The article was updated on February 22, 2023.
Retail is considered an evergreen industry. It has been prospering for decades and will continue doing so into the unforeseeable future. By 2027, retail sales in the US will only probably reach $5.5 trillion, with a 30% share of online shopping.
Since the retail industry is so popular and all-encompassing, it’s critical for businesses to come up with retail solutions that can satisfy increasing customer expectations and niche requirements. Along with technological advancements, these ever-changing conditions will shape the future of retail technology and the means and tools for boosting business operational efficiency and improving its communication with consumers.
Here, we’ll share technology trends in the retail industry that will become essential for customer shopping experiences in 2023 and beyond. Read on to get inspired to bring your business in tune with the new industry standards.
Top technology trends in retail
1. Omnichannel shopping
One of the main trends in the retail industry is providing customers with omnichannel shopping experiences. Over time, this tendency will become a non-negotiable feature for all brick-and-mortar stores that want to find their place in the retail market.
A modern shop of any niche can use retail software in order to create a unified multichannel ecosystem for its customers. Employing physical locations, mobile apps, websites, social media, and delivery simultaneously helps brands establish continuous communication with their customers, reach a wider audience, and allow the customers to interact with the store in whatever way is convenient for them. So, the customer can, let’s say, pick up the product bought online physically, or choose goods in-store and order the preferred size and color in an app.
In the last several years, multiple studies have shown that a seamless and flexible omnichannel shopping approach makes people spend more, thus increasing the brand’s revenue both short- and long-term. Moreover, strong omnichannel strategies yield higher retention rates, thus turning shoppers into loyal lifetime customers.
2. Artificial intelligence to aid logistics
Retail tech powered by machine learning can help optimize the delivery sequence and other aspects of logistics. One vivid example of how you can use advanced retail technology to improve your supply chain is Amazon’s custom-developed AI software that enables the company to deliver goods to any location within one hour.
The company’s AI takes in the data about how many units of each item their customers are likely to buy and determines where the majority of these clients come from. The system accounts for all sizes, colors, and other applicable characteristics of each product. This kind of predictive analysis allows Amazon to stock the goods in warehouses closest to locations from which the respective orders are most likely to come.
The main benefits of incorporating AI into supply chain management include the following:
- Faster delivery with less resource waste. Customized AI systems can keep track of all delivery routes and adjust them dynamically as well as determine how many staff members are needed at each location.
- Optimal stocking with computer vision. Connecting video feed from warehouses to a system that uses computer vision can help determine how to stock the goods, and it’s also useful for leading staff members to the already packaged products to facilitate deliveries.
3. Virtual and augmented reality
Although the notions of AR and VR are not new, the number of possible applications of this technology for businesses increases every year, and in retail, brands get more and more creative with the use of these solutions.
In the last years, businesses have been expanding the options of how augmented reality can work in retail. Both AR and VR are used for online stores to engage users and provide a more immersive experience, sometimes trying to replace their offline visits. For instance, IKEA uses the power of 3D modeling and AR to help people explore how furniture will look in the desired setting before buying it.
However, many brands apply AR and VR in-store, too. A famous beauty company, Coty uses AR-driven smart mirrors to help customers see how a makeup product will look on them without actually wearing it. Moreover, Coty utilizes the power of VR sets for consumers to visualize the brand fragrances.
Taking the VR and AR experience to the next level, the metaverse is an independent, decentralized virtual world that can be used by brands to interact with their customers in a new way.
Users can access a metaverse retail space by creating their avatars, and shop using cryptocurrency. A brand, in its turn, can bring its retail store in the metaverse in various forms, from creating a virtual copy of the real shopping location to entertaining customers in a game.
With almost endless possibilities of the metaverse in the retail industry, businesses have a chance to reach out to more potential customers from any part of the world, provide them with a new interaction channel, and personalize their user experience, which leads to higher customer engagement and more sales.
You can already find several creative examples of metaverse retail use cases that go beyond simple marketing. Louis Vuitton created a game in the metaverse that tells the history of the brand. Users can discover it by collecting 200 candles that coincide with 200 years of the brand’s existence.
5. Retail video analytics
Surveillance cameras have been used in stores for decades; yet, the concept of smart AI-powered retail video analytics is very different from simple security footage. Brick-and-mortar stores use video analytics for understanding retail consumer behavior and gathering and analyzing specific data for improving their experience.
Particularly, video analytics in retail stores can give insight into:
- customer count and profile: the number of visitors, their gender, and age;
- visitors’ behavior: customer recurrence, time spent in the store, visitors’ interaction with the shelves, the checkout process, etc.;
- the store’s performance: conversion rate, in-store advertisement and layout efficiency, hot areas, etc.
6. Predictive analytics
The retail industry is bursting with information that businesses can leverage. Big data is no longer merely a buzzword but a powerful tool to drive your forecasting, recommendations, and even product quality. Predictive analytics using big data in retail is so promising, experts estimate this market to increase from its 4.2 billion dollar value in 2019 to 13.3 billion in 2025.
Retailers can use predictive analytics in several main areas:
- Demand forecasting. Big data is an incredibly effective tool to predict how the demand for a particular item is likely to change. You can use this to figure out how many units of each product you need, what to launch onto the market next, and what will soon need a makeover.
- Product recommendations. Predictive analytics can help you understand each customer’s shopping behavior and generate personalized content and recommendations. This helps both improve your customer experience and increase loyalty by adding a personal touch to your campaign.
- Quality control. Big data can also help warn customers about potential dangers quickly in case something goes wrong. For instance, Costco once used the aggregated data to identify customers who bought foods with possible Listeria contamination and deliver thousands of warnings within just one day. Having a fast and efficient way to leverage customer data can help you make your services safer.
- Logistics. Using big data is useful to predict which stores need to be stocked with a particular kind of product.
Read also: Predictive Analytics. Transforming Data into Actionable Insights
7. Personalized customer recommendations
Customer experience will never be complete without personalization. As online retail has skyrocketed, so has the demand for advanced recommendation engines and other retail technology types for personalization. Personalized recommendations can make your clients feel welcome as well as provide them with useful insights, simultaneously driving your revenue up by 5-15 percent.
Recommendation engines take numerous factors into account, but most systems can be classified as a combination of content-based and collaborative recommendations.
- Content-based. These systems consider each customer’s previous purchases, as well as their browsing history on the site, product returns, and wishlist content. After analyzing this information, recommendation engines can provide suggestions on what products may be interesting to the client.
- Collaborative. This type is used in retail technology solutions more frequently, and it aims to find similarities within groups of customers. These recommendation systems identify patterns in users’ behavior and apply the resulting recommendations to each applicable member of the group.
8. Customer support chabots
Chatbots in retail businesses will be getting more and more sophisticated over the next few years. The whole industry of natural language processing (NLP) is predicted to grow beyond $43 billion by 2025, which amounts to a 3.5 times larger value than is presented this year.
Chatbots help retail organizations communicate with customers more effectively and suffer less resource waste. These systems can conduct a conversation that feels natural to a user, recommending items, helping make a purchasing decision, or solving a technical issue—all without any input from a human employee.
Chatbots can also gather customer data for analytics and identify the most promising consumers, subsequently redirecting them to your employees.
9. Automation to improve inventory control
Technology innovations in the retail industry stretch beyond software. In supply chain management (SCM), automated warehouses are well on their way to becoming the future of retail technology, optimizing processes and reducing costs, delivery times, and resources needed for production.
Incorporating the following elements into your infrastructure can significantly improve inventory control and aid your SCM:
- video feed from a warehouse, processed by a computer vision system to automatically classify all items;
- dynamic analytics of what you have in stock, eliminating the need for manual inventorization;
- AI-powered management systems to control the delivery of goods and subsequent home delivery to customers;
- pick-to-light technology that uses a smart lights system to guide employees to the location where the required product is.
10. In-store analytics tools
Technology in retail stores should aim to gather and process customer data. Gaining insights from online consumer activity is a familiar practice, but you should expand it to your real-life stores if you want to stay on top.
Services like AdMobilize, ShopperTrak, and Dor already exist to help companies measure foot traffic and gather demographic information about consumers.
A custom-made system can be tailored to your particular needs and provide insights into your staffing situation, conversion rates, and visitor behavior.
11. Robotic store assistants
Retailers use robots more and more frequently to improve the functioning of the store. This retail and technology innovation helps with safe and efficient cleaning, transportation of goods, product tracking, customer assistance, and analytics.
Some examples include the following:
- Amazon Scout autonomously delivers products to consumers’ doors.
- LoweBot provides assistance to customers in stores, answering their questions, helping with navigation, leading them to the desired item, and so on. The robot also gathers customer visit data for further analytics.
- Millie finds and cleans various spills inside the store. The robot can also determine whether there is a safety hazard and alert the staff immediately.
12. Voice search and personal assistants
Voice search technology is one of the fast-growing retail technology solutions. Experts predict the number of voice assistants that people use to reach 8.4 billion in 2024.
Voice assistants like Siri, Alexa, and Microsoft’s Cortana make users’ everyday activities more pleasant and easy. A custom-made solution for your retail business can go further and help you enhance the customer experience, improve client engagement, and deliver news about fresh product releases, sales, and special offers in a human-friendly manner.
13. Contactless payments
One of the most irreplaceable kinds of technology in the retail industry is digital wallets and contactless payment systems. Incorporating digital payment into your business will provide users with a fast, secure, and extremely convenient payment method.
Digital wallets help make purchases with just one click, as opposed to older online systems that require users to input credit card details every time, conduct multi-step verification, and wait for the transaction to complete. Depending on the payment system, consumers can use the face recognition log-in method or Touch ID to make a purchase.
14. Geolocation marketing technology
Geolocation and proximity marketing is not the latest technology in the retail industry, but it will certainly be one of the fastest-growing.
This technology has the following primary functions:
- It helps retail organizations customize recommendations and content for consumers more accurately. Geolocation detection allows you to divide your clients into target groups by their current city and show them personalized promotions, products with special prices, and hot offers nearby.
- Proximity marketing with beacon technology can lead customers to particular items in your store, track the clients’ interest by detecting which aisles they surveyed, and offer personalized product recommendations.
15. Retail sustainability
Nowadays, sustainability and the reduction of the brands’ carbon footprints are becoming more and more obligatory in the retail industry. It is often a matter of ethics: In the US, for the majority of consumers, a company’s position on social, political, and environmental issues is important and even decisive for their choice.
So, well thought out retail sustainability initiatives can help businesses neutralize their environmental impact and thus improve their reputation in the eyes of consumers. Following the example of Levi’s, you can work toward improving the quality of your product towards sustainability and recycling.
Technologies that help businesses cut waste, optimize supply chains, reduce digital emissions, and minimize carbon footprint in delivery are among the most powerful retail industry trends.
How to get started with innovations in retail
Being among the most popular industries, retail absorbs all global trends in software development. Whether it’s automation and analytics or the sci-fi-like metaverse, all advanced software solutions echo in the shopping industry in the form of technology trends in retail.
Worldwide brands already use these retail innovations to make their customers’ shopping experience easier, more enjoyable, and extraordinary – and also to become leaders in their niche.
Learning how technology is changing retail is the first step towards building your own successful marketplace. Eastern Peak has extensive expertise in developing solutions that implement the latest trends in retail and correspond to the exact needs of your company. Contact us today to get a free consultation and start enhancing your business.