May 04, 2004

Technology for Technology Sake

Another poster child -- Pradas Pratfall

Chic Technology Stumbles

By Susan Reda, Executive Editor

A visit to Pradas New York Epicenter in SoHo is revealing - in more ways than one. Most of the upscale retailers much ballyhooed technology, deployed when the Manhattan flagship opened in December 2001, is either not working or nowhere to be found.

There are no wireless hand-held staff devices in sight, and inside the dressing rooms, garments placed in the RFID closet just hang there. No interactive touch screens are displayed, and theres no opportunity to select alternate sizes, colors or fabrics or to see the garment on the Prada catwalk.

Even more revealing are the dressing room doors - literally. Made from liquid crystal panels that darken for privacy, the doors were designed to open and close using a foot pedal and shift from clear to opaque with another. But it turns out that some Prada devotees missed the second pedal, revealing more than intended. Others stomped on the pedals in a futile attempt to open doors that frequently jam.

When it debuted, the Epicenter store was billed as a harbinger of cutting edge retail technology by hundreds of newspapers and magazines, including STORES. What actually emerged is the model of what not to do when launching new technologies.

Despite the promise of reinventing the shopping experience and transforming the delivery of service, Prada is experiencing the pitfalls that can occur when a technology is installed before its been retail hardened and without taking into account the methods and mores of the associates charged with putting the technology in play.

Prada executives were convinced that when Inspector Gadget met Paris Hilton sparks would fly. Instead, there was no chemistry. And, its been a costly mistake. Although Prada executives couldnt be reached for comment, its been widely reported that the 22,000 sq. ft. shop cost in the neighborhood of $40 million.

A quarter of that budget was reportedly assigned to IT, and experts speculate that the lions share of those resources were poured into the wireless network powered by RFID (radio frequency identification) technology, which was supposed to track inventory and deliver tailored information to shoppers.

Hugely over-leveraged and mired in debt, experts say Pradas problems run far deeper than technology that misfired.

Robin Lewis, president of New York-based Robin Reports and a retail consulting firm bearing his name, offers a tongue in cheek response to the situation. "I would have done exactly what the Bertellis [Pradas owners] have done with their business. I love the Italians, their wild and crazy lifestyles and exquisite sense of style and design," he says.

I too, would have spent a reported $90 million, twice, on the Americas Cup race. I too, would have built a multi million dollar Rem Koolhaus designed fashion museum in SoHo. I too, would have spent wildly on leading edge technology that doesnt work and in a business of onesies and twosies during the big luxury meltdown, Lewis says. Thats why I never got rich, and thats why they may drown in debt. But, theyll still drown happy, wild and crazy. Ill just drown.

PLENTY OF TECH HICCUPS
Central to Pradas high-tech problems is the retailers approach to RFID. In short, they tried to do too much too quickly and, along the way, the technology created business disruptions instead of easing processes.

Using a proprietary infrastructure, Pradas technology partners cobbled together numerous systems and launched them without conducting extensive testing within the employee base.

Prada made headlines because they delivered RFID in the store and at the item level and positioned themselves as cutting edge. But there was still a lot of learning about RFID that needed to take place, learning thats ongoing today, says Peter Abell, co-founder of Boston based ePC Group. They tried to merge different technologies without a solid infrastructure and it created plenty of hiccups.

Paula Rosenblum, director of retail research at Aberdeen Group in Boston, takes Prada to task for what she views as technology for technologys sake. The store was architecture for architectures sake, and the technology was tech for techs sake. The systems were not retail hardened in any manner, shape or form, she says.

In an attempt to be as chic about technology as they are about heels and handbags, they misjudged the customers acceptance as well as the sales associates willingness to embrace it, adds Rosenblum.

They also appear to have underestimated the deluge of tourists that flock to the store and its effect on the systems. Early on, many store visitors came to gawk at the architecture and play with the gadgets. The staff hand -eld devices, initially left on the shelves and displays, were often mishandled by shoppers. Other visitors found their way to the dressing rooms to toy with the touch-screens and RFID readers.

HAND-HELD HITCH
The hand-held devices debuted with a splash, but now appear washed up. Initial press coverage reported that Prada believed the wireless RFID readers would render the little black book obsolete.

In theory, sales associates would capture information from a garment tag or a customer card outfitted with an RFID chip and gain access to a library of content, including detailed product data and inventory information, as well as specifics on the shoppers buying habits, such as preferred sizes and past purchases.

In reality, shoppers balked at the collection of personal data. And the delays that occurred when transmitting data between the sales and inventory systems and the wireless network frustrated associates to the point of abandonment. Truth be told, Prada has such limited inventory in-store that deploying RFID for inventory management seemed ill-fated from the start.

Another blunder was overestimating customers and associates acceptance of technology. The key to introducing high-tech innovations in the store, say experts, is to be sure the technology is appropriate, that consumers view it as adding value to their experience and that associates feel comfortable engaging the technology as a tool to sell.

Store personnel were unhappy with having to use the technology, in part because it changed their work habits, explains Abell. People are uncomfortable with change, and RFID requires cultural, organizational and behavioral change. There was no true ramp up to this, it was just supposed to happen.

As a result, when the staff devices didnt perform quickly enough, associates shelved them and reverted to more mainstream methods of delivering service.

PRADAS UNDRESSING
Technology installed in the fitting rooms further contributed to Pradas undressing.

The notion of using technology in the dressing rooms drew its share of kudos during the opening months. RFID equipped closets were built in the rooms and when a shopper hung a garment in the closet, the reader read the tag, engaging a video touch-screen. From that screen, shoppers were supposed to be able to access product specifications and alternate or complementary items. It was even going to be possible to store the items in a personal web account.

Unfortunately, the technology has some kinks, the biggest being that the readers no longer read the tags. On a recent visit to the Epicenter store, an associate claimed the problems were with the spring collection. In an attempt to demonstrate the trs chic technology, he grabbed a handbag from the winter collection and placed it in the accessories closet. Nothing magical happened - no video screen sprang to life, no images of the handbag on the runway, no response.

Transforming the dressing room doors from transparent to opaque with a tap of the foot appears to also have been scratched. After numerous unsuspecting shoppers mistakenly undressed without hitting the switch, a decision was made to leave the glass opaque and avoid the blood curdling screams that alternately emanated throughout the stores lower level.

Of the myriad dressing room technologies, the one that does work is the Magic Mirror, a video-based application that not only reveals the customers back, but displays a delayed playback when the shopper turns.

EVOLUTIONARY DEVELOPMENT
Bruce Eckfeldt, co-founder and technology architect at Cyrus Innovation, was among the cadre of professionals who worked on the Prada store. At the time, he was the engagement manager for Icon Medialab, the Swedish company responsible for integrating much of the stores technology.

Although Eckfeldt declined to comment about what went wrong at Prada, he speaks highly of many of its accomplishments. The mission statement for Cyrus Innovation suggests he learned some lessons along the way.

The New York-based company helps retailers and their technology partners manage what he calls evolutionary development. Too often technology is deployed without a clear understanding of the business impact or how long it will take to evaluate its effectiveness, explains Eckfeldt. We help clients to evaluate the users of the technology and their needs in the development process.

Whats unique about the way we approach projects is that we emphasize the need to think, implement and deploy technology incrementally, he says. We design new functionality and deploy new working code every two weeks to gradually improve and learn; and every two weeks we evaluate the benefit of additional development. This way we can really control the investment and monitor the ROI.

Kate Delhagen, vice president of Forrester Research in Cambridge, Mass., stresses that Pradas Epicenter is an experiment. There are lessons to be learned from what went wrong, but you have to give them credit for pushing the envelope. Before Prada, you could count on one hand the number of retailers who knew what RFID was. They raised awareness and attention and started people thinking about its potential.

Delhagen surmises that the retailers executives didnt anticipate how difficult it would be to get the technology working and keep it running. Theres a fair amount of ongoing maintenance and technology evolution that needs to take place, and from what I can see, thats not happening, she says. Technology decisions cant be made in isolation. If they are, theyre doomed to fail.

The question that remains unanswered is whether the technology is just sitting there with the lights out or whether its merely waiting for an overhaul. In July, Prada will open a second Epicenter in Beverly Hills. When the SoHo store opened, the retailer planned to build three U.S. Epicenter stores, but the blueprint for a San Francisco flagship has been shelved, largely due to Pradas financial challenges.

Theres no word on which technologies deployed in SoHo will reprise their role on the West Coast, if any. But you can bet a lot of people will be watching.

STORES - May: Prada’s Pratfall

Posted by Craig at May 4, 2004 08:57 PM