The retail industry is currently experiencing a significant transformation, which is being propelled by rapid technological advancements. The integration of technology and retail is revolutionising consumer experiences and industry standards, with innovations such as augmented reality changing room experiences and cashier-less stores.

As we look towards the future, it is evident that several technological trends will dominate the retail landscape, fundamentally altering how businesses interact with customers and conduct operations. This analysis is supported by research conducted by the Grozeo team, which provides insight into the factors that will drive the adoption of these trends.

Augmented Reality (AR) and Virtual Reality (VR)

The amalgamation of augmented reality (AR) and virtual reality (VR) is poised to transform the in-store shopping experience. A report by Retail Perceptions reveals that 61% of consumers favour stores that provide AR experiences, underscoring a burgeoning desire for interactive and immersive retail settings. AR-based virtual try-ons and VR-assisted store tours are merely the initial steps.

As Jonathan Chippindale, the CEO of Holition, aptly states,

“Retailers who excel in the utilisation of AR and VR will be at the forefront of the industry.”

Personalization through AI

Artificial Intelligence has ceased to be a far-fetched aspiration; rather, it has emerged as the impetus behind customised shopping experiences. As per Salesforce’s report, a significant 62% of consumers anticipate companies to personalise their experiences in accordance with their prior interactions. The AI-powered recommendation engines scrutinise data from previous purchases, browsing history, and preferences to generate tailored recommendations, thereby augmenting customer engagement.

Angela Ahrendts, the erstwhile SVP of Apple Retail, aptly observed that,

“The person with the best data wins.”

Contactless Shopping and Payments

The COVID-19 pandemic has expedited the implementation of contactless solutions, encompassing both shopping and payments. According to Juniper Research, contactless payments are anticipated to constitute more than 50% of worldwide point-of-sale transactions by 2024. This trend is consistent with evolving customer inclinations for smooth, sanitary, and effective transactions.

Tim Cook, the Chief Executive Officer of Apple, reinforces this notion by stating,

“We are witnessing the concepts that we have previously discussed as future prospects, materialise in the present.”

Smart Shelf Technology

The shelves are becoming more intelligent as well. The implementation of smart shelf technology involves the use of sensors and RFID tags to oversee product levels and provide inventory updates in real-time. This approach, which is driven by data, reduces the occurrence of stockouts, enhances replenishment processes, and simplifies supply chains.

According to McKinsey, the accuracy of inventory is enhanced by 20-30% through the use of RFID-based solutions, underscoring the efficiency benefits that this technology offers.

Robotic Assistance

The deployment of robots in retail settings is gaining momentum, as they are increasingly being utilised for tasks such as inventory management, shelf restocking, and customer service.

According to Brett Bonner, the Chief Technology Officer of Bastian Solutions, robots are expected to enhance human productivity rather than replace it. The emergence of robots as retail employees is exemplified by the “LoweBot” of Lowe’s and the “Auto-C” of Walmart.

Data-Driven Insights

The abundance of data produced through customer interactions presents a lucrative opportunity for retailers. The examination of this data yields valuable information regarding shopping habits, inclinations, and trends. Retail TouchPoints reports that 73% of retailers regard data analysis as a primary strategic objective.

As Ryan Peterson, CEO of Flexport, astutely observes:

“Data is the new oil. It possesses great value, but in its raw form, it is of little use.“

Blockchain for Supply Chain Transparency

The intricate network of supply chains can now be disentangled through the utilisation of blockchain technology. This decentralised ledger guarantees transparency, traceability, and legitimacy throughout the entire supply chain. The collaboration between Walmart and IBM for food traceability serves as evidence of blockchain’s capacity to ensure the genuineness and safety of products.

Video commerce and ad monetization

The adoption of live streaming, video commerce, and assisted selling by retailers is rapidly increasing as a means of enhancing online conversion rates. While the initial focus of e-commerce was on substituting human experience with digital and always-on commerce, the trend is now shifting towards providing human-led experiences to drive commerce.

According to a research report by eMarketer, social media is expected to outpace total e-commerce in China by 2023, growing at a rate of 13.2% YoY. Live Streaming via social media is expected to grow the fastest, at a rate of 23%. Notably, virtual influencers have grown by 285% in market scale over the last three years in China. Sales conversion via social influencers is also witnessing two-to-three-fold growth compared to brand communication.

Major brands, including beauty and luxury brands, are successfully live streaming their major fashion events on their e-commerce sites. The key objective is to reduce the gap between consumer demand generated via content and the actual act of conversion.

Retailers can build additional revenue streams by providing additional services to brands, such as ad targeting capability and consumer insights, as they know that customers return for more content and assortment.

Ad monetization opens a much-needed additional revenue stream in the retail world, where there is constant pressure to be competitive in terms of pricing while providing a leading experience. A multinational e-commerce giant has reported nearly 7% to 8% of their revenue as ad revenue and is currently the third-largest ad network in the US. Another Chinese e-commerce leader has the largest ad network and reported

34.3% of the total net digital ad revenue in China a few years back.

Nonetheless, the establishment of an advertising network of this nature and the subsequent competition necessitates specialised expertise in technology, the management of consumer consent and data, as well as the creation of AI/ML-led segments.

Factors Driving Adoption

Several factors are steering the adoption of these tech trends in the retail sector:

Changing Consumer Expectations

The contemporary consumer is increasingly adopting technology in their daily routines, thereby elevating their expectations with regards to their shopping experiences. In order to remain pertinent, retailers must strive to fulfil these expectations.

Competitive Landscape

Retailers are consistently engaged in a race to distinguish themselves from their competitors. The adoption of innovative technological solutions serves as a means to set them apart, thereby creating a competitive advantage in a market that is already saturated.

Efficiency and Cost Savings

The utilisation of technology-driven automation and data analytics has been shown to significantly improve operational efficiency and yield long-term cost reductions. Retailers are highly motivated to optimise their processes through the integration of technological advancements.

Pandemic Aftermath

The pandemic has expedited the transition towards digital and contactless solutions. Retailers are adjusting to the current circumstances by embracing technology to ensure safety and convenience.

Conclusion

The future of retail is infused with tantalising technology. As the boundaries between the physical and digital realms become increasingly blurred, retailers have a unique opportunity to enhance customer experiences, optimise operations, and maintain a competitive edge.

By embracing augmented and virtual reality, utilising artificial intelligence for personalization, and implementing contactless solutions, smart shelf technology, robotics, and blockchain, retailers can pave the way for innovation.

As the renowned Steve Jobs once stated, “Innovation distinguishes between a leader and a follower.” The time has come for the retail industry to lead through technological innovation.