Commuters and virtual storefronts

Michael Baker
February 15, 2012
The Age

You’ve just arrived at the station and an LED screen shows your train is leaving in one minute. You tear down the escalator to the platform but just as you reach the bottom the train is pulling away from the station. There isn’t another one for 20 minutes.

Watch a YouTube video of a virtual storefront here

The few seats on the platform are taken so you can’t sit down and read. How do you kill the time? Try doing the grocery shopping maybe.

Last year, British-based global retailer Tesco made waves by setting up amazing virtual stores on the walls of underground transit stations in Korea. Commuters could do their shopping simply by scanning their smartphone over a two-dimensional barcode on the station’s wall.

Now the idea is being mimicked in the US. How long before virtual storefronts becomes a regular feature of the daily commute worldwide, including Australia?

US online grocery retailer Peapod, which is owned by conventional supermarket operator Ahold USA, announced last week the launch of virtual storefronts on Philadelphia’s transit system. Peapod operates in 24 US cities, so if the Philadelphia experiment goes well there is a potential for the idea to expand quickly.

Peapod’s storefronts consist of photographs of grocery items plastered onto advertising boards on station platforms. Each of the product photos has an associated QR (Quick Response) code that can be scanned with a smartphone or tablet. Commuters just download an app onto their digital device and scan the code for each item they want, which then go into a shopping cart to be delivered to the customer’s home later that day.

Peapod’s gambit emulates the trailblazing experiment by Tesco in Korea. Wanting a way of getting around constraints on site availability for regular stores, Tesco figured that it would bring its products to where a lot of bored people gather in large numbers. Subways fit the bill nicely.

Unlike Peapod’s storefronts on advertising boards, Tesco’s cover the actual subway wall and copy the layout of a real Tesco supermarket. Tesco said last year that these subway stores had increased its online sales in Korea by 130 per cent.

The beauty of the idea is that commuters are a 100 per cent captive audience. On Sydney’s CityRail for example, it isn’t unusual to have to wait 20 minutes for a train. According to CityRail, about one million trips are made daily on the 307-station system. It isn’t hard to imagine a meaningful proportion of those million trips morphing into convenience shopping trips if the virtual storefronts were available.

Of course, bringing stores to people rather than waiting for people to come to stores is not exactly revolutionary. Vending machines have been upscaled in recent years to dispense health and beauty products and digital devices. And retailers have used here today-gone tomorrow pop-up shops in all sorts of places to market and sell their products.

The differences between those and the Peapod and Tesco experiments are the technology employed, and the nature of the products. Online grocery has proven to be one of the toughest nuts for retailers to crack. Cost and logistics are notoriously difficult to manage and virtual supermarkets in transit stations will appeal mostly to the affluent.

Busy commuters with smartphones are usually short of time and not so short of money. They, together with virtual grocery stores, could be a match made in heaven.

Michael Baker is principal of Baker Consulting and can be reached at michael@mbaker-retail.com and www.mbaker-retail.com.

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