The Tech Trends That Will Shape The Future of the Retail Sector
The retail sector has undergone numerous transformations, especially in recent years, which is why it’s crucial that amidst this spiral of change retailers find a way to adapt to the new shopping habits of customers.
Unlike other sectors where the main objective is to be profitable, in the retail sector the focus shifts to achieving an excellent and personalized customer experience. The last few months have further accelerated the digital transformation, and customer habits have shifted towards omnichannel shopping and e-commerce. This means that it is essential to understand where these trends are heading and what are the keys to making a business competitive in the future.
According to Gartner’s 2021 CIO survey, nearly two-thirds of retail CIOs said their relationships with their CEOs strengthened in 2020, as CIOs have helped guide their businesses through significant disruption.
- 1 What Is The Retail Sector?
- 2 Digital Transformation of the Retail Sector
- 3 Technology Applied to the Retail Sector
What Is The Retail Sector?
The retail sector is an economic sector that refers to the sector in charge of providing goods and services to the final consumer. It is the industry most closely linked to consumption, bringing together companies, traders, products, and consumers. The clearest examples are supermarkets, shops, and bookstores.
Digital Transformation of the Retail Sector
As mentioned above, consumer habits have changed more rapidly and significantly in recent years, and this means that retailers can get stuck in more traditional habits. It is vital that companies see and understand the new trends and how digitalization can become their best ally.
In the United States alone, e-commerce grew more than three times faster from 2019 to 2020 than in the last five years, which translates to far more consumers now purchasing products before trying them. For traditional retailers to build stronger and more memorable relationships with their customers, it is essential to create a stronger brand and offer a better immersive customer experience based on digitization.
By relying on technology, business decisions are improved with the goal of increasing sales, thanks to the analysis of millions of data in real-time, the commitment to disruptive proposals, convenient and simple payment methods, or automating processes are just some of the proposals to become a smart, profitable and future-proof retailer.
Technology Applied to the Retail Sector
We are facing an omnichannel customer that demands personalized experiences. Therefore, our challenge must be to be able to predict consumer behavior and the possibility of satisfying these needs in a simple way and at the time the user demands.
Technology has become responsible for making all this possible, and the following ones are the ones that will shape the future of the retail sector.
Predicting Demand with Machine Learning
One of the biggest challenges for retailers is to improve stock tacking. Now the Artificial Intelligence solutions makes it possible to monitor product turnover in real-time, as well as to analyze the purchasing situation.
Introducing AI makes it possible to react quickly to ensure the availability of goods of certain products depending on the parameters that trigger the purchase, such as the weather, for example. A forecast of snowfall should mean that we have products in stock according to these conditions.
Data Analysis for Cost and Safety Management
Another major concern in retail is operations, ranging from cleaning to reconfiguring layouts for customer and employee safety. Data analysis is key to managing and predicting costs, maximizing contractor value, or documenting cleaning and safety measures.
Over-information or unstructured data can lead to the opposite of the expected result. The right analysis allows for a 360° view of customers and the correct understanding and optimization of business decisions.
User-Friendly Shopping and Payment Applications
In Europe alone, digital wallets have spread to more than 20,000 shops and 31% of Europeans are expected to use the digital wallet on their mobile device. The future of the retail sector also lies in 2.0 shops with advisory staff and automated checkouts.
The front-end can now be separated from the back-end, enabling retailers to roll out new models and functionalities in their shops more quickly. Shoppers demand more choice in the checkout process and should be given the ability to choose how they interact with the point of sale, from how they pay, to how they view information, to how they locate the product.
Automation of Processes
Implementing AI to automate operations is essential today, whether it’s for verifying identification when customers buy age-restricted items, reordering processes for low stock, recording serial numbers, customizing product samples according to the customer… The possibilities are endless.
We can also apply it for marketing purposes, where customer data can be collected to encourage an increase in their purchases. This collection of information can be translated into data-backed campaigns that can be automated, such as communications or the launch of offers based on loyalty to our brand.
The introduction of robots into a business has been a huge game-changer for companies that are using them for in-house product delivery. By taking a photo they can deliver the order to the required location.
Many stores and supermarkets (Walmart, UPS, Hyundai…) have incorporated robots, drones, and autonomous vehicles into their premises or supply chains to save exponentially on costs and time. Thanks to 5G and Machine Learning, these types of proposals are starting to become more relevant.
Chatbots and Voice Commerce
The latest breakthroughs in NLP (Natural Language Processing) have made it possible for voice assistants to become a great ally for retail. By 2025, the US is expected to have more than 77 million households with smart home devices, so there is great potential for the retail sector.
IoT devices can listen to the voice of the consumer and respond accordingly, helping customers find products and make purchases. Chatbots are a very useful tool for answering questions online in real-time, saving a lot of time in customer service.
The “beacon network” or BLE (Bluetooth Low Energy) applications allow brands and retailers to understand exactly where a customer is in the physical shop in order to offer them a personalized experience at all times.
Carrefour is an example of the implementation of this technology, on which they rely so that their communications are key for their customers when making a purchase. This improves the customer experience, as well as generating personalized offers and discounts according to the type of shopper. Retailers are able to study and understand their customers’ needs and interact with them thanks to innovative technological tools.
Augmented and Virtual Reality
According to a Google survey on consumer habits, 66% of consumers are interested in using Augmented and Virtual Reality tools when shopping. 3D visualizations, product samples, or virtual testers are perfect for customers to try products from anywhere before making a final decision, something that also translates into reduced return rates and increased conversion rates.
Large multinationals such as Ikea or L’Óreal have joined this trend so that they can see how furniture would look in their room, with the possibility of personalizing it or seeing how to place stands or products in 3D.
It’s one of the trends that is gaining momentum in all sectors, including retail. Consumers are placing more and more importance on the ethical values associated with a brand, and shopping is moving towards a greener trend.
Sustainable and disruptive technology facilitates the creation of a more balanced future without sacrificing efficiency or business growth. Migrating to a Cloud model, opting for digitalization to generate less waste, and improving processes using Computer Vision or Big Data to minimize costs and maximize production are just a few examples.
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