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8/14/2018
08:00 AM
Cynthia Harvey
Cynthia Harvey
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10 Ways Technology Is Reshaping Retail

Your future shopping experiences might be much more automated, but they also might be much more personal than today's trips to the store.



The traditional retail industry is in a crisis. Massive numbers of outlets are closing their doors. Some in the business have even dubbed it the “retail apocalypse.” In their efforts to ride out the disaster, a growing number of organizations are betting big on technology to help them survive.

According to Fung Global Retail & Technology, 6,985 brick-and-mortar stores closed in 2017. That was more than twice as many as closed the previous year — 229% more, to be precise. By some estimates that’s even more retail outlets than closed during 2008 at the height of the financial recession.

And, 2018 isn’t shaping up to be much better with companies like Toys R Us, Bon-Ton, GNC, Foot Locker, Abercrombie & Fitch, Lord & Taylor, Sears, Kmart, Best Buy, Sam’s Club, Gap and many other announcing major closures.

The reason?

Most economists say it’s a complex mix of different factors. But some store managers will say it all boils down to one word: Amazon.

Brick-and-mortar stores are struggling to compete against online retailers. Consumer preferences have shifted, and companies haven’t been able to change fast enough to meet those new needs.

For many of the firms that haven’t gone out of business, the way ahead seems clear. If they are going to compete against e-commerce and win, they’re going to have to fight fire with fire. That means digital transformation.

According to IDC, retail spending on digital transformation is growing at a compound annual growth rate of 20.2%, which is faster than overall digital transformation spending.

That digital transformation means investing in new technologies that will transform the way we shop. The following slideshow highlights 10 of the ways that technology is reshaping the retail industry.

Image: Pixabay
Image: Pixabay



1. Personalization

Image: Pixabay
Image: Pixabay

Consumers are clearly communicating to retailers that they want a more personalized shopping experience. In an Accenture survey of consumers in the United States and United Kington, 56% said they would be more likely to shop at a store or website that knows them by name. In addition, 58% were more likely to buy when a retailer makes relevant purchase recommendations, and 65% were more likely to shop at places that remembered their purchase history.

The retailers are paying attention. Industry estimates suggest that between 60% and 80% of retailers are investing in personalization technology. This can include everything from online recommendation engines to targeted marketing campaigns to touchscreens in changing rooms to facial recognition technology.



2. Predictive Analytics

Image: Pixabay
Image: Pixabay

Retailers are also investing heavily in predictive analytics, particularly solutions that incorporate artificial intelligence and machine learning capabilities. According to MarketsandMarkets, retail spending on analytics solutions could top $8.64 billion by 2022. Firms are using these tools to segment customers, improve customer acquisition and retention, detect and prevent fraud, and anticipate customer demand.

Chad Bockus, chief product officer for AI platform CarStory, offered an example of how predictive analytics is helping car dealers. “Research shows that half of the vehicles on a car dealer's lot will either sell too slow or too fast,” he said. “The result of inaccurate vehicle pricing is half a million dollars in lost revenue for the average dealer.” By using predictive analytics, dealers are better able to time their vehicle supply to meet customer demand and reduce this lost revenue.



3. Cybersecurity

Image: Pixabay
Image: Pixabay

In recent years, retailers have been among the organizations hardest hit by cyberattackers. In fact, according to the 2018 Trustwave Global Security Report, the retail industry suffered more data breaches than another industry in 2017, accounting for 16.7% of incidents. Over the last two years, high-profile breaches at Macy’s, Adidas, Sears, Kmart, Best Buy, Saks Fifth Avenue, Lord & Taylor, Forever 21, Whole Foods, Gamestop, and others have stoked fears about attacks. It may not be mere coincidence that many of these companies are also on the list of firms that have closed physical stores in the past two years, as many consumers say they stop shopping at retailers after they have heard about data breaches. To fight back against attackers and prevent breaches, retail firms are investing in more robust security systems for their ecommerce, point-of-sale and other systems, as well as enhanced in-store security. Consumers may feel some of the effects of this additional security in the form of more cumbersome login procedures or more visible store security measures.



4. Chatbots

Image: Pixabay
Image: Pixabay

As AI technology has improved, more retailers have begun using chatbots to provide basic customer service functions online and on the phone. While only 2% of organizations were using chatbots in 2017, 25% of customer service and support operations will be using virtual customer assistants and chatbots by 2020, according to Gartner. The research firm also noted that virtual customer assistants reduce inquiries by up to 70% while increasing customer satisfaction and decreasing costs by 33%.

Even if they aren’t deploying chatbots, many retailers are experimenting with voice interfaces by creating Alexa skills or voice apps for other smart platforms.



5. Omni-Channel Experience

Image: Pixabay
Image: Pixabay

Today’s consumers interact with retailers in multiple ways — through smartphone apps, websites, in-person store visits, smart speakers, and more. And, they expect all those experiences to be integrated.

As a result, omni-channel marketing and omni-channel integration are among this year’s biggest trends in retail technology. In fact, according to IDC, omni-experience engagement is the digital transformation strategic priority that will see the fastest growth between 2016 and 2021 — a 38.1% CAGR.

These initiatives will change shopping for consumers in a number of subtle ways. They may find it easier to buy something online and pick it up in the store. If a store doesn’t have the product they need, store clerks may be more likely to order it for them online and have it shipped directly to them. Or they may receive personalized shopping recommendations on their smartphones while shopping in a retail store.



6. Robotic Process Automation

Image: Pixabay
Image: Pixabay

The phrase robotic process automation (RPA) in the context of a slideshow on retail technology may conjure up images of humanoid robots offering to help customers on the sales floor, but that’s not really what it’s about. RPA involves using computers to do the manual, time-consuming business process tasks that most workers hate. For example, RPA might be used to complete tax forms, reconcile accounts payable, calculate supply chain costs, get authorization for returns, perform credit checks and perhaps even serve as the first line of complaint management. According to McKinsey, RPA could handle about 54% of the work in the retail industry, helping companies become more efficient and freeing up human workers to focus on customer needs.



7. Blockchain

Image: Pixabay
Image: Pixabay

Blockchain is currently one of the hottest technology trends in the financial industry, but it also has significant implications for retailers. Blockchain is the distributed ledger technology that makes cryptocurrencies like Bitcoin possible. Companies are really interested in it because it could make transactions more secure, eliminate the need for intermediaries like banks and credit card companies to process transactions, and enable smart contracts that would initiate payment as soon as the contract conditions had been met. For example, a retailer could enter a blockchain smart contract with a supplier that would automatically pay the supplier for goods as soon as those goods were unloaded at the warehouse. IDC has forecast that blockchain spending will grow at a CAGR of 81.2% through 2021, when revenues will top $9.7 billion.



8. Intelligent Displays and Advertising

Image: Samsung
Image: Samsung

In tandem with the trend toward personalization, some retailers are beginning to investigate smart displays and smart signage. Some of these intelligent displays function like kiosks to answer customer questions about products while also tracking customer movement through stores. Others can actually scan customer faces to recognize emotions and change the advertising appropriately. For example, shelfPoint smart signage slides right into that strip on the shelves in grocery stores where the price usually is. The moving display is designed to entice shoppers to move closer, and when they do, the advertisement can change to offer more relevant information. At the same time, the computer vision technology in the sensor is collecting data on shoppers’ ages, ethnicity, and reaction to the advertising campaign. The retailer and product manufacturers can then mine this data to better target their campaigns. Time will tell whether consumers welcome this kind of interaction or view it as an invasion of privacy.

 



9. AR/VR

Image: Shutterstock/Monopoly919
Image: Shutterstock/Monopoly919

Some of these smart displays are also incorporating elements of virtual reality (VR) and augmented reality (AR). For example, several clothing retailers have installed smart mirrors that can show customers how they will look in a given piece of apparel without them actually having to try it on. Or it can suggest shoes or other accessories to complement an outfit.

Other retailers are experimenting with AR or VR applications that can run on users’ smartphones or specialized headsets. These tools may function primarily as elaborate ecommerce sites, or they may allow consumers to interact with products before purchasing. For example, IKEA offers an app that allows customers to see how IKEA furniture will look in their homes.

 



10. Checkout-Free Shopping

Image: Shutterstock/VDBPhotos
Image: Shutterstock/VDBPhotos

Some retailers, most notably Amazon, are experimenting with technology that eliminates the need for customers to go through a checkout line to purchase items. At the Amazon Go store, shoppers simply take items off the shelves and place them in their bags or carts. Sensors in the store automatically detect what the consumers have taken and then deduct the appropriate costs from their Amazon account. Currently, Amazon has one Go store in Seattle and plans to open another this fall. Industry observers believe the model could eventually become widespread throughout the retail industry.

 

Cynthia Harvey is a freelance writer and editor based in the Detroit area. She has been covering the technology industry for more than fifteen years. View Full Bio

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