Over the last several years, technology has impacted every aspect of the retail industry. As more brick-and-mortar stores and e-commerce sites evolve into omnichannel operations, it’s become critical to use technology to engage customers at every touchpoint, from awareness to purchase. New trends, such as contactless palm-print payment systems based on biometrics and AI-driven customer engagement tools like chatbots, are no longer relegated to the far-off future; for many retailers, they’ve become integral to staying competitive in 21st-century retail.
Technology also factors into “behind-the-scenes” business operations. For instance, inventory and order management software both use big data analytics to gain real-time visibility into stock levels and potential supply chain disruptions, allowing retailers to react instantly. Digital technology in retail can also facilitate marketing campaigns, aid in staff productivity, and automate tasks including customer service, purchasing, payment processing, and billing.
Retailers are using AR and VR for 3D product visualization, enabling customers to “try on” clothing and makeup applications, visualize furniture in their homes, and even take a new car for a virtual spin, all before purchasing.
Retail businesses that stay abreast of modern technology, as well as customers’ changing shopping patterns, may strategically outpace competitors. Here’s a look at current retail industry trends and the tech shaping them.
Retail Industry Market: An Overview
There’s no question that e-commerce has increasingly become ingrained in everyday shopping habits. According to a Pew Research analysis, which surveyed 6,034 adults in the U.S. in the summer of 2022, roughly half (49%) of Americans ages 30 to 49 report making purchases online, at least weekly, using a smartphone, with 38% of those aged 18-29 doing the same.
But online commerce isn’t necessarily pitted against in-store shopping. In its annual 2023 forecast, the National Retail Federation (NRF) acknowledged that while shoppers continue to embrace the convenience of e-retail, the physical store figures prominently in the fulfillment process. Notably, the NRF found that brick-and-mortar is still the go-to point of purchase for 70% of sales.
And the urge to buy isn’t going anywhere: As per Statista data from September 2023, total retail sales (including e-commerce sales) are projected to reach 7.9 trillion U.S. dollars in 2026 – an increase from about 6.6 trillion dollars in 2021.
Retail Challenges, Today and Tomorrow
While sales remain robust, small- and medium-sized stores are facing the following challenges.
- Limited new construction and few vacancies: Spurred by unwavering consumer demand, retail spaces aren’t as easy to come by. According to CBRE’s 2023 U.S. Real Estate Market Outlook Midyear Review, new declining levels of new construction may push overall vacancy rates below 4.5% by mid-2024. Lack of retail space could push companies toward an e-commerce model.
- Staffing and turnover. In recent years, attrition has become more pervasive and retention more elusive. Many retailers are turning to programmable robots and automated return services to fill labor shortages and reduce the burden of repetitive tasks. They’re also stemming the exodus by upskilling and training staff via gamification software and mobile learning solutions, both of which can lead to greater productivity – and greater job satisfaction.
- Coordinating omnichannel commerce. By leveraging emerging technologies in retail, store owners can go online, meshing their brick-and-mortar shops with webstores, social media, and app experiences that work together to fulfill customer demand at all touchpoints. But staying ahead of digital trends can be particularly challenging for smaller operations that may not have the budget or workforce of behemoths. Still, the rewards may be well worth the investment.
The Future of Retail Design: Technological Trends in the Retail Industry
By incorporating digital technology across all channels, businesses can provide a friction-free shopping experience – and better position themselves to meet the future head-on. Here are some tech trends to look out for:
- Big data analytics. Stores have a wealth of data at their disposal. Collecting, sorting, and analyzing it can help at every stage of the supply chain to reduce costs and improve efficiencies. While this data is often too rich to parse manually, there are plenty of data analytics tools available to help companies make sense of – and spot trends in – massive amounts of information.
- Ambient commerce. This form of retail seamlessly integrates technology into a shopper’s experience. Ambient computing – the embedded technology behind ambient commerce – is “invisible,” using tools like the Internet of Things (IoT), AI, machine learning, and advanced data analytics to help retailers gather location data, consumer retail habits, and buying history, while also creating an immersive, intuitive, and individualized shopping experience.
- Virtual reality (VR) and augmented reality (AR). Retailers are using AR and VR for 3D product visualization, enabling customers to “try on” clothing and makeup applications, visualize furniture in their homes, and even take a new car for a virtual spin, all before purchasing. Product sampling through technology can help minimize returns, bump up engagement, and allow customers to experience a product outside of a physical environment.
- Checkout-free stores. Supermarket chains, startups, and major e-retailers alike are all piloting checkout-free technology which tracks shoppers as they roam the aisles and automatically charging their account as they leave the store – without ringing up at the register.
- Optimizing brick-and-mortar. AI is used to cull data from in-store customer interactions to make store layouts more efficient. For instance, mobile devices, cameras, and sensors can all connect to a centralized hub where data can be analyzed accordingly. AI-driven visual search and image recognition technology are emerging as well, letting customers snap a photo or upload an image to locate a product’s aisle and shelf, while digital kiosks allow shoppers to interact with product experts.
- Hyper-personalization. In a quest to cut through the barrage of brands available, retailers are using machine learning and AI algorithms to personalize emails and newsletters, sharing the arrival of fresh merchandise, promotions, and curated product recommendations.
- Selling on social. It’s also become imperative for retailers to reach shoppers where they scroll. In the Future of Retail Report, 2023 Edition, which surveyed 2,000 consumers and 500 retail owners and managers about directional retail industry trends for 2023, Square and Wakefield Research found that 91% of retailers are now selling goods on social media.
Advantages of New Technology in the Retail Industry
Innovations in retail technology can enable dynamic decision-making and a smooth purchasing journey. Whether implementing digital innovations in-store, or using e-commerce tools to contact customers through online sites, flash sales, social platforms, and mobile devices, companies may see the following benefits:
- Minimize inventory costs. Inventory management tools including SAP (systems application and products) use tools like RFID tags, IoT sensors, and barcode scanning, each of which support real-time visibility into stock levels and can help businesses reduce shrinkage, spot issues, avoid inventory holding costs, and quickly adapt to changes in market trends.
- Streamline supply chain processes. Automating inventory processes ultimately creates efficiencies across the supply chain, making businesses more agile while mitigating rising costs, boosting order fulfillment proficiency, and helping to free up capital for growth.
- Improve customer satisfaction. By embracing technology trends and creating a glitch-free shopping experience channel-wide, companies can further encourage customer engagement, repeat business, and customer loyalty.
- Predict future outcomes. Using demand forecasting and predictive analytics that interpret historical data, businesses can anticipate customer demand and shopping trends, updating merchandise accordingly while shortening the distance between products and users.
The Bottom Line
As retail continues to evolve, businesses are connecting with customers across all channels, including online, brick-and-mortar, social platforms, apps, and mobile devices. Early adopters that create a seamless experience, engaging customers through technology trends like livestream shopping events, virtual product sampling, and curated product recommendations may be better positioned to win brand loyalty. Using automated tools, they can efficiently manage inventory and supply chain snafus, mitigate labor shortages, and update product offerings based on consumer trends.
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