17 Jul 2019

Part One: The Fitting Room merges physical and digital

As brands and retailers recognize the need to create a customer journey that combines both digital and physical commerce, technology providers experienced in both areas are creating some of the most innovative retail concepts.

The Fitting Room, launched by a pair of Swedish retail technology companies, allowed a pair of brands - one apparel and the other footwear - to improve sales and lower costs by combining the benefits of both physical and online retail. 

The duo - Deniz Chaban, co-founder and CEO, Touchtech, and Johan Lind, CEO and co-founder, Versiteit - converted a 63-square-meter space in a retail mall into a store that allowed customers to browse merchandise on interactive kiosks, try on shoes and clothing, place orders and have them delivered to their homes. 

The model, tested from October to November, increased sales and reduced the need for on-site inventory. 

"You could actually have a profitable business in a smaller space," Chaban told Kiosk Marketplace. "This hadn't been done by anyone before."

The Best of Both Worlds

Looking to combine the benefits of physical store and online store, Chaban and Lind reasoned that the physical store offers the ability to touch and try on product, as well as good customer service, while the online side offers extensive product information. 

They designed The Fitting Room to allow customers to touch and try on product and at the same time have access to the depth of selection and information they normally find at an ecommerce site. Touchscreen kiosks provide access to extensive product and brand information, such as the designer's thoughts and the properties that add value to the product. 

To access product information, the customer takes the product to the kiosk and scans the RFID tag against the RFID reader mounted on the kiosk, prompting product information to appear on the Elo touchscreen. The customer is able to engage with the brand at their own pace. 

there is also a touchscreen table in the center of the room for customers to browse.

"You had a really great sales tool to tell about the product," Lind said. "You're not just scrolling through images like on a website." 

Chaban and Lind had no trouble convincing the Nordstan shopping center in Gothenburg to provide the space for the Fitting Room. Preparation began in May 2018 and the store opened in October. 

Liberate the sales staff

Looking to combine the benefits of physical store and an online store, Chaban and Lind reasoned that the physical store offers the ability to touch and try on product, as well as good customer service, while the online side offers extensive product information. 

The store staff did not have to administer anything; they simply assisted customers as needed. There were two full-time employees in the store at all times.

"I had always thought that if we could just free the sales staff from the POS and allow them to assist customers it would increase sales.,"Chaban said. "The staff was accessible to the customers," Lind said. "They didn't need to count the case or put out new products. They could spend all the time with the customer."

Some of the sales people excelled more than others, he said. Those who liked to engage with customers did a lot of sales. 

While the two brands - Sneaky Steve, a shoe specialist, and Wacay, an apparel brand - aren't famous, they are premium brands, Lind said. "They really had a story to tell, and a story that added value to the customer," he said.

Minimum on-site inventory

All inventory in the store was try-on only. Every shoe model was available in every size, but not in every color. Note every color t-shirt was available to try on; there was one color for small, another for medium and another for large. 

"We did not purchase any inventory upfront," Chaban said. "Which meant that we basically were never out of stock; they always had products available. It was shipped from that (ecommerce) location just as if you made an order from their website." 

Once the customer decided to make a purchase, they went to one of the four touchscreens, entered their address and paid using their credit card or smartphone. Cash was not accepted. 

Improved results

The 30% returns common for ecommerce in Sweden nearly disappeared in The Fitting Room, Lind said. Returns were less than 1% "due to the fact that they tried the product before they ordered," he said. 

The test increased the ecommerce sales by 43% for Sneaky Steve, Lind said, whole for Wacay, the boost was slightly lower. Sales per square meter were above that of other retailers selling the two brands, he said.

The space averaged 50 customers a day that actually purchased product, Chaban said.

"This shows that there can be a new way of having a relationship between the reseller and the manufacturer," Chaban said. The reseller got 55%, which was normal. In addition, the brands incurred no marketing costs.

There i no plan to bring the Fitting Room back, but the insights will be usefull to helping the two channels together. 

"One can be bold and create a new type of concept where it's really consumer focused," Chaban said.