It’s no secret the retail industry has experienced a major disruption. With the effects of the global pandemic playing out for the last two years, retailers were forced to accelerate their digital transformation efforts. And most did so successfully offering a range of pick-up, drop-off, and touch-free purchase options to keep their sales going — to the tune of $1.7 trillion in revenue over the last two years. Still, retailers are at a precipice today as the economy teeters on a potential recession and deals with inflation rates that haven’t been seen in decades.
It’s clear that it is time for the retail industry to rethink how it’s using digital to drive its industry forward and navigate the current economic situation. Outside of going online, what can the industry do with things like Industry of Things (IoT), data, omnichannel marketing, and even the metaverse to deal with what we are facing in the economy.
The Realities of Deflationary Technology
As retailers are dealing with the impact of inflation, many are turning to technology to help target and reach consumers in new and different ways. Of course, there’s always the argument that adopting technology is an investment, but I believe in the reality of deflationary technology, meaning that the more technology is used, the more the cost of technology goes down. This is why now is the right time for retailers to make the investment.
In order to revolutionize the industry, retailers need to start rethinking their relationship with technology. In the past, we have seen retailers use technology such as AR and VR to pull people into stores. Even before the pandemic, things like virtual fitting rooms were a “thing.” Soon, they’re going to be table stakes. Still, none of that really changed the shopping experience. Until now. The following are just a few
As more and more retailers recognize the importance of headless commerce and being able to adapt and bend to different customer channel preferences, the time to implement new and better options in-store is essential. These include things like:
Frictionless—and cashier-less—shopping. As usual, Amazon was ahead of its time when it launched Amazon GO. Then, the thought of waltzing through a store with a cart full of products and leaving without waiting in line at a cash register on the way out seemed absurd. Now, adding sensors to the store to enable this type of shopping for consumers makes sense, especially when you consider how retailers have been some of the hardest hit by the Great Resignation. Turning to this type of technology would be a large initial investment, but would likely be less of a yearly expenditure than paying for cashiers. These employees would be able to spend more time dedicated to improving the customer experience, which would likely result in more loyal customers. The initial investment would be worth it in the long run.
Smart shelves. Have you ever checked on a company’s website to see if a certain item is in stock at their local location, only to drive all the way there and find out the product is fully out of stock? Smart shelving and AI-powered inventory should help with that. By being able to count stock in real-time, and send that information to relevant websites and apps, stores will be able to eliminate a lot of frustration for customers. This technology could be applied to the entire supply chain so a customer would see that a product is out of stock at one store, but it is available nearby for pick up or delivery within a day. The options are endless when stores have access this type of real-time data.
Technology companies like Qualcomm have been making headway to solve the problem. They unveiled their smart shelf edge technology equipped with dynamic pricing, geolocation, and LED technology at NRF 2022 with the hope of helping retailers navigate their stock and pricing issues. Another company that is doing interesting intelligent shelving is Scandit, which has made any device with a camera into a smart scanner. This has a plethora of improved retail experience implications for retailers and consumers.
Omni-channel Marketing to Blur the Physical and Digital
One of the trends we’ve seen lately is the blurring of the digital and physical store. People are shopping however and wherever it is convenient for them. As such, retailers need to be able to reach customers wherever they are. That means social media, websites, e-commerce site, geo-location smart beacons, emails, push notifications and several other avenues. To do this successfully, companies need to collect data and invest in data management tools like CDPs to be able to mine date for insights. The retailers that can send the right message to the right customer at the right time will likely be recession-proof. The ones that don’t tap into this type of technology will likely go extinct.
I’ve covered the CDP space extensively here on Forbes, and I continue to see massive investments from large enterprise software companies like Salesforce, Microsoft, Oracle, SAP, and Adobe to enable the next generation of customer data platforms to integrate with current systems of record. There has also been a rise of specialty CDP vendors that include Treasure Data, Segment (Now Twilio), Klaviyo, and Emarsys to name a few. I expect the big software companies to continue to lean into this space, while the point solutions seek differentiation—I expect that retail-focused CDP solutions will continue to grow in popularity.
Monetizing the Metaverse
While we are still years away from the metaverse being mainstream, people are using it now. And people are spending their money and time there. The Nike metaverse store reported over 7 million visitors in just 6 months — that’s a huge audience to reach. Retailers need to understand the potential that the metaverse holds and start planning now.
Physical stores aren’t going anywhere, but the metaverse and the digital marketplace will have value. Whether it’s offering digital goods, housing, or services, there is money to be made. And the metaverse, while it might be slower to come to full adoption if a recession happens, is likely going to be around for many years to come. To capitalize on the potential, retailers need to start planning now.
The Future is Uncertain, but Adopting Technology will Help
The world is not the same as it was two years ago, let alone five. Many of these technologies have existed well into the past, but the “new normal” is creating acceleration of technology and new use cases we have never seen. Consumers now want options. They want ease. They want transparency. They want to shop whenever and however is convenient for them. At the same time, retailers need to plan for the future. The economy is facing a level of uncertainty that we haven’t seen since 2008. It’s possible that if inflation doesn’t level out and that we will go into a recession or even worse, stagflation. One thing we’ve learned from the uncertainty of the pandemic is adopting the right technology will enable agility and resiliency to navigate the worst. And those skills cannot be overlooked.