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Top Tech Trends Redefining the Retail Industry

Nov 30, 2023 4 minutes read
Nov 30, 2023 4 minutes read
The global landscape's rapid digital interconnectedness is driving an unprecedented change in the retail sector. Machine learning, voice shopping, and IoT are all part of that change.

The retail industry is changing at a rate never seen before, largely due to growing digital interconnectedness around the globe. This shift is also being driven by a myriad of cutting-edge tech like the Internet of Things (IoT), augmented reality (AR), and artificial intelligence (AI).

What does the future hold for the retail industry?

The retail industry is expected to grow significantly. In the US alone, retail sales are expected to hit US$5.5 trillion by 2027, with online sales making up 30% of the market, as reported by Forrester Research.

At the same time, the industry is facing unexpected challenges because of increased labor costs and rising inflation. That’s why the retail sector as a whole is relying on technology to guide it through these turbulent times.

However, it is up to the companies themselves to forecast and identify technology trends that will shape retail’s future. Having said that, there are the major technological developments that are influencing modern retail that we have identified, ranging from personalization to the incorporation of IoT devices for a smooth in-store consumer experience. In this digital era, these developments will completely change the way that retailers operate.

1. Embracing the Digital Revolution

For makers and sellers of consumer-packaged goods (CPG), digital transformation is a top priority. CPG businesses are expected to invest US$24 billion in digital transformation by the end of the decade, according to a 2021 study. A substantial amount of this investment will go into integrating cutting-edge technology, such as AI, that is intended to increase automation and operational efficiency.

The digital revolution has many real-world implications, such as improving inventory control, enhancing in-store product visibility, simplifying checkout procedures, refining retail operations, and streamlining the supply chain and logistics operations, among other game-changing initiatives.

Warby Parker, a popular American retailer that focuses on prescription glasses, contact lenses, and sunglasses, makes use of customer data to create customized email campaigns that showcase frames that are comparable to those that the user has already bought. The company also uses the collected data to identify clients who would benefit from a new pair of glasses and direct marketing campaigns toward them.

2. Machine Learning for Prediction of Retail Demand

Demand forecasting is one area where machine learning is changing the retail scene. Retailers can predict future fluctuations in client demand with amazing accuracy by utilizing sophisticated AI algorithms. Numerous data sources, including point-of-sale data, market information, economic indicators, and seasonality, are used to generate these projections.

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With such a data-driven approach, retailers are also able to create responsive future marketing strategies that encourage higher consumer spending.

Walmart, one of the biggest retailers globally, has been among the first to employ AI technology for demand forecasting. It has put in place a machine learning system called Eden which aims to decrease food waste by estimating with high precision the shelf life of fresh produce. Amazon began this trend more than 20 years ago by using AI algorithms to recommend items to buy.

3. The Ascendance of Direct-to-Consumer Brands

Direct-to-consumer (D2C) brands, characterized by their innovative marketing strategies, have proven to be exceptionally adept at capturing the attention of millennials and Gen Z. By capitalizing on the extensive presence of these demographics on platforms like Instagram and TikTok, D2C brands have effectively converted engagement into substantial revenue streams.