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The Official Blog of Acuity Knowledge Partners

The Need to Relook at Virtual Stores

Published on November 16, 2016 by Prabaldeep Paul

In a connected economy and connected lifestyles, convenience is key. Most consumer-related technologies being currently implemented or being thought about revolve around ways to make it easier not only for companies to engage their customers but also for customers to smoothy complete the journey from product learning to purchase. To this effect, ecommerce, online banking and transfers, subscription and pay-as-you go offering, and other channels have become ubiquitous.

While the supply chain industry has responded to this trend with innovative solutions to longstanding distribution and the last-mile challenges, solutions to point of sales (PoS) have been limited.

Traditionally, a PoS has been a place where sales are made, such as shops, malls, markets, and (more recently) the online medium (e.g., ecommerce). From a technical perspective, in the retail industry, PoS is a system in which a customer completes a transaction or makes a payment, such as a checkout counter. There has been a lot of innovation in technology around transactions/payments at PoS systems, including mobile-point-of-sale devices. However, retailers have not ventured beyond the traditional PoS locations.

Theoretically, any public place that has high footfalls and is equipped with suitable enablers (mobile phones, virtual kiosks, etc.) can be turned into a possible PoS location. Tesco was the first to demonstrate the possibility of such an offering through virtual stores in metro stations in South Korea. Virtual stores are essentially kiosks placed in public places that display popular products with barcodes. Customers can scan the products using an app on their smartphone, and the selected products are delivered to their home.

Bus stops and terminuses are a natural extension, but beyond Korea, the concept has not been explored much since its launch in 2012. Woolworths has made similar attempts in Australia, while recently, Jumbo launched its virtual bus stop supermarket as an experiment in the Dutch city of Utrecht.

Virtual reality (VR) is an interesting extension to the concept of virtual stores. Alibaba, in its Singles Day shopping fiesta in 2016, showcased this possibility by tying up with Macy’s – Alibaba’s customers used cheap cardboard VR headsets (provided by Alibaba) and Taobao’s app to virtually walk through and shop at Macy’s flagship store in New York.

Virtual-store use requires tech-savvy customers who are adept at using their mobile phone and have a fair understanding of the latest mobile-technology-enabled services. This factor may have been a reason for the slow offtake of this channel in the past. As we approach the end of 2016, with smartphones being increasingly popular, easier to use, and connected to much wider services (through apps), it is time to take a relook at virtual stores as an innovative retail channel.


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About the Author

Associate Director, Strategy Research and Consulting

Prabaldeep Paul leads the Strategy Research and Consulting practice at Acuity Knowledge Partners. He has over 11 years of experience working on assignments related to growth strategy formulation, go-to-market strategy, market entry and expansion (buy/build options), benchmarking, business transformation, process improvement and related areas.

He works closely with management, strategy, corporate development, competitive intelligence, innovation, procurement, and client teams across multiple industries, with focus on logistics and procurement, CPG and retail, hi-tech and digital services, private equity, and industrial goods.

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