When retailers list their business priorities, technology isn’t always the first thing that comes to mind. Even though technology has transformed the back end of retail, from the supply chain to the inventory system, it has been slow to show up on the shop floor. However, new technology trends in retail should see that change rapidly, as tech evolves and retailers are faced with increasing pressure from online competitors and from customers interested in more than just the basic product. These trends are split in two directions: personalizing the customer’s experience, and making omnichannel distribution seamless and efficient.
One major trend in retail technology concerns the customer experience, both in-store and across multiple shopping channels. As analysts from Microsoft point out, today’s consumers are sophisticated and tech-savvy. That means they’re willing to hand over personal data – but only in exchange for a better retail experience. Customers want a personalized, individual experience, complete with custom offers, recommendations, and early access to the products they want. Retailers who can deliver this personal, authentic experience to customers can reap the rewards of customer loyalty, which makes it well worth investigating how they can make it happen.
There are several established technologies that retailers can use to deliver this personalized experience to customers at a basic level. These technologies build on loyalty programs, which use big data analytics to associate personal data with purchase histories, to give retailers an idea about what their customers want – and what they will want in future. This can then be used to develop product offers that meet the needs of specific consumers using tools including big data analytics and artificial intelligence (AI). Of course, as a retailer, you need to be aware of exactly how powerful AI-based personalization can be. One cautionary tale comes from US general retailer Target, who developed a “pregnancy score” predictor that ended up surprising some customers, and not in a good way. So the lesson here is that using big data analytics on your loyalty card data is an excellent way to deliver the personal experience that customers want – as long as you don’t go overboard!
Loyalty programs are just the tip of the iceberg. An upcoming technology trend that will help retailers personalize the customer experience is augmented reality (AR). AR can be thought of as a lightweight version of virtual reality (VR), where instead of creating an entire new virtual world, virtual elements are overlaid on a real-world environment. AR offers retailers the opportunity to give customers unique insights into how their products “fit”. For example, Specsavers, a UK-based optical company, has developed a program called Frame Styler. This program lets users “try on” different frames virtually, displaying the results in a mirror. More than that, the program makes suggestions for frame styles and fits to suit the shape of the customer’s face and their own preferences. This tool makes trying on glasses – typically a stressful and frustrating experience for customers – far easier. It also helps customers navigate the wide array of choices available. For retailers who are trying to balance the realities of keeping an efficient inventory with the customer’s demand for choice, all while meeting the customer’s need to try on and experience the goods they are buying, AR technology like apps, smart mirrors and similar tools could be a game-changer.
A third major trend for retailers – both in-store and online – is social shopping. Social shopping debuted on social media sites like Instagram and Pinterest, which are both image-based sites that use visual technologies to facilitate the consumer’s ability to search for specific goods. In social shopping, the consumer is embedded in a social media platform as she searches for products and purchases them. For example, she might see a dress she likes on the Insta feed of her favorite celebrity, click through and be taken directly to where she can buy the same dress. In the beginning (which was only a few years ago) social commerce was an informal use of social media, with mostly small retailers offering their products through Instagram or Pinterest, typically by contacting the account manager directly. Today, social shopping is increasingly sophisticated, and is rapidly developing to the point that customers will be able to research products and make purchases without ever leaving the social media domain.
Social shopping can go even further if retailers think outside the box. One example is a Chinese e-tailer, who connects shoppers to each other via livestreaming, allowing them to ask questions and talk about purchases. While that is still a little bit in the future, retailers cannot ignore the growing use of social media to discover and research brands and products. According to a consumer poll from Global Web Index, 42% of consumers are now using social media to research products, while 24% are looking at social media to find new brands, mainly via recommendations from other users. By thinking about how new and existing technologies can be used to facilitate interactions between shoppers and use of social media, retailers can place themselves in the right position when customers decide they are ready to buy.
Of course, technology is not the only factor in whether your customers feel comfortable, valued, and like they are receiving a personalized experience that delivers what they need. Retailers also need knowledgeable salespeople with all the information at their fingertips to anticipate and respond to customer needs. These salespeople are key to getting customers to make a purchase: According to one study, customers are 43% more likely to purchase after a salesperson interaction.
This is an area where retailers can look beyond the obvious applications of their existing technologies. Tools like integrated inventory management helps salespeople immediately access information about products, while AI can be used to generate recommendations for personalization of in-store shopping experiences, just as it can for online shopping. Thus, the final technology trend that is shaping personalization of the retail experience is not a new technology at all, but applying technologies the retailer already has.
There’s no doubt shoppers love a personalized experience, but they also have other needs. Increasingly, shoppers expect and demand a broad selection, always in-stock (or easily acquired) inventory, and a seamless experience across in-store, mobile and online sales channels. Simply put, customers want to be able to buy what they want, when they want it, and where they want it. Dealing with both the expense and the technical challenges of seamless omnichannel retailing is an increasing concern for retailers.
The biggest trend in seamless omnichannel sales right now is data-powered warehouses, which enable the retailer to integrate inventories and coordinate sales and returns across multiple retail channels. At the most basic level, an integrated inventory management and control system will ensure that products are available to stores, online and through mobile – no matter how the customer wants to order. Integrated inventory management also makes the supply chain more efficient, since the retailer can account for all demand, no matter where it’s coming from. If a retailer is going to run multiple sales channels, integrated inventory management just makes good sense.
Data analytics is another major trend in omnichannel retailing and inventory management. One of its upcoming uses is as a shelf management tool. According to a Microsoft survey, shelf management – including areas like product placement and merchandising as well as basic stocking – is responsible for 66% of sales, along with 85% of profits. However, retailers significantly underspend on shelf management compared to other areas like promotions, which are far less profitable. Shelf management can be facilitated by trending technologies in several different ways. For example, PepsiCo has developed an app with GoSpotCheck which allows sales associates to scan a full shelf of SKUs and determine whether the available inventory meets existing or near-future customer needs. If not, the app can let the associate know exactly what changes should be made to the inventory, ensuring that the store’s shelves always have the right products at the right time.
There are many other ways that data analytics can be used in real-time analysis of the retailer’s stocking and integration of data systems. For example, displays can integrate digital promotions tailored to specific customers. The retailer can use eye-tracking technology and analysis to test how customers respond in real time to product placement strategies. Like many of the other upcoming trends this year, these strategies are more about the application of existing technologies in new ways.
The future of retail is changing fast, with several exciting options retailers can leverage for increased sales and customer satisfaction. Investing in the right technologies for your needs and goals is a smart way to meet shopper demands and increase competitive advantage. If you’ve got any questions on how to leverage technology for your retail strategy, please get in touch; we’d love to help.