.

Rebecca Minkoff: Although there are only two stores in New York and San Francisco, Rebecca Minkoff is pushing the digital limits in her hip retail locations. Certain in-store technology was created by a team at Ebay thereby having a nexus in digital. Interesting elements include an interactive PayPal app, a touchscreen wall, and smart fittings rooms with RFID capabilities.  If users check into the store using the app, sales associates can be informed of the guest’s information and preferences. On the in-store touchscreen, shoppers can browse items, order a free drink, or have merchandise sent to a dressing room (users are texted when the room is ready). Within the fitting rooms, the mirrors are also touchscreens so shoppers can view or request matching accessories and other size/color options. The fitting rooms are also outfitted with custom lighting options which can be changed by each shopper. Selections from the fitting room can be saved within the app to be viewed or purchased at a later time.

Sephora: Sephora is also marrying a digital experience to its in-store format. Recently, the beauty supply leader announced two new initiatives directly related to its in-store experience: augmented reality and Beacons. Later this Spring, augmented reality will be available in store windows and displays. Shoppers will be able to aim their phones at the images of nine female founders of different cosmetic brands and pull up interviews, product videos, animated GIFs, YouTube playlists and Sephora webpages. Beacons provide in-store push notifications to shoppers who have the retailer’s app, communicating among other in-store happenings, birthday rewards loyalty updates, etc.

Hointer:  Hointer, a start-up retail technology firm with its own beta apparel store in Seattle was founded by Nadia Shouraboura, a former Amazon executive. The beta store is quite futuristic and is designed to combine the best of on-line and in-store shopping in an optimized customer experience.  Using a smartphone, shoppers can use an app to place merchandise in a virtual cart and the items are delivered to the dressing rooms in less than one minute. Within the dressing room, the shopper can use the app to try other sizes or styles. There are tablets in the dressing rooms for checkout. This store concept and the underlying technology is designed to be on the leading edge of innovation while delivering a great customer experience at an effective cost. The fact that technology is advancing at this pace opens up a host of potential applications that were simply unheard of just a few years ago.

H&M: H&M is also riding the wave of updating its fitting rooms by allowing shoppers to pay there via iPads. The company also offers its New York City customers the opportunity to walk on a virtual runway and be projected onto screens in Times Square. H&M shoppers are ready for their close-ups!  Lastly, interactive mannequins within the store have screens that show alerts, deals, videos, and photos.  H&M has aggressive expansion plans in the U.S. and will benefit from growing its store footprint unencumbered by legacy systems at a time when opportunities to leverage technology are abundant.

Uniqlo: This Japan-based apparel store is focused on expanding its U.S. footprint. In-store, shoppers can use a “Magic Mirror” to view themselves in other color options of a select product. For example, a consumer who is trying on a sweater in front of the mirror can toggle through different colors on its touch screen and actually see themselves wearing the other colors. Customers will be engaging with retailers (and physical merchandise) in different ways, personalizing many interactions, and there will be many ways to extend this new engagement model though the entire purchase process.

Sport Chek: This Canadian sporting goods company (a division of iconic Canadian Tire) has launched a digital concept store. Together with Samsung, Sport Chek has placed 140 screens throughout the store. Promotions, ads, simulations, still photos, game schedules, updates, stats, and videos are projected for customers. The store also features a build-your-own sneaker kiosk from Reebok.

Lowes: Lowe’s Innovation Lab recently launched the “Holoroom,” which is an empty room in the store that customers can decorate, design, and then view via virtual reality on an iPad. Ikea launched similar technology within an app for shoppers to use in conjunction with their catalogues in their own homes. Users can place virtual furniture within their houses as viewed through a tablet or smartphone. On large-ticket purchases, payment options are critical to the purchasing decision and integration within the sales process will become more important in a dynamic environment with virtual showrooming, self-service tools, and the like.

For more information, please contact John Grund, Partner,; or Allison Brenner, Analyst, Both specialize in Credit Card Issuing.

To read the rest of this article, please subscribe to

The Navigator Newsletter