Using Analytics to Better Understand and Shape the Future of Retail

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Simeon Piasecki, Director of Explorium, a Fung Group laboratory in Shanghai

By Simeon Piasecki

Retailers the world over are grappling with how to attract today’s digitally savvy consumers and turn them in to repeat customers. Yet, I would argue that this is nowhere more keenly felt than in China.

Chinese consumers are setting shopping trends globally, especially with their avid use of digital devices and social media. They are much more likely than American or European consumers to interact with brands through social media, according to BCG. Chinese consumers are fast becoming the world’s most discriminating and knowledgeable. Chinese consumer groups and their behavior are highly segmented, requiring very targeted, nuanced interactions.

So, although digital disruption challenges retailers everywhere, China is an ideal place to look for solutions to address it. The  Fung Group recently opened a large-scale laboratory in Shanghai to allow brands to experiment with new business models and techniques that will shape the future of the retail industry. Called the Explorium, it is a unique platform for businesses to observe and explore in real-time how consumers interact with new technologies, products and environments.

Retailers are using the Explorium to test different store concepts and combinations of ways to connect more deeply with consumers, whether through more exciting interactions with physical products in-store, or by extending customer experiences beyond. The scale and rapid iteration the Explorium enables is, to my knowledge, unmatched anywhere else in the world.

IBM is collaborating with us, bringing to the Explorium its deep expertise in the retail industry as well as analytics. By using IBM Presence Insights — a location-based solution that helps companies understand mobile activity in and around a physical location — Explorium retail partners are able to provide individual consumers with timely, relevant offers and discounts as they move throughout the Explorium.

IBM is also delivering a spectrum of advanced analytics that will allow Explorium’s retail participants to deliver in-depth insights from contextual information such as in-store traffic patterns and volumes, how many visitors entered a store, how many stopped at a specific location or category in the store, how they were engaged, and whether specific retail displays or promotional campaigns yielded conversions.

Retailers in the Explorium can learn from these insights to deliver consumers personalized, relevant marketing interactions in real-time. Consumers can opt-in to receive offers and rewards from their favorite brands via social media and their mobile device — all tailored to their location and unique preferences. These customized interactions with consumers create opportunities for brands to differentiate the experience they offer their customers, building loyalty and boosting profits.

The lab has been functioning on a soft-opening basis for three months with retailers including Fung Kids (Holdings) Limited — which has  iconic children’s brands such as Stride Rite, Toonsland, Hello Kitty and Petit Bateau in its portfolio — and Global Brands Group Holding Limited, whose licensed brands include  Nautica, Jeep and New Balance.

Explorium, which is membership-based, has close to 12,000 active participants registered from among employees and family members of the Fung Group and its business partners, including IBM. Already, we’ve uncovered valuable insights.

By using Presence Insights we are able to track consumer paths and dwell times. Analysis has shown that over 40 percent of Explorium members come from the upper-middle to affluent income segments of Shanghai. While this group tends to spend less dwell time than other demographic groups of Explorium participants, the 10 percent higher conversion rate of this group has proven that they have a higher propensity to purchase.

In the coming months we will design, build, run and measure a greater number and variety of experiments to produce a pool of data that will enable participating brands and retailers to obtain unique insights for their individual businesses.

What’s most exciting to me is that we aren’t operating with an agenda to prove that one retail model is better than another or even to make predictions about which business models will emerge from the experiments at Explorium.

Our primary goal is to learn from the Explorium, enabling our retail partners to experiment, incubate and iterate at high speed while minimizing their cost and risk. And who knows? We may just come up with the next big thing in retail.