Survival of the Fittest: Tech Strategies for Modern Retail
The 4 Tech Tools Retailers Need to Thrive in 2024 – and Beyond
The retail industry is at a crossroads. Post pandemic, retailers face a stark choice: invest in modernising technology or risk being left behind.
The 2024 Gartner CIO and Technology Executive Survey indicates that 71% of leaders plan to increase spending on store technology investments, reflecting a commitment to digital transformation. Yet, as one retailer candidly put it, “Many of us are cash poor post-pandemic. It’s a choice between modernising technology or updating my stores – it’s a struggle to know where I’m going to get the greatest value-add quickly.”
It’s time to face facts. AI, AR, VR and automation are no longer buzzwords, but crucial investments for retailers. Let’s set the record straight on the words behind the buzz.
Augmented Reality (AR): Enhances the real world by overlaying digital information, such as apps that show how furniture looks in your home.
Virtual Reality (VR): Creates a fully immersive environment, for instance enabling customers to shop in a virtual store using a headset.
Artificial Intelligence (AI): Mimics human intelligence to make decisions, like personalised product recommendations based on browsing history.
Automation: Uses technology to perform tasks without human intervention, such as self-checkout kiosks for scanning and payment.
Seeing is Believing: AR's Transformative Impact on Shopping
AR technology is still in its infancy, with only about 1% of retailers experimenting with it. But its potential is immense. The AR-in-retail market was valued at over £1.5 billion in 2021 and is projected to reach £47.4 billion by 2031, growing at a staggering predicted compound annual rate of 41.4%.
AR allows shoppers to visualise products before making a purchase. Take, for example, Maybelline’s AR mirror – a 4,000m² interactive screen which enabled shoppers to “try on” the brand’s latest mascara. This innovative use of AR not only promoted the product but also created a captivating spectacle, increased brand exposure, collected valuable consumer data, and boosted sales. It’s a perfect example of using AR to rejuvenate traditional marketing with interactive experiences.
Immersive Impact: Marketing in Another Dimension with VR
While VR adoption in retail is slower, it still holds significant promise. The global VR-in-retail market is projected to reach £4.2 billion by 2028, growing at a healthy rate of 13.82%.
VR offers similar benefits to AR, such as virtual product demos and try-ons, but goes further by creating fully immersive environments. Imagine “walking” around a virtual store or “sitting” in a new car. American footwear retailer, Merrell, recently used VR to promote its Capra hiking boots. Wearing VR helmets, customers navigated a virtual obstacle course, allowing them to experience the product’s functionality and engage more deeply with the brand.
AI: Personalising Retail, One Algorithm at a Time
As Microsoft’s Shelley Bransten recently put it; “You can’t spell Retail without AI.” The integration of AI in retail is no new concept. Amazon began utilising AI technology for recommendation engines over two decades ago. Today, it permeates every facet of modern retail, from predictive analytics to inventory management. And the advancements are rapid.
Virtual fitting rooms, like Nike Fit, provide accurate size recommendations, while Sephora’s app offers tailored recommendations via facial scans. AI-driven chatbots use Natural Language Processing to mimic human conversations. Pharmacies are harnessing AI tech to enhances diagnostic accuracy, while shopping centres utilise AI systems to strengthen security and prevent theft.
Smooth Operators: Automating Retail for Better Service
From Walmart’s InHome Replenishment to automated checkout systems like Aldigo by Aldi, automation is another key driver of the retail revolution. In physical stores, trolley/basket scanning eliminate the need for traditional checkouts, reducing wait times and improving efficiency.
However, it’s essential to ensure inclusive options for shoppers which consider the varying levels of tech adoption among different demographics. Retailers should provide clear instructions, support and alternatives for those less familiar with technology to ensure a seamless experience for all.
Return to Sender: Tech’s Eco-Friendly Impact
A significant advantage of these technologies is their potential to reduce returns, promoting sustainable shopping. Virtual “try-ons” for example, minimise returns and the environmental impact.
But it’s important we recognise the limitations of technology. While AI can recommend the perfect shoe size, it can’t replicate the feeling of trying them on. Textiles may not translate through a screen; glasses might slip down the nose… you get the picture. So, while these technologies offer significant benefits, they are not a one-size-fits-all solution and cannot replace the physical experience.
The Future of Retail
It’s clear that the integration of AI, AR, VR, and automation in retail is not just a fleeting trend or the latest tech fad; it’s a seismic shift in how we shop and engage with brands. These technologies, when seamlessly woven into the in-store experience, unlock new opportunities to create exciting customer journeys, streamline operations, and grow sales.
However, embracing this revolution demands more than just investment; it requires a strategic approach to ensure the greatest value-add. Retailers must adapt and innovate to stay competitive. Whether through AR-enhanced shopping experiences, VR-driven marketing, or AI-powered automation, the trick will be in sensitively leveraging these advancements for success – and survival.