Canadian tech companies are sparking a retail revolution

In 2019, Sophie Howe, co-founder and CEO of Xesto, felt like she was rolling a rock uphill. Sure, the company was creating innovative technology that could revolutionize online shopping, but landing that all-important first customer? No dice.

The startup, spun off from research at the University of Toronto, was working on something new for the shoe e-commerce space: a software tool that uses a smartphone’s facial ID camera to create 3D reconstructions customers’ feet. Suddenly, online shoppers could tell in seconds if these size eight KEENs or Nikes would actually fit them.

Howe expected the tool to be easy to sell to retailers. Not only was the solution brilliant in its simplicity – 3D video scanning was ubiquitous in new phones then – but accurate foot measurements could dramatically reduce line returns, a huge problem for the industry. Between 30 and 40 percent of all shoes purchased online are returned, she says, often at the company’s expense.

But when Howe reached out to potential customers to ask them to commit financially, retailers asked him to come back when the tool was ready to launch. Then they would decide.

“It was like, ‘Let me see when you work with the big players.’ And then the big guys said, ‘Let me see when you’re working with our competitors,’” she says, explaining that e-commerce just wasn’t on their radar.

That is, until the pandemic hits. Then people started returning his calls.

“Everything changed overnight,” she says.

This change has been felt throughout the retail sector. According to data from Statistics Canada, e-commerce retail sales nearly doubled between February and May 2020, when they reached a record $3.9 billion, and companies scrambled to find ways to make online shopping easier and more attractive. Many of these technologies are blocked. Today, Xesto is used by thousands of customers and is moving into the wristwatch space, offering fast, convenient 3D wrist measurements for smartwatches with slip-on bands in multiple sizes. Full body scans could be next. (Say goodbye to squirming around in jeans in a claustrophobic locker room. Score.)

“Pre-existing and emerging trends have accelerated dramatically over the past two years,” said Kostya Polyakov, National Industry Leader for Consumer and Retail at KPMG Canada. “The retail sector, in particular, is undergoing a sea change.” In response to Covid-19 lockdowns and general unease about shopping in public, the pandemic has ignited a firecracker under retail technology that would otherwise have taken years to come to fruition. As Polyakov puts it, “augmented reality, artificial intelligence, and chatbots, the adoption rate just skyrocketed.”

In other words, we actually got to to like these new innovations, even preferring them to traditional mall retail. From Calgary-based Nobal, which creates interactive mirrors and turns shoppers into digital avatars that can try on different styles and sizes of clothing, to California’s HaptX, which uses virtual reality and robotics to simulate touch, technological innovations s are accelerating as more and more retailers hang on. And they are becoming more and more immersive and sophisticated.

A personalized experience

Companies in the luxury market, in particular, have had to rethink their businesses to incorporate more technology. Before the pandemic, many luxury brands didn’t even care about e-commerce sites. The emphasis has always been on excellent in-person service. But suddenly they needed systems that would enable online purchases and in-store pickup, as well as ways for salespeople to chat with their best customers to book appointments.

“Previously, all of this was seen as an asset,” says Ali Asaria, president and CEO of Tulip, a fast-growing point-of-sale software company based in Kitchener, Ontario, which works with high-end retailers. range. including Coach and Tiffany & Co. “Then Covid hit, and it was, ‘OK, the last 10 things we talked about that we would do over five years? We have to do them in five months. ”

How are things changing? Imagine your favorite store knowing your favorite style, fit and colors, then a salesperson texting you, IMing, WhatsApp note or calling you to give you tailored recommendations for the latest products and news on upcoming lines. Forget those boring generic corporate e-blasts. This time it’s personal. One of Tulip’s apps also installs a widget on the retailer’s website so customers can book one-on-one appointments with salespeople.

As online shopping becomes more convenient, the in-store retail experience will also need to evolve. This means making sure that online and in-store inventory merges so that a customer can check if their local store has what they want before hopping in the car. Polyakov calls this “connected business,” explaining that major retailers already have the digital onboarding capability that will show you their inventory levels, pick-up availability times, and even which aisle to find the item in. But small and medium-sized chains will have to step up their efforts to be competitive.

They can’t take a “lipstick-on-pig approach to digital or e-commerce,” he says. “Next-level digital integration is an absolute must today.”

Even further, the online and real worlds could eventually collide with live salespeople giving personalized advice online. Polyakov calls this merging of the physical and digital worlds “phygital”.

All of these innovations will likely mean a reduction in store real estate footprints as retailers shift to appointment-based or showroom shopping models. Think fewer SKUs and products, while sharing on-premises storage space with other nearby stores.

Augmented reality takes off

Pawel Rajszel of Leap Tools in Toronto has also seen a surge in interest in his Roomvo app, which gives users a way to view anything from furniture and carpets to paint colors and flooring in your own space. Shopping at, say, Crate & Barrel online? Simply take a picture of your room and use the Roomvo tool which is seamlessly integrated with the retailer’s website. Here is. There’s the new lamp next to your favorite comfy chair.

Looking to the future, Rajszel believes tools like this will become the norm rather than the exception. Especially since Roomvo is rolling out new features such as the ability to give personalized advice on combining pre-existing furniture with new decorative pieces. He sees the industry improving the AI ​​game.

“Frankly, we’re really only at the beginning,” he says. “We are only scratching the surface with all these features and enhancing the consumer experience.”

Polyakov agrees, describing a world where, after a few innovative hardware updates, we’ll buy a sofa online and then use our phone or laptop to project a life-size 3D image onto the floor to see how it will perform in our space. . Or we’ll buy a tent, throw it up and lay “inside” to check the dimensions and see how it feels. Customers will likely expect these kinds of additional services that will make online purchases of problematic items like furniture, rugs, or yes, jeans and shoes easier.

“Augmented and virtual reality will be one hundred percent more prominent in purchases,” says Polyakov.

Merchants immersed in the metaverse

Chatbots are also becoming more sophisticated. Polyakov highlights the personalized experience Nestlé Toll House has created with Ruth, its new AI-powered assistant. Just list what you have in your fridge and pantry and the humanoid baker on your screen will give you suggestions on recipes to try (with company products, of course).

But chatbots are just a gateway to the dawn of the next era of connectivity and visualization, says Polyakov, who sees retail exploding into the digital metaverse space, an immersive parallel reality in real time.

What would that look like? A much richer sensory experience than the current version of shopping in virtual space. (Let’s face it. You can’t throw pennies in a mall fountain when shopping online or catching up with your friends. But you can in the metaverse.) Video game players are already used to spending real money to upgrade outfits or gear in their digital. worlds – could they also be persuaded to buy real jeans in the game that will be delivered the next day? Or maybe we’ll all put on VR haptic gloves to feel how soft a new sofa is, because the real one is three time zones away. Although we are still years away from that, visualization, avatar and connectivity technologies are pushing us in that direction.

Companies such as Gucci are already grabbing space at The Sandbox, a digital theme park, while metaverse platform Decentraland is set to hold its first Metaverse Fashion Week from March 24, with dozens of global brands and thousands of users connecting virtually at fashion shows and after parties, twirling in digital couture. Meanwhile, Warner Music Group is set to host star-studded virtual concerts on The Sandbox, which are expected to attract millions of viewers. It doesn’t take much of the imagination to see how fans might be tempted to buy real clothes or merchandise at these events as well.

Some experts predict that the metaverse is set to become the next Internet, and Polyakov agrees. “Humans are going to spend more time online, more time in the digital world,” he says. “It’s the gamification of life.”