retail news in context, analysis with attitude

Content Guy's Note: The goal of "The Innovation Conversation" is to explore some facet of the fast-changing, technology-driven retail landscape and how it affects businesses and consumers. It is, we think, fertile territory ... and one that Tom Furphy - a former Amazon executive, the originator of Amazon Fresh, and currently CEO and Managing Director of Consumer Equity Partners (CEP), a venture capital and venture development firm in Seattle, WA, that works with many top retailers and manufacturers - is uniquely positioned to address.

This week's topic:

And now, the Conversation continues...

KC: So you’ve just returned from a trip to Disney World with your sons, and I’m curious about some of the technological innovations you found there, and how they might be relevant and adaptable to the retail business. One of the most interesting things I’ve read about is the introduction of the Magic Band, which seems to be enormously versatile in its applications. How exactly does it work, and how did it interact with various components of the park experience?

Tom Furphy:
Our oldest is a high school senior and this year he wanted to go to Disney World one more time as a kid. My wife and daughter were there the week before for the national cheerleading championships. It’s not a short hop from Seattle and we knew they would not be interested in flying right back and into the mayhem of Disney. So it was a great opportunity for me to bond with my boys.

Several weeks before the trip we were prompted to visit the My Disney Experience website. Once there we set up a user account for the family and individual profiles for the family members. We had been to Disney about four years ago, so much of the necessary information was already in there. I was able to tell Disney that my two sons and I would be traveling together. We linked ourselves to each other and to our hotel reservation and park tickets. Our entire itinerary could then be shared digitally between us.

As part of the sign-up process we were prompted to select our Magic Bands. These are RFID wrist bands that were to be used throughout our visit for entry to the parks and attractions, paying for goods and services and even as our key for entry into our hotel room. We could each select our own color which gave it a nice element of personalization. The bands were shipped to us in a very professionally designed box with our names printed next to each band. All of the included collateral was personalized with our names and our trip details.

Disney also prompted us to download the My Disney Experience app before our arrival and to book our Fast Passes in advance. Fast Passes allow park visitors to bypass the lines for a ride within a scheduled one-hour window. We could book three fast passes per day ahead of time. Then, once we used the three in a given day, we could book one more at a time through the app.

KC: Okay, you're almost making me wish I had an excuse to go to Disney. Almost. These tools all sound great, but did you actually use these tools once you were on the premises? Did they make the experience more palatable?

We used the app constantly to manage our Fast Passes, check wait times for rides, book dinner reservations and even to navigate the parks and transportation systems. It was our trusted assistant throughout the trip, enabling us to mitigate many of the pain points usually associated with a trip to Disney.

The Magic Bands and digital Fast Passes were great. We used our three allotted passes early every day, then had no trouble getting at least three more each day. Using the app’s wait times as a guide, we never had to wait more than 40 minutes for rides where we didn’t have Fast Passes. It was one of the busiest weeks of the year at the parks, but the technology made it bearable.

Another historical pain point at Disney is booking dinner reservations and wait times at the restaurants. We easily could search for restaurants in the app, by location, targeted time to eat, type of cuisine and price levels. It was a snap. We sat for dinner every night within ten minutes of arriving at the restaurant.

KC: I can imagine that some folks would be concerned about the lack pf privacy - that the use of this technology also meant that Disney knew where you were at virtually every moment. Was that ever a concern to you?

No. We were fairly confident that Disney would not use our personal information in any nefarious ways. In fact, we ended up quite impressed by the personalization that the app and Magic Bands enabled.

When we first arrived, there was a slight issue with our bands. We visited my mom for a few days before Disney, so we did not check into Disney transportation at the airport or into our hotel before entering a park the first time. Because of that, we had trouble entering Magic Kingdom our first day because Disney had not validated that we were the people the bands were assigned to. We must have missed this required step somewhere. So, after waiting in line for about ten minutes to enter the park, we had to detour to Guest Relations for another 40 minutes to get verified. Not an ideal start to the visit, but we assumed it was our mistake.

To my surprise and delight, about ten minutes after entering the park I received a text message that asked if it was ok to receive communications during my trip this way. I said yes. Then I got a text back apologizing that I had to go through the extra wait and awarding us two more Fast Passes for the day! This turned a potential negative experience into an amazing positive one!

There was one other time when we showed up about ten minutes early for our Fast Pass window at Tower of Terror. When the sensor did not turn green, the park attendant addressed us by name, welcomed us to the ride and allowed us to enter. Such great service.

All in all, the app and the Magic Bands addressed many of the largest pain points of visiting Disney. Not only did it make them more bearable but they actually turned most of them into positive, personal experiences.

KC: One of the things that is interesting to me is how Disney seems to have integrated old technology with the new.  For example, I gather that they still have old-fashioned animatronic figures in the Hall of Presidents, and rides such as Pirates of the Caribbean and The Haunted Mansion don’t seem to have changed much over the years.  And yet they have the Magic Band and the Fast Pass, because it was Disney’s sense that people want new technology to help them see attractions that feature old technology.  Is there a broader business lesson here?

Absolutely. Technology was used to support the traditional experience. There was very little new technology used in the attractions. But using technology to support the experience made the experience markedly better.

Think about the applicability to retail. Of course technology is important for e-commerce delivery, auto-replenishment and click and collect. But there are also many ways that technology could be used to drive personalized experiences before, during and after the traditional trip to the store.

For example, imagine customers tapping their smartphones on a sensor at the deli counter. No more paper number tags. Associates could address customers by name. And their preferences for thick or thin slices or dietary restrictions could be displayed to the associate.

Or maybe a customer is watching a chef demonstrate a cooking technique. The app could sync a tutorial on the technique and load a recipe and shopping list right there. Or perhaps a fish monger is sharing information on a new species they are carrying. The shopper could sync the information and take it home, perhaps with reference to cooking instructions.

And for all of this, the retailer would have a record of the interactions and could follow up on them later. Was the shopper happy with their purchase? What other items might go well with the selection? These communications could be managed de-centrally by dedicated store personnel. Or a retailer could staff concierge service reps centrally. Ultimately, many of these interactions could be transitioned to AI as a result of machine learning.

It’s all about weaving technology into the traditional human experience. Human interactions can be supported and tracked with technology. Then they can be enhanced by using the technology to follow up and add value. It’s a way to scale the human touch.

KC: There was a story in Fast Company a couple of years ago about Disney’s technology initiatives revealing that, in fact, making these changes to the park experience was very difficult because the division’s culture actually is change resistant - "built to be industrial and resilient, for consistency and volume; it’s not built for change.”  It has to be heartening to smaller, less innovative businesses that even Disney, where so-called “imagineering” is a near-sacred function, has trouble embracing change sometimes.

This is what our industry grapples with every day. We would not survive without scale, consistency and efficiency. It is imperative. But that alone will not guarantee that incumbents and the status quo will survive.

Disney had significant pushback from the Imagineering group, operations and corporate IT. To get past this, they recruited best of breed outsiders from design and technology to help them envision the solutions and to push through the resistance. Ultimately, this is what enabled them to be successful.

In our last Innovation Conversation, we talked about agility and using interchangeable services on the platform of a retailer. We said that these services work together to form an ecosystem to enable the retailer to perform well beyond its own capabilities. For a traditional retailer, it is absolutely possible to keep the core tenets of your business in place – your merchandising strategy, your customer service philosophy, your supply chain and your operational controls – all while allowing for the configurable parts of the business to be innovated.

Think of the pain points in your store. Think about the customer! Then work backward to figure out how to leverage technologies to turn those pain points into positive points of differentiation. Don’t get caught up in long decision cycles. Foster a culture of experimentation. Try things, measure and iterate quickly. You shoppers will reward you for it.

The Conversation will continue...

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