Retail @Scale can only be delivered via the adoption of a digital mindset and cutting-edge retail and consumer tech. Here are the trends that are driving it
Retail transformation has been underway for some time. What is different in 2024, however, is the speed and the multiple ways in which this is playing out. Modern technology has the power to transform both quantitative and qualitative metrics of retail, right from measurably boosting cost-efficiencies, brand sales and value to creating intuitive customer engagement occasions that surprise and awe. Tech.NXT 2024, an event concurrent to Phygital Retail Convention, sums up the six drivers of Retail @Scale that can only be delivered via the adoption of a digital mindset and cutting-edge retail and consumer tech.
- Passion drives purpose, but data drives decisions
In a world of more and more transparency and measurable outcomes, advanced data analytics is how retailers are getting closer to reading customer preferences, behaviour patterns, and market trends. The retail universe is replete with instances of outstanding use of data science and advanced analytics, resulting in highly personalised recommendations, targeted marketing campaigns, and optimised inventory management.
Reading the customer: Understanding customer behaviour is central to everything else. While the sources of data have multiplied in the digital age, collation to arrive at actionable insights is less smooth. Optimal deployment of data science tools can drive behavioural analytics—a stunningly accurate picture of customer demands, customer satisfaction, and other granulated behavioural patterns.
Segmentation and recommendation: Grouping customers into super-specific segments is helping retailers tailor marketing and outreach categories instead of deploying one-size-fits-all tools. Hyper-targeted marketing—and sales—is a highly desirable outcome of intuitive categorisation of characteristics. For online retailers, building a strong recommendation engine that accurately tags products based on specific characteristics, and also creates user segments based on their preferences, is a powerful asset.
Inventory and price optimisation: For offline retailers, finite physical spaces mean that inventory levels must be continuously optimised for efficient trading density. Here’s where data analysis techniques such as logistics regression (to create demand functions that match pricing with forecasted demand), help with warehousing capabilities, identify inventory trends, and enhance picking and packing processes in a warehouse setting.
- Star Trek for Retail: A continuous journey of Wow!
What retailers want to deliver to customers is not infrequent wow moments, but a consistent, permanent brand experience that awes at every touchpoint. Augmented Reality (AR), Virtual Reality (VR) technologies and Artificial Intelligence (AI) are transforming shopping experiences, with sophisticated engagement interfaces allowing customers to visualize products in real-world settings, try on virtual clothing, converse with virtual assistants, walk through virtual stores, personalise their interactions, and much more. Imagine delivering a highly interactive Star Trek for Retail, in the real world.
The Magic of Extended Reality: Almost 60% of consumers globally prefer at least one activity in the immersive world versus the physical alternative as per McKinsey’s blog. Ikea’s VR showrooms and Balenciaga’s VR-powered promotions are examples of retailers delivering stunning, magical customer experiences beyond real-world capabilities, which is a serious competitive advantage.
Pain-free CX: About 65% of customers worldwide believe that AI should save them time when they log a complaint or a pain point. Faster first-response times, decreased handle times, and shorter wait times are benefits customers will enjoy when retailers use AI—such as AI chatbots and interactive voice response (IVR)—to improve their experience.
Sales boosters: Virtual or augmented reality has powerful potential to add incremental sales and revenue channels for a retailer. As the number of VR and AR users rises, retailers can use immersive technologies to expand their customer bases, boost online sales, and ensure stable business growth.
Immersive shopping: Interactive videos are designed to engage the viewer and encourage them to take specific actions, like clicking on a link, filling out a form, or making a purchase. These videos can increase engagement rates by up to 300% and conversion rates by up to 70%, as per a report by Demand Metric. With the rise of interactive video technology, it’s clear that this type of content will become a vital component of shoppable media in the years to come.
- Brains of the Operations
Automation is making a mark in areas like warehousing, inventory management, and order fulfilment. McKinsey predicts that in the future, 52% of all retail tasks can be automated with existing technology, reducing human errors, enhancing service quality, boosting employee productivity, and saving costs. Technologies such as Robotic Process Automation (RPA), chatbots, and self-checkout systems are simplifying operations and improving efficiencies across the inventory chain, while RFID, IoT sensors, and Blockchain are creating 360-degree supply chain visibility, traceability, reducing lead times, minimising stockouts, and ensuring product authenticity and quality.
Tightening the Nuts and Bolts: Automation—utilising advanced algorithms and data in conjunction with AI—can be a change maker in streamlining and optimising operations across departments: Real-time monitoring, queue management, supply chain, staff optimisation, security, loss prevention, and more.
Leveraging the Point-of-Sale (POS): POS technologies utilising wireless technology to connect with a server allow retailers to maintain and update information in multiple locations. Real-time monitoring of sales figures and inventory levels to facilitate product ordering decisions as well as checkout processes improve operational efficiency — leading to improved sales and profitability.
- The Theatre of Physical Retail
The in-store universe has perhaps irreversibly changed. Consumers who’ve been wooed by digital experiences, are expecting a merger of offline and online words in this physical shopping realm too. For retailers, luckily, technology has advanced by leaps and bounds to deliver these. The potential to create ‘drama’ and offer theatrical shopping experiences that are also intelligent in functionality has never been higher.
Automated shopping: Innovation-led retailers such as Reliance Retail’s Azorte are fine examples of automated retail environments that combine the convenience of technology with personalisation. AI-driven in-store solutions are creating new-age retail models that predict demand patterns, optimise inventory management, reduce stockouts, and deliver awe-inspiring shopping experiences that marry virtual imagination seamlessly to a tactile environment.
RFID: Radio Frequency Identification (RFID) creates a whole new set of data about in-store environments, product movement, and customer behaviour. Data shows that retailers that are not already piloting RFID are lagging in the market. While RFID innovations have been around for over a decade, today it is a must-have in retail, given its massive potential for cost savings and new revenue opportunities.
Video analytics: Many retailers worldwide are using in-store Video Analytics to observe real-world shopper behaviour, respond to in-store situations in real-time and develop customer behaviour analysis. ML-driven solutions are processing vast amounts of data to pre-empt in-store shopping patterns, identify gaps and blind spots, and offer solutions within seconds.
- Digital DNA: The backbone for scale
For a retailer, scale is key to gathering economies of scale and building long-term profitability. Retailers with a digital DNA are discovering that tech is boosting market insight, unifying teams, communicating organisational priorities with great clarity and creating access to new markets and consumers like never before. Driven by increasingly more custom solutions, market identification, market entry strategy, customer acquisition, hyper-targeted marketing, predictive analytics, demand forecasting are becoming the backbone of retailers looking to build growth, but not at the cost of profitability.
Cloud-based enterprise: The sales approach for retailers expanding to new markets and consumer sets requires a robust, agile foundation built for scale — such as a cloud-based business management system. The benefits of cloud-based ERP are cross-functional: comprehensive data management and accessibility, real-time inventory tracking, demand forecasting, enhanced CRM, higher business scalability, flexibility and responsiveness to market changes, wherever they occur.
Advanced analytics: To extract the full potential of built-for-scale technology, retailers are embracing advanced analytics and insights platforms, which gather data from websites, mobile apps, social media, point-of-sale systems, and more. They provide retailers with a 360-degree view of customer shopping behaviour and inventory visibility. In an intensely competitive market, this data-driven approach will be vital for boosting revenue and ensuring long-term success.
- Channel-agnostic Retail
For a consumer-facing brand, stability of experience is of paramount importance, because consumers relate brands to stories and memories. And that is not going to change. While e-commerce has enabled scale, 24/7 accessibility and convenience, mobile commerce takes this a few clicks further, with retail-on-the-go platforms — particularly relevant in India with 650 million smartphone users. Because customers typically behave differently across channels, the challenge lies in being truly Omnichannel: Integrating the disparate offline and online channels through unified customer databases, supply chain management, fulfilment, marketing, and operations — while still delivering the exact same brand experiences and memories.
‘Branded’ CX: Best-in-class retailers have been able to deliver distinctive, consistent customer experiences across channels by integrating into an umbrella commerce architecture that supports all touch points. The result is a customer experience that is unique to the brand, but the same across all its sales channels.
Cloud-based ‘datafication’: Despite the advances in integration, for most retailers, data are often fragmented across systems or partly consolidated with limited visibility to all relevant organisational departments. To magnify the power of data in an omnichannel operation, cloud-based data platforms that enable automation and reuse over a set of defined protocols, is a must-have.
