How is technology continuing to impact the future of retail — while some things remain firmly entrenched in the “if it ain’t broke, don’t fix it” category?
It’s all about keeping a finger on the pulse of changing consumer expectations and shopping behaviors — and by forming a technological “sixth sense” for consumer trends, needs and expectations.
Brands and businesses attuned to their customers’ desires will provide better service. Doing so in ways that leverage technology will also help retailers operate more efficiently and increase profits as they act on data to optimize store function, store site selection and smart lease structuring.
Tech Has Changed the Way People Shop
Once upon a time, consumers depended on print ads, mailers and catalogs to point them toward what was new, trendy, or money-saving. They paid in person with cash, check or credit cards. That was the pre-Internet, pre-cell phone, even pre-5G era.
Now, everyone with a cell phone is a potential consumer target, influenced by user digital experience, and likely participating in e-commerce (online shopping) and its subset, m-commerce (mobile shopping).
Omnichannel content drives engagement, while mobile devices let us make purchases wherever we are. Add no-fee credit cards, seamless reward systems, cost-saving subscriptions, and privacy and security technologies like Face ID and Touch ID, and you have a pretty attractive, frictionless retail environment.
Tech Saved Retail During the Pandemic
When people were forced to isolate, that’s when the power of retail technology kicked in big time — helping to drive digital commerce and satisfy consumers’ need for essential and nonessential goods.
The ease and appeal of shopping online (i.e., next-or same-day delivery, free shipping and returns) spurred consumers to spend money saved for vacation and travel on Zoom-meeting apparel, self-care items, and home goods.
Other technologies like QR codes, a touch-free way with which businesses could communicate and sell to customers, were suddenly everywhere — from restaurant menus to billboards.
COVID also helped usher in phygital retail: a synergistic blend of physical and digital shopping and marketing that created an unprecedented “holistic customer experience.” During COVID, shopping and paying options exploded out of a need for safety, convenience and instant gratification. Customers began their journey on one platform, continued to the other, and switched back and forth to shop, compare prices, and read reviews before clicking “Buy,” heading to a store to seal the deal, or use curbside pick-up.
Additionally, retailers increasingly enjoyed the “halo effect” of in-store-to-online shopping and — vice-versa — as the combining of real-life and virtual experiences shaped customer behavior.
Along the way, there were some great technological hits and, notably, a few misses. Big Tech ideas like Amazon Fresh, “revolutionary” shopping by robots Alexa, Siri or Google, and shopping with Apple watches have, so far at least, failed to take off.
We also witnessed a bit of online struggle — and some perhaps inevitable economy-driven pullback: At the close of 2022, free returns were predicted to end as retailers looked to cut expenses, enhance sustainability and discourage returns in an industry where the supply chain is ideally intended to flow one way.
Tech is Transforming Retail Today & Tomorrow
As technology continues to change the look and feel of shopping, successful retailers will leverage it to simultaneously engage consumers, drive sales and be profitable. Current retail technology trends include:
1) Embracing the Hybrid Approach – E-commerce and physical retail are more complementary than ever. As a result, retailers are working to ensure a consistent experience across all shopping platforms. Because customer expectations have changed — thanks to digital-first trends like buy online/pick up in-store, curbside delivery and shop by appointment — store associates and customer service representatives will act more like brand ambassadors and less like “employees.”
2) Go further with cashless, contactless and autonomous – One example is Amazon’s cashier-less Just Walk Out technology — specifically, its Amazon One device, which lets people enter, identify and pay using palm-recognition technology. KBS’ Accenture Tower in Chicago, Il, is home to one such Amazon Go location, an amenity that allows tenants to quickly shop and go without interaction with a clerk.
Apple Pay, Google Wallet and Venmo are gaining steam. The already-familiar QR code is being used in new ways to help consumers shop and check out — and to better inform retailers about what’s working, inventory- and marketing-wise.
3) Use artificial intelligence (AI) to better predict demand and manage inventory – Thanks to advances in computer vision technology, AI that monitors purchase trends and accurately predicts customer demand is now much more accessible for physical retailers. Today’s brick-and-mortar stores can use AI algorithms to manage their logistics and inventory like online shopping platforms have for years.
4) Lean into Personalization – Retail brands will capitalize on connected technologies and omnichannel retailing by personalizing their offerings and serving up products customers want, where and when they want to buy them. Using granular data, retailers will tailor in-person shopping experiences by sending customized real-time promotions and recommendations and screens or push notifications with personalized discounts while people are in the store.
5) All hail environmental, social, and governance (ESG) – A global focus on sustainability and environmental consciousness has resulted in more customers who care about ESG practices. In response, disruptive technologies like the Internet of Things (IoT), AI, automation, cloud computing and data analytics are reconfiguring supply chains, streamlining business operations and shrinking the gap between physical and digital worlds. This helps retailers enhance the customer experience and change business processes while analyzing and optimizing their ESG impact.
6) Full-On Experiential with Mixed Reality – Despite being a technology still in its infancy, immersive experiences that use augmented reality (AR) to create try-before-you-buy moments or virtual reality (VR) to be transported to different places are gaining in popularity.
Retailers are using extended reality (XR) and entering the Metaverse to capture younger audiences and drive sales in the real world and in virtual worlds — where customer avatars attend yoga classes, go to concerts, and shop — especially for luxury goods that are unaffordable to them in real life, accumulating them as digital assets.
Retail technology enables brands to fuel business by nurturing all customer touchpoints. Today, offline retailers are leveraging innovations made by online retailers in logistics and inventory management to offer flexible payment methods, home delivery options and loyalty programs. Online retailers are learning about building personal relationships with customers and how to provide better immersive shopping experiences from brick-and-mortar retailers.
Going forward, winners in the retail space will be those who synergize all connected technologies and omnichannel retailing. Brands that enthusiastically embrace a hybrid mindset and “holistic” approach that takes customer experiences to new and exciting places will develop a sixth sense of how to stay relevant to and preferred by consumers. They will succeed by building a world where making a purchase has never been easier or more desirable.
Learn more by visiting KBS.com/Insights.