7 Technology Trends To Change Retail Industry In 2020 And Beyond
Technology is widely adopted by retail companies with the quite obvious purposes of overtaking less advanced competitors, gaining new customers, and eventually increasing revenues.
Just like technology, retail remains a shifting landscape. In particular, the emphasis on digital transformation continues to reshape shopping, online experiences and even customer expectations of physical stores. The retailers who thrive in this environment are the ones who embrace technological change. Let's take a closer look at 7 tech trends that will affect the retail sphere over the next few years.
Trend #1: Augmented shopping
A report from Gartner indicates that 100 million consumers are expected to engage in a shopping experience that employs augmented reality. AR has been around a while, but the maturation of the technology—particularly on mobile platforms—has put AR systems in the hands of everyday retail customers.
A number of retailers are embracing the trend. Lacoste, American Apparel and Uniqlo have opened virtual showrooms and fitting rooms to allow customers to try products in virtual spaces. Zara has deployed smart mirrors that read RFID tags on clothes that have been pulled from racks to provide suggestions in a fashion closer to what consumers see from online stores rather than brick-and-mortar locations. Ikea is using an ARKit-based app to encourage customers to visualize what new furniture will look like in a room while moving their phone cameras around in real time.
71% of respondents in a report from 2016 stated they'd be more interested in shopping with a retailer that provided AR-based try-before-you-buy options. By making these experiences more engaging for customers, retailers can create a lure that'll bring customers back into the brick-and-mortar setting.
Leveraging AR technology to provide visitors with enhanced indoor navigation experience is the next step to building brand loyalty. Wayfinding mobile apps help customers not to get lost and can even lead them to a certain product in a store. Augmented Reality-based indoor navigation is capable to remove shortcomings of beacon-based solutions and provide more accurate user positioning.
Trend #2: Personalized interactions with customers
The big technologies behind personalization are data science and machine learning, which allow retailers to anticipate customer needs before they know what they want themselves.
A McKinsey & Company report indicated that 36% of US companies confirmed having an edge carved out using analytics. Done right, these systems can provide rapid recommendations that speed the buying experience along.
Developing opt-in for data collection is a big part of this process. Rather than just hassling consumers to download an app that many of them will delete once they get the deal they want, incentives have to follow consumer wants and needs. This calls for developing robust shopping profiles, allowing machine learning methods to drill down through information about similar customers. Calls to action can then be tailored to specific users, such as Macy's has done with its style preference system.
In-store options are catching up to online and app-based ones quickly. A major driver of this advancement is Bluetooth Low Energy and RFID, allowing low-power consumption solutions to be deployed throughout stores. FashionAI, a technology built by Alibaba Group, generates personalized mix-and-match apparel recommendations for shoppers as they move around stores. They can then quickly find items that will fit their tastes.
According to Amazon, 35% of its sales are driven by its recommendation engine. Using AI, these kinds of recommendation systems can be refined in cyberspace and deployed widely in real-world settings.
And of course, we shouldn't forget about NLP-driven chatbots that get ever smarter and deliver personalized experiences. Even outside the retail sphere, chatbots are expected to be the biggest word in customer service, offering deals and recommendations, providing easy navigation and tracking orders.
Trend #3: Omnichannel retail to deliver seamless shopping experiences
The new age of omnichannel marketing means that customers expect a seamless experience across all channels. They see items on websites, visit stores, whip out their phones and start looking for help. They visit a store, see an item, save it to their phone, go home and want it delivered. They stay online, purchase and expect pickup in the store.
In other words, none of the channels are distinct or meaningful to them. Look at the role mobile-based visual search plays in customers making buying decisions. Pinterest Lens lets a user pull out their phone, snap a picture and find related pins on the platform in a matter of seconds. The platform has experienced 100% year-to-year growth, indicating interest in visual search is there when there's an app that can do it well.
This also means that other seamless omnichannel interactions are open for use. People are happy to click online and collect items in the store. According to a report from the National Retail Federation, 89 million customers use a combination of online and in-store shopping over the post-Thanksgiving runup for the holiday shopping season. Especially enticing for retailers is the report that omnichannel users spent $93 more than average customers.
Tech innovation finds its way everywhere. For example, the concept of "buy online, pick up in-store" (BOPIS) may seem nothing new for the retail sphere. However, it is close to entering the mass market, with several top retailers having adopted and refined the approach. For example, Walmart, having installed pick-up towers to its stores, employed supporting innovations like driverless vehicles for customers.
Trend #4: Staff-free and cashier-less stores
Freeing staff members up from menial and time-consuming tasks is an important part of re-imagining the retail landscape in the coming years. The tools that will allow this digital transformation include RFID tags, computer vision systems, machine learning, IoT devices and facial recognition.
One of the most promising concepts in this area is the cashier-less Amazon Go store chain. Despite being not completely staff-free, it still allows smartphone-wielding customers to shop quickly, without time-consuming lines and checkouts. Vendors in the merchant terminal industry are also getting onboard, with Mastercard showing off unmanned checkout technologies for use in convenience stores. Using smart shelves, sensors can be utilized to tie physical products to a customer's virtual shopping cart. IoT-based systems can then identify when they and the items exit the store, at which point the sale is registered to their credit card.
In 2017, KFC experimented with face recognition software that was tied to predictive systems. The fast food choices of customers were remembered, and sales were sped up in the process.
Self-ordering kiosks are also a trend worth watching. CaliBurger introduced a system in 2018 that recognizes faces and streamlines the ordering process. Loyalty programs and rewards can also be constructed around these technologies, reducing the steps that go into swiping a card in order to get perks.
Trend #5: Voice-enabled shopping to reduce the sales cycle
Voice-based search has taken off in recent years, especially as a function on app-enabled smartphones and television sets. The logic is extremely straightforward. A person can speak 100 words a minute relatively easily, but they can only type half as many over the same time.
The boom in voice-activated systems has largely been driven by companies like Amazon and Google with their Alexa and Google Home products, respectively. A handful of competitors, especially Sonos and Apple, are also driving innovation. The ever evolving IoT technologies will also help smaller competitors to enter the market. According to a survey by NPR and Edison Research, 53 million Americans now have at least a single smart speaker system at home.
Integrating voice into any device is easy thanks to the advent of the Amazon Voice Service. You can expect to see many products that will bear the label "Alexa-enabled" in the near future. This idea found its way to the Internet of Things products like smart mirrors, which deliver varied content in an engaging manner.
There are three net effects that can be gained from voice-enabled retail shopping. The first is the speed and personalization that can be attained. Second, customer loyalty can be encouraged by making things like tracking packages as simple as uttering the question, "Where's my package?" Third, voice-based systems can be excellent enabling technologies for products like AR/MR headsets, connected automobiles, and smart homes.
Societal adoption remains the strongest headwind against voice technologies. There are continuing security concerns, and access to systems is a worry, too. In particular, parental controls need to be dependable enough that families are happy to leave speakers sitting around their houses.
Trend #6: Tech-powered improvement of internal store processes
Streamlining store processes is one of the biggest digital transformation opportunities for businesses. RFID-enabled IoT devices can make it easier to identify when products are out of stock or past their sell-by dates. Machine learning can allow companies to identify trends that ensure seasonal inventories and trending items arrive just in time, reducing clearance risks by keeping inventories tight. Facial recognition technologies can enable shops to check the age of customers who buy restricted products, such as alcohol, without unnecessary human involvement.
Store processes can also be utilized as data mines. For example, Walmart has entered a patent application that would use shopping cart handles to monitor customers' biosigns, making it possible to gauge moods during their times in stores.
Similarly, returns processes can be trimmed down using automation and AI, reducing the current estimate that a returned item is handled by seven different employees before it goes back up for sale. A Brightpearl research indicates that 69% of retailers don't use digital systems to process returns.
Blockchain systems have the potential to improve contracts, address inventory control issues and ensure that supply chains are more efficient and trustworthy. Companies that have built their brands around socially responsible sourcing, for example, can verify that products have been handled to their standards from end to end using smart contracts. Verification through blockchain is also a viable way to prevent counterfeiting, ultimately protecting brands and making products like prescription drugs safer. The warranty process can be improved, too, as blockchain would make it simpler to transfer a verifiable warranty to a new owner.
Loyalty programs stand to benefit from being blockchain-enabled. By treating coupons like a digital wallet, for example, we can increase redemption offers and even make rewards transferable.
Trend #7: Customer data privacy shielded by technology
The movement of many data platforms to cloud-based systems has created immense pressure to ensure these setups are fully secured. While such configurations permit greater flexibility and cost savings, they also add a layer of authentication. Similar concerns abound as more components operate in software-as-a-service settings. It's estimated that about 50% of an average organization's IT architecture now resides on systems outside its CIO's control.
Data from Akamai indicates that more than 10 billion attempts at stuffing credential to enter retail systems occurred between May and December of 2018. Apparel companies were the most widely targeted, facing 3.7 billion attempts.
The oversight landscape surrounding cybersecurity and privacy also changed dramatically with the arrival of the General Data Protection Regulation in the EU. While aimed at firms with interests in Europe, the GDPR applies to any enterprise that has users or interests on the continent. Likewise, prohibitively stiff penalties for disregarding the GDPR make it impossible for organizations to assume they can just pay fines and skate past it. A minimum non-compliance fine of 20 million Euros is imposed, and fines can escalate to as high as 4% of a firm's annual worldwide revenues.
In terms of the main retail cybersecurity concerns, the GDPR's biggest compliance requirement is that breaches must be reported within 72 hours of being discovered. Data processing services providers also have to enter into agreements affirming they'll take care of user data in conformity to the GDPR. This means encryption requirements have increased, and the rules governing confidentiality and sharing of user data require significant amounts of affirmative consent.
Alex Vasilchenko, Lead Solution Architect with 5 years of experience in retail projects
"While there will be more talk of an ongoing retail apocalypse, this year is also one that offers a lot of opportunities to companies that are prepared to be adaptive and use technology to survive and succeed on the market.
In an ecosystem where new niches are waiting to be monetized, there are many chances for spoils to be claimed by companies that are focused on digital transformation. Data-centric cultures will continue to displace ones that can't seamlessly and rapidly bring together customer preferences, fresh technologies and supply chains into experiences that consumers find engaging, accessible and valuable."
Client & Business Goals: This internal project shows how to create a voice-controlled Internet of Things product for smart... more →
January 21, 2019
The Internet of Things is actively shaping both the business and consumer worlds—and it's going to be a tough year for... more →
December 17, 2018
Tech innovation in retail has been running at a breakneck pace in the last decade. A host of solutions have appeared on the... more →