Immersive Retailing Defined

Immersive retailing
Executive brief

How immersive technology can
revitalize the shopping experience.
Taking customers inside your brand

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Introduction
Contents Why do shoppers choose to come to your store on any given day? Do they
search for products online first and then come in—or do they start their decision-
2 Introduction making process inside the store? How do they feel when they leave? Did you
4 “Brand” new experience: offer unique, empowering experiences and services that leave them excited to
enter here come back — again and again? Do individuals feel like your brand is relevant
9 Immersing the shopper in to their lifestyle? Do they understand the value of your brand experience over
an engaging, 360-degree
the commoditized products that you are selling? Or, as they wander from store
experience
to store, do your potential customers forget your brand as it blurs in their
12 Why IBM?
minds with those of competitors?

These are all important questions, given the tough reality of our commoditized
retail marketplace, where it’s harder and harder to stand out from competitors.
Especially since fickle customers seemingly can choose from ever more channels
and providers. Sure, factors like price and service help attract customers, but to
truly stand out from the competition, retailers need to create customer advocates
who, when they’re ready to make a purchase, think first about the retailer’s store
brand rather than a list of product brands.

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Truly immersive experiences — which connect with shoppers on an emotional
Why are immersive strategies
level through personalized dialogues and give them greater control over the
important?
shopping experience — are the new frontier in retailing. The immersive retail
Noted retail analyst and supermar- experience is more about involving the customer than it is about merchandise
ket guru Phil Lempert thinks there and merchandising. Think outdoor stores that provide simulated trails or streams
are ﬁve key reasons retailers need for testing equipment, or appliance stores with test kitchens where customers can
to consider immersive strategies: feel what it’s like to actually use products. In other words, for stores in many retail
• Survival — Stores need to develop segments to stay ahead of competitors, they will need to generate the excitement
business models and solutions of a theme park ride—and become a destination. Of course, being a destination
that meet customer expectations, takes a lot of work. Walt Disney said, “Whenever I go on a ride, I’m always think-
using virtual and augumented real- ing of what’s wrong with the thing and how it can be improved.” Disney knew:
ity technolgies, before disruptors you must constantly improve the experience in order to stay relevant. This
reshape marketplace segments. point is underscored by the recent trend of retailers hiring executives from the
• Brand image — New technologies entertainment industry.
present virtually endless opportuni-
ties to reinforce the brand image.
Immersive technology solutions — which stimulate people’s visual, auditory,
• Flexibility and responsiveness —
olfactory and tactile senses to connect with shoppers on an emotional level
Integrated technologies can
to create unforgettable shopping experiences — can open up a whole new
enable retailers to rapidly
world of energizing shopping experiences. Combined with ﬂexible, responsive
respond to changing customer
business models, they have the potential to transform the way customers interact
whims more readily.
• Greater reach — Technologies like with your brand. This brief explores how immersive technologies and business
the 3-D Internet can introduce strategies can create a brand voice that generates renewed excitement about
potential customers from all over your store. It also examines IBM’s vision for immersive technologies.
the world to your stores.
• Personalized connections — Large
retailers can use the right mix
of social technologies to achieve
similar successes to small brands
in connecting with customers.

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“Brand” new experience: enter here
Getting the immersive strategy right

David Polinchock, chief experience
“ Consumers are expecting retailers to accommodate how they prefer
officer of the Brand Experience Lab
to buy and especially how they naturally tend to think about products.
and experiential advertising pioneer,
thinks it’s critical for retailers to start Most consumers … tend to think about products in terms of the needs
telling their brand story through the they fulfill and the life experiences they enhance or facilitate.”
in-store experience and offers some — Yankelovich Monitor1
important tips.

• Be true to who you are. It’s impor-
Because shoppers have so many products to choose from and so many ways
tant that stores are consistent with
to buy, shopping approaches and expectations have changed dramatically
how they market themselves and
in recent years. Today, customers want to be treated as individuals — not as
with the technology they use. In
a buying group. Moreover, as they make decisions about where to shop for
some cases, the technology may
be behind the scenes; in others, many types of purchases, they now expect shopping experiences that are:
it may be front and center. The
important thing is to put money • Relevant and contextual.
into something relevant to what • Easily accessible.
you’re about. • Lifestyle oriented.
• Get it right. Customers see through • Organized to help the customer succeed (for example, to quickly find
false or misleading claims, so be what he or she needs).
sure to back up your brand mes-
sage with technology that can help Given customer expectations, retailers that can connect with customers through
you deliver on it. experiences that are personally relevant, memorable, interactive and emotional
• Involve customers. Shoppers need are more likely to increase sales and brand loyalty. This is where immersive
to feel like they’ve had personal strategies, which start personalized dialogues with customers and generate
service and that the problem or a culture of participation that increases the value of the shopping trip, come
need they came in to address is in. At its core, immersive retailing is about involving customers and creating
taken care of. environments that are affective and effective.

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“ It can be surprising how often retailers In the store, immersive retailing solutions create heightened sensory
fail to engage shoppers’ needs, which experiences — that use touching, seeing, tasting and smelling — to foster
emotional experiences that make customers feel like they’re interacting
is what immersive retailing is all about.
with the brand rather than merely browsing items.
In our recent study of consumer

perceptions and behavior, Professor The goals of immersive retailing can range from simplifying the shopping exper-
Neil Morgan and I found that a ience and raising awareness of a given scenario or product to making customers
store’s ability to make an emotional feel like your store fits their lifestyle. Integrated applications of new and existing
technologies will enable the experiences. Overall, immersive retailing benefits
connection with shoppers explains
shoppers by driving a more personalized, convenient, fun and, ultimately,
55 percent of the variance in custo-
memorable shopping experience. It benefits retailers by helping to:
mer satisfaction and 45 percent of

the variance in store loyalty.” • Keep retailers relevant through greater shopper engagement.
— Dr. Raymond R. Burke, director, Customer • Create new opportunities to appeal to customers’ lifestyle choices and
Interface Laboratory, Indiana University
Kelley School of Business
stand out from competitors.
• Enhance flexibility to respond to changing customer whims and competi-
tive threats.

“ Even on Madison Avenue, it’s amazing to see how many stores look
exactly the same, except for maybe colors. The staffs look the same,
the fixtures look the same — as if they were all done by the same
designer. Stores should speak to the ‘soul’ of the brand. Otherwise,
stores are simply manifestations of Web catalogs and customers are
just as well served shopping online.”
— David Polinchock

Depending on your exposure to new technologies, the idea of taking people into
your brand using immersive technology and experiences may sound technically
challenging or too futuristic. So how could it look in your stores and tie into your
Web sites? Let’s explore several scenarios to help you picture the different types
of possibilities.

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“ Something that gets our heart Creating memorable in-store experiences
racing is the question of how the The possibilities for immersive strategies in stores are limited only by imagination.
From an emotional perspective, immersive technology can help retailers create
retail environment goes from an
stronger bonds with customers. For example, fashion retailers can create
inventory management place to
microenvironments in the store to transport their customers to what feels like
the social experience place where a front-row seat at a virtual fashion show in Milan—complete with the smell of the
retail happens.” models’ perfume and brushes of wind as they pass by. It’s possible through
— David Polinchock 3-D technology and audio and olfactory systems that closely mimic real life.
David Polinchock points out that an in-store solution could also be as simple
as providing fashion tours of stores in the form of celebrity podcasts.

“ Ubiquitous, behind-the-scenes Three-dimensional technology can also augment reality to help customers
technology can play a big role in highlight their uniqueness. For example, it could enable them to customize an
item, such as a dress, on the sales ﬂoor and see how it would look on them.
creating a positive brand experience.
Or customers could more easily try on clothes using virtual dressing rooms
Consider stores where you have a
that superimpose clothes on their body image, and they could even share the
great experience and then must show fashions with their social network using cell phone technology or the Internet.
your bag to security when exiting. Customers could also use their cell phones to obtain information about products
Technology can help decrease theft and to locate departments or particular items. Potential beneﬁts include increased
cross-selling, higher customer satisfaction, increased conversion, fewer returns
less intrusively.”
and increased revenue per transaction. Best of all, augmented reality solutions
— David Polinchock
provide opportunities for retailers to try new things, partner with other businesses,
expand their footprint and expose inventory from across partners — all without
requiring disruptive remodels in stores.

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“ I think Second Life will break down Redefining the online experience
the walls between Internet shopping Immersive technology has the potential to dramatically reshape the retail exper-
ience, both online and in the store. Retailers can leverage microenvironments to
and brick-and-mortar stores.”
more closely interact with shoppers. For example, they can offer 3-D design tools
— Phil Lempert
(online and in the store), such as a solution for designing a home entertainment
system based on room dimensions, and unique experiences in 3-D Internet
environments, such as the opportunity to co-create new store environments or
provide product feedback. Phil Lempert thinks it’s critical for retailers to push the
envelope with 3-D Internet technologies if they want to survive the next revolution
in retailing. Lempert thinks that successful retailers can leverage technology, like
the 3-D Internet, to create emotional experiences and develop a relationship with
the personality of shoppers—not just views of customers that are based on their
transactional history. To underscore the possibilities and importance of the 3-D
Internet, Lempert launched Phil’s Supermarket, the first virtual supermarket, which
is located in the online world of Second Life. Just like in the real world, shoppers,
in the form of their virtual avatars, can wander through Phil’s, browse items and
attend food forums, cooking demos and other interest-group-based meetings
that empower users with the information they need to enhance their relationship
with food brands that they’re interested in. The key benefit of the more immersive
experience is that users form more emotional bonds with brands.

“ Second Life provides a social aspect to the shopping experience
that you can’t get on the Web. … It also enables you to create a retail
experience you can change in five minutes at a minimal expense.”
— Phil Lempert

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“ We ask a lot of questions, like when Blurring the lines between online and in-store
I’m shopping and see a beautiful So far, we’ve examined in-store and online scenarios for immersive retailing
separately. However, the shopping experience of the future is not an either/or
dress that I think would be great
option. It’s a multichannel, multiplatform experience. Consider the process of
for my daughter , why isn’t there a
remodeling a kitchen, for example. In the store, shoppers can view samples of
way to easily send a picture of the items, but there’s no way to actually conﬁgure a room to see how it would look
dress to my wife? If I didn’t have to when the remodel is complete.
bring her back to the store to see
With new technologies, the remodeling process could begin online, where
it, there’s a better chance I’d buy it
shoppers create a proﬁle by providing the dimensions of their kitchen and
on the spot. If I can do it online, I
features, such as the cabinets they are replacing, including their placement
should be able to do it in the store. in the room. They could also narrow the styles of cabinets and colors of tiles
We call it ‘e-tailing your retail.’” they’re interested in to streamline the time it will take them in the store. When
— David Polinchock they go to the store, instead of looking at samples, they could enter a scaled 3-D
re-creation of their kitchen and mix and match their various choices to see and
experience how they would all look together. Using this information, they could
then easily choose the best option. This model would enable companies in
many retail segments to move from product pushers to true solution providers.
.

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Immersing the shopper in an engaging, 360-degree experience

“To stand out in a crowded marketplace, retailers need customer
advocates, not just shoppers.”
— IBM Institute for Business Value 2

Clearly, immersive technology in retailing presents compelling opportunities. But
what’s appropriate for the brand experience, and what are the factors that help
define and deliver those experiences? When charting a strategy, it’s important
to consider your business objectives and how you can link them with customers’
expectations for your brand to create advocates. And depending on the retail
segment you’re in, part of the challenge may be rethinking how customers use
your store. Think Starbucks. It’s as much a community meeting place as it is a
coffee shop. The Apple store is as much a help desk, customer support center
and Wireless Fidelity (WiFi) access point as it is a store. And American Girl is as
much a theater, playhouse and museum as it is a store.

Focus on customer expectations to create advocates
What makes the above brands successful? Their customer focus. According
to a 2007 series of IBM surveys that polled nearly 20,000 consumers, those
retailers that integrate customer-focused initiatives throughout their businesses
have a greater number of advocates and often outperform their competitors.
Advocates are defined by three criteria: they are customers who recommend
their retailer to their friends and family, who would increase their purchase
amount if their retailer offered products found at other stores, and who would
stay with their retailer even if another retailer offered a competitive product. IBM
surveyed U.S. consumers from five retail segments — grocery, large-format
apparel, mall-based specialty (MBS) apparel, drugstore and online retailers —
to identify the key retailer attributes that drive consumer advocacy. Knowing
the underlying reasons why customers become advocates enables retailers to
pursue customer-focused initiatives and investments, such as immersive retail
technology solutions, with greater precision and success.

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To better understand what retail features, or attributes, are most important to
advocates, IBM studied 14 attribute statements across each retail segment,
and then grouped the 14 attributes into 7 attribute categories. IBM then asked
customers to rate their primary retailer on a scale of 1 to 10, from “strongly
disagree” to “strongly agree.” The survey results showed that, on average across
the segments, the single attribute statement that advocates ranked highest was
“store is pleasant and enjoyable to shop,” which falls into the “store experience”
category. Similarly, the survey showed that the most important attribute category
for advocates is a positive store experience. Advocates want their primary retailer
to provide a pleasant, easy and enjoyable overall shopping experience — all of
which are attributes that immersive technology solutions can help deliver.

Meet varying demographic needs
Today’s marketplace is full of customers with very different relationships to
technology and brands. Traditionalists and baby boomers tend to want help
from store associates with product expertise. Generation X shoppers, on the
other hand, are more comfortable with technology and seek out solutions that
help them form their own opinions and figure things out on their own. Millennials
or Internet generation (iGen) shoppers — the generation whose members have
used the Internet and advanced technology their entire lives — will demand an
arsenal of support from all channels, including a high-touch service experience
based on interactions with self-service technology and associates. As millenn-
ials figure more and more into sales equations, it will be important to pull rather
than push them into sales. Regardless of demographic, all customer advocates
demand access to rich informationso that they can make the right buying
decision the first time.

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“ Putting a new store environment Combine your innovative strategy with technology to create immersive environments
in Second Life with the idea that An immersive environment is enabled by technology and spatial experiences, but
it’s fueled by business objectives and customer expectations. Three-dimensional
it will sell a lot is a recipe for fail-
Internet, 3-D video, motion-tracking solutions, surround sound, and environmental
ure. Retailers who go on with the
design and merchandising can all be key components of immersive retailing,
intent to learn and figure out what’s helping to change buying attitudes and deliver the type of experience that keeps
next — and get to the future faster — customers coming back. How? A fashion store could enable customers to see
will succeed.” themselves in social situations, such as at a bar or walking down the street, in
— Phil Lempert the clothes they’re interested in. Media stores could transport customers to front-
row seats of a concert for the artists they’re interested in. Or a craft store could
provide virtual crafting sessions that enable clients to learn from experts situated
anywhere in the world.

“Technology will play an increasing Of course, immersive technology solutions are only one aspect of next-generation

role in the shopping process … some retail technology environments. Ultimately, next-generation stores and Web sites
will be sense-and-respond environments that morph themselves to meet the
of the revolutionary developments
temporal demand of customers’ immediate shopping objectives.
poised to enhance the shopping

experience in the near term include The immersive retailing experience will be delivered via microenvironments that
smart fixtures that sense and respond narrow the focus of shoppers’ experiences to “I” and “me.” It will leverage the

to shoppers, 3-D volumetric video dynamic aggregation of flexible technology, realtime sales, and rich customer
data and business rules. And it will be driven by the ability to evaluate inventory,
displays and telepresence devices
store and business conditions, along with specific customer preferences, on
that allow shoppers to consult with
the fly. An array of technologies will combine to create these environments,
product experts in remote locations.” revolutionizing the shopping experience in stores and online. In the store, the
— Dr. Raymond Burke integrated technologies will include radio frequency identification (RFID), kiosks,
electronic shelf labels, biometrics, digital media, shopping cart companions,
mobile workforce solutions and the consumer’s own personal device. Online,
3-D technologies, true user-driven design and collaboration tools will spur the
turn to innovative, dynamic and user-driven experiences.

Immersive retailing presents a way to take shoppers beyond detached browsing © Copyright IBM Corporation 2008

into brand and product experiences that they won’t soon forget. When you’re ready IBM Corporation
IBM Software Group Industry Solutions
to explore this new frontier and forge stronger relationships with customers, IBM Route 100
can provide the tools and insight to put you on the path to success. Somers, NY 10589
U.S.A.

Produced in the United States of America
Why IBM? 01-08
Given the saturated retail marketplace, creating exciting shopping experiences that All Rights Reserved.

build advocacy and keep customers coming back is harder than ever. For more IBM, the IBM logo and ibm.com are registered
trademarks of International Business Machines
than 35 years, IBM has provided leading-edge retail solutions, and we’re working Corporation in the United States, other countries
hard to provide groundbreaking immersive retailing solutions that are designed to or both.

open personalized dialogues with customers and deliver real business beneﬁts to Other company, product and service names may
be trademarks or service marks of others.
retailers. IBM brings solutions to market that enable this total vision for on demand
IBM provides this publication “as is,” without war-
retail operations. A solution is a business-objective-based aggregate of capabilities ranty of any kind, express or implied, including the
that supports the life cycle of enablement. implied warranties of merchantability or fitness for
a particular purpose. Some jurisdictions do not
allow disclaimer of express or implied warranties
IBM also provides the IBM Retail Integration Framework, a best practice combination in certain transactions; therefore, this disclaimer
may not apply to you.
of IBM business process, open-standards-based information and security manage-
IBM reserves the right to change specifications
ment software and services that can help hasten solution implementation and or other product information without notice. This
optimize choice. The Retail Integration Framework can support the infrastructure publication could include technical inaccuracies
or typographical errors.
ﬂexibility and the people-to-people, people-to-process and process-to-process
References to IBM products and services do not
interactions needed to enable immersive retailing environments. To differentiate imply that IBM intends to make them available in
your operations and take customers into a whole new brand experience — look other countries.

no further than IBM. The IBM home page can be found at ibm.com®.

1 Call to Action, Yankelovich Monitor, 2006.
For more information 2 Turning shoppers into advocates, IBM Institute for
Business Value, 2008.
To learn more about immersive retailing and immersive retailing solutions available
from IBM, visit:

ibm.com/retail

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Immersive Retailing Defined

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