Shanghai Explorium Launch Report

 OCTOBER 18, 2015
DISCOVERING THE
FUTURE OF RETAIL
On September 24th, we were in Shanghai to attend the opening ceremony for Explorium, a Fung Group initiative in collaboration with IBM and Pico, which is an innovative experimentation platform over the future of retail. This report is a recap of what we saw. What Is Explorium? It may look like any upscale shopping mall, but beneath the surface, Explorium is much more. It is a retail “omni-­‐platform lab” consisting of a physical space and an interconnected digital network of services, including a mobile shopping application, an i-­‐beacon tracking solution and a data analytics platform. The space is presently populated by 35 brands that are experimenting with concept stores and products that leverage innovative layouts and retail technologies. The lab gives these brands the opportunity to observe how customers interact with new technologies, products and environments in real time, providing the brands with valuable insights into customer behavior. Explorium is not open to the public, which is another way it differs from a regular shopping mall. The lab pre-­‐registers customers who represent various demographics and builds detailed consumer profiles on them. Explorium later matches the customers’ profiles with their actual behavior while in the lab. At present, the Explorium’s customers consist of a curated community of over 12,000 employees of the Fung Group, IBM and Pico, and their families. Explorium members have spent an average of over three hours per visit during the first three months of the lab’s operation, following its soft launch in June. Augmented-­‐reality applications, magic mirrors, gamification tools and 3D-­‐printed, customizable products are among the technologies that brands are experimenting with at Explorium. Explorium is located at LiFung Plaza in Shanghai and currently occupies 5,500 square meters of trade exhibition area; there are plans to expand the operation to more than 23,000 square meters and to feature other product categories, including women’s and men’s apparel and homewares. Currently, Explorium’s participating brands operate in the kids’ segment and include Toys “R” US, Gymboree, Build-­‐A-­‐Bear Workshop, Stride Rite and Hello Kitty. DEBORAH WEINSWIG, EXECUTIVE DIRECTOR–HEAD OF GLOBAL RETAIL & TECHNOLOGY [email protected] US: 917.655.6790 H K: 852.6119.1779 CN: 86.186.1420.3016 Copyright © 2015 The Fung Group. All rights reserved. 1
The Ceremony: Opening Remarks Fung Group Chairman Dr. Victor K. Fung delivered opening remarks on-­‐site to about 200 invited guests in a packed auditorium. He was followed by Explorium’s Director, Simeon Piasecki, who provided more details on the concept. Dr. Fung began his speech by describing the transformation presently under way in the world of retail and highlighting China’s unique position as a vibrant market shaping global retail trends. “The Internet and mobile communications are disrupting the way consumers behave and, in so doing, providing unique opportunities for retailing to come up with new business models,” he said. “Chinese consumers are setting shopping trends globally, especially with their avid use of social media. And Shanghai is home, arguably, to China’s most vibrant, tech-­‐savvy consumers.” Dr. Fung explained that this is why the Fung Group chose Shanghai as the Explorium launchpad, and clarified that “while most of Explorium’s inaugural customers are Fung Group–related, this omni-­‐channel lab is available to all retailers and brands as a place to incubate, experiment and iterate.” He added that he had no preconceived ideas about the results. “No one knows yet what the optimal combination or winning omni-­‐channel business model will be, or what success will look like. For instance, in three to five years, what will be the role of a flagship store in relation to a shopping website? What are the implications for shopping malls? What services will tomorrow’s consumers expect as a basic condition of making a purchase? How should retailers adapt? Presently, there are more questions than answers. Everyone is in a race to connect the dots.” Simeon Piasecki provided further insight into the operations of the lab, saying, “Our strength lies in creating experiments that convert retailing ideas into workable business models through rapid testing and prototyping.” He elaborated that Explorium’s priority in the coming months is “to 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.” Piasecki stressed that data and analysis are integral parts of Explorium’s offering. By using IBM’s Presence Insights, Explorium is able to track each customer’s journey, finding out which products best catch the customer’s attention and interest. Explorium Tour Following the opening remarks, ceremony attendees were given a tour of the facility. Below is a recap of the most interesting spaces. Toys “R” Us is experimenting with a few retail innovations: 1) Augmented-­‐reality display solutions that highlight product features when the product box is scanned 2) Tablets placed on shelves that allow customers to view additional product information online 3) Mobile shopping for big ticket items: kids can play with big items such as cars and playground equipment, which the store does not hold in inventory, but which are available for purchase and delivery through a mobile app DEBORAH WEINSWIG, EXECUTIVE DIRECTOR–HEAD OF GLOBAL RETAIL & TECHNOLOGY [email protected] US: 917.655.6790 H K: 852.6119.1779 CN: 86.186.1420.3016 Copyright © 2015 The Fung Group. All rights reserved. 2
Augmented-­‐reality transformer emerges out of the box when the box is scanned Play area for large items not held in inventory, but which can be purchased through a mobile app Fung Group’s Studio 8020 Studio 8020 is a 3D-­‐printing experimentation platform based on the premise that, in the future, 80% of a product will be mass-­‐produced and the remaining 20% will be customizable. To showcase this idea, the Studio 8020 team created various traditional products with customizable parts. Examples included racing car toys that carry drivers with 3D-­‐printed heads of real individuals and a foosball table with players that have “real” faces. Racing car drivers with 3D-­‐printed “real” heads Foosball teams with customizable faces Kids’ shoe brand Stride Rite is experimenting with a new way for kids to try on shoes. The brand has installed an interactive game that involves kids playing and dancing in their new shoes to see if they fit right. The game features an animated penguin that sings and dances while the player mimics its movements. The game seemed like an instant success with kids. The brand is also implementing a magic-­‐mirror solution by Catlook, which displays additional product information once a shoe is placed on the scanning surface. DEBORAH WEINSWIG, EXECUTIVE DIRECTOR–HEAD OF GLOBAL RETAIL & TECHNOLOGY [email protected] US: 917.655.6790 H K: 852.6119.1779 CN: 86.186.1420.3016 Copyright © 2015 The Fung Group. All rights reserved. 3
Interactive game for trying on new shoes Catlook solution for detailed product information Other Brands & Technologies Other notable brands operating concept stores in Explorium include Build-­‐A-­‐Bear Workshop, which is making its first foray into China via the lab, and Gymboree and Hello Kitty. The latter two brands are running experimental store concepts that blend “experience” and “shopping” areas and allow offline-­‐to-­‐
online shopping. In terms of technology, we saw the IBM platform that is the backbone of the digital services provided by Explorium. The platform integrates tracking technology to create shopping heat maps and display individual shopper paths through the commercial space. The interface is also equipped with a user-­‐
friendly dashboard that provides store operators with insights on shopper behavior and store performance. Other interesting technologies we saw at Explorium were the Screemo mobile-­‐to-­‐screen application for mobile advertising and what is said to be the world’s largest claw machine game, called the Claw of Fortune. The claw is operated solely by hand gestures instead of a traditional joystick, and the game serves as an additional attraction for families visiting the space. Pico’s role in the lab is to bring all these experiences together in a physical environment of constant change. As Dr. Fung explained to the media, “The whole of Explorium is about tests. It’s like a stage where the scenery is constantly changing. We need a very good manager with good ideas for this—and that’s Pico.” Conclusion Explorium is an exciting new concept that brands are paying more attention to as they try to understand not just Chinese consumers, but also the omni-­‐channel business models reshaping the future of retail all over the world. We hope to see more innovative solutions implemented at the space across a broader product range, and we will continue to follow Explorium’s development closely. DEBORAH WEINSWIG, EXECUTIVE DIRECTOR–HEAD OF GLOBAL RETAIL & TECHNOLOGY [email protected] US: 917.655.6790 H K: 852.6119.1779 CN: 86.186.1420.3016 Copyright © 2015 The Fung Group. All rights reserved. 4
Deborah Weinswig, CPA Executive Director—Head of Global Retail & Technology Fung Business Intelligence Centre New York: 917.655.6790 Hong Kong: 852 6119 1779 China: 86.186.1420.3016 [email protected] Filippo Battaini [email protected] Marie Driscoll, CFA [email protected] John Harmon, CFA [email protected] Aragorn Ho [email protected] John Mercer [email protected] Shoshana Pollack [email protected] Kiril Popov [email protected] Jing Wang [email protected] Steven Winnick [email protected] HONG KONG: 10th Floor, LiFung Tower 888 Cheung Sha Wan Road, Kowloon Hong Kong Tel: 852 2300 2470 LONDON: 242-­‐246 Marylebone Road London, NW1 6JQ United Kingdom Tel: 44 (0)20 7616 8988 NEW YORK: th
1359 Broadway, 9 Floor New York, NY 10018 Tel: 646 839 7017 FBICGROUP.COM DEBORAH WEINSWIG, EXECUTIVE DIRECTOR–HEAD OF GLOBAL RETAIL & TECHNOLOGY [email protected] US: 917.655.6790 H K: 852.6119.1779 CN: 86.186.1420.3016 Copyright © 2015 The Fung Group. All rights reserved. 5