This article was originally published in BIV Magazine's BC Tech issue.
Technology has always been important for retailers, but the need to keep pace with competitors’ innovations, and to exceed them, has never been more important.
Those who fail to dazzle customers with innovative technology risk losing sales to forward-thinking competitors who made those investments.
Many entrepreneurs and executives instinctively know technology is an investment, not a cost, and the question on their minds is often whether to spend capital to create proprietary technology, or contract out their technology needs.
Sometimes the solution is to buy a technology company.
In July 2020, Vancouver-based Lululemon Athletica Inc. spent US$500 million to buy Mirror — a New-York-based, in-home fitness company.
Mirror’s marquee product is a device that appears to be a standard mirror, unless it is turned on.
Users activate their Mirror to enjoy an augmented reality, where a fitness instructor wearing Lululemon clothing could appear, for example, ready to guide the user through a workout.
The Mirror could show videos that include Lululemon representatives, or community events.
Lululemon CEO Calvin McDonald suggested on a September 8 conference call that part of the rationale for the acquisition was the “natural synergy” between driving customer loyalty and generating future sales.
“Guests want to engage deeper with us, and each other, and they are willing to shift into the digital space to do so,” he said.
“Mirror can be the vehicle through which we offer long-term benefits to our guests, such as membership programs and special experiences.”
Lululemon earlier this year installed more than 150 Mirror kiosks within American Lululemon stores, and McDonald said his aim is to have those kiosks in 200 stores by the holiday season.
The company plans to launch Mirror sales in Canada on November 22 in some of its stores in Ontario, B.C. and Alberta.
Mirror is a revenue driver on its own. Its devices in Canada cost $1,895 plus tax. Mirror memberships cost $49 per-month for unlimited live and on-demand fitness classes for up to six household members.
Early buyers in Canada will also get a $250 Lululemon gift card.
To increase engagement, Lululemon has invested in two new production studios to triple the number of live classes it offers and create more Mirror content.
The devices do not yet enable e-commerce, but McDonald said that those transactions could be possible in the future, as the lines between entertainment, social content and retail sales channels blur.
Being able to virtually try on Lululemon clothing is another possibility for Mirror, given that this kind of augmented reality has become standard in other retail sectors.
EssilorLuxottica’s Vancouver-based subsidiary Clearly, for example, has had virtual try-on technology for many years.
“That augmented reality is not really disruptive anymore,” Clearly CEO Arnaud Bussieres tells BC Tech. “It is really hygiene for most eyewear retailers.”
Former Clearly CEO Roy Hessel in 2016 floated the idea that the company was looking at having online eye exams that would let customers know their prescription.
Bussieres, however, says that doing that is still “illegal” in Canada, and that the most the tests could do is suggest whether the customer needs to see an eye doctor.
“First, the accuracy is very questionable, and second, you cannot really prescribe anything, or give any prescription out of it.”
As might be expected, Clearly’s cross-town rival Kits also has augmented reality to show users what eyewear looks like when tried on.
A click can turn on a computer or smartphone camera, and the image on the screen will be that of the user wearing the desired spectacles.
Kits also, however, offers potential American customers the ability to take vision exams on smartphones.
The company’s co-founder and chief operating officer Joe Thompson explains to BC Tech that those who take the exams can confirm existing prescriptions, but they will not get issued new, or changed, prescriptions.
If their current prescriptions are no longer valid, they will be told to visit a list of nearby optometrists from an auto-populated list.
The process for Kits’ exams involves users propping up their smartphones. Exam-takers then follow speech commands, such as to step back a certain distance.
Smartphones then show letters, for example, and ask exam-takers what is on the screen.
“There are some colour-coded charts, some letter charts, and the audio advances at your command,” Thompson says.
The exam technology knows what kind of smartphone the customer is using, so it can understand how large letters are when it asks the exam-taker to respond to what letter they are seeing, Thompson says.
Bussieres says some new technology that Clearly is using is less visible to users.
Products in its bricks-and-mortar stores have radio-frequency identification or RFID technology that tracks products’ movement, and can determine how many times customers have tried the products on.
This helps the company put the most popular products in its physical stores, including the one on Robson Street and the one on West 4th Avenue.
Products in Clearly’s stores also have tags with QR codes that customers can scan to read product reviews and feedback from previous purchasers, Bussieres says.
Kits, meanwhile, recently opened its first physical store — an outlet in a former Starbucks location, on Cornwall Avenue in Vancouver — which doubles as a coffee shop, so customers can buy a latté as they shop for glasses.
The lion’s share of sales for both companies is online, and the shift to e-commerce has been a reality for most retailers.
It is why Ottawa-based Shopify did so well during the pandemic that it became the largest public company in Canada, ranked by market capitalization.
Shopify has standardized templates that enable small businesses to have e-commerce websites. It then gets royalties when the websites generate sales.
The shift to e-commerce has also been a boon to Burnaby-based Cymax Group Technologies Ltd., which has a platform that helps furniture manufacturers and vendors sell products online.
“We work with more than 400 vendors right now, and we have more than 400,000 products in our catalog,” CEO Riz Somji tells BC Tech.
“Our objective is to simplify the entire e-commerce process, and amplify the reach of our vendors, whether it’s through new marketplaces that we sell on — Amazon, eBay, Walmart, Howe — or through our own websites, which are Cymax.com and Homesquare.com.”
Cymax never touches the vendors’ products. Instead, it provides e-commerce tentacles that connect the end-buyer with either the manufacturer or a retailer, which could be a small business with a single store.
“We manage inventory, pricing, fulfillment, post-order management, etc.,” Somji says. “Everything is through this Channel Gate product-platform of ours.”
In 2015, Cymax had about $190 million in revenue, and Somji says that his company’s sales have almost doubled since then.
“It’s a tough business,” he says. “We are managing hundreds of vendors, dozens of marketplaces and websites, thousands of SKUs (stock keeping units), millions of transactions and dozens of carriers. There are a lot of moving pieces.”