As I look at retail technology trends to watch in 2018, they are underpinned by one common denominator: big data powered by advanced analytics. Smart use of data and analytics to understand the customer, both online and in-store, as well as using new tools to deliver the best customer experience, will be essential for retailers to stay ahead and capitalize on these trends.
Trend No. 1: Application of AI Takes Over All Retail Functions
Artificial Intelligence (AI), in its visible and often invisible form, has really come into business and consumer conscience in the last few years. However, what we'll see in 2018 and beyond is the penetration of this technology across the whole retail value chain, being applied to all the functions of retail — from operations to manufacturing to marketing.
According to Gartner, 85 percent of customer interactions in retail will be managed by AI by 2020, and 30 percent of all companies will employ AI to augment at least one of their primary sales processes. AI will play an even bigger role when it comes to driving consumer engagements via smart systems, voice assistants or robots, or as a behind-the-scene application to help optimize operations and create back-office efficiencies. Use cases of the last few years have shown some real, measurable results: following the introduction of Pepper, The Ave experienced a 98 percent increase in customer interactions, 20 percent increase in foot traffic, and a 300 percent increase in revenue.
It’s examples like this that prove AI has a lot of potential in retail, with many opportunities still to be found, making this space even more exciting to watch.
Trend No. 2: Augmented and Virtual Reality Go Beyond the Hype
2018 could see a real uptake of AR and VR in retail. Currently, they're being used to enhance and secure a positive consumer experience — e.g., showing how a piece of furniture would look in someone’s house, and hence reducing possible product returns. Although the technologies have significantly improved in the past few years and costs have gone down, they have some way to go before they find broader application.
To future-proof, retailers need to go beyond the hype and ensure they have a strong business proposition for adopting these technologies. To be effective, AR and VR need to be personalized to the specific sector (furniture, fashion, grocery) and to the specific brand (Ikea, Topshop, Amazon.com).
Trend No. 3: Rise of Smart Stores for New Consumer Journeys
Brick-and-mortar stores have long been challenged by online retailers, and this has driven brands to find new ways to meet consumers’ changing demands, adapting, for example, their physical stores to match new shopping journeys. Alongside traditional shops, smart stores have emerged, where technology helps deliver an improved customer experience through options for in-store browsing or home delivery.
Fashion has seen a rise in showrooms, spaces that showcase the brand, offer selected items for inspection, provide a human face for advice on products, and take orders (see Nordstrom for example). The products are then shipped to the customer’s home from some other location, thus delivering a better experience for the customer and supporting increased overall sales.
In order for the showroom concept to have long-term success, stores have to be smarter. Data is vital to ensure the right products are showcased, as well as for continued insight to drive iterative improvements as boundaries between digital and physical retail get closer.
Trend No. 4: True Omnichannel to Become the Norm
If a retailer ticks the boxes for online, store and mobile, it sometimes mistakenly believe it's omnichannel. It's only when these channels are operated coherently and cohesively, and the retailer is able to gain a single customer view, that the real benefits of an omnichannel strategy are achieved. With the right data, technology and approach, this will be a challenge that retailers can overcome in the next 12 months.
All trends we see flow from using data and insight more effectively and, in a highly competitive industry such as retail, this can be a make-it-or-break-it deal for a business. Which retailers will use the power of data and analytics to their advantage and which ones will succumb? We’ll have to wait and see!
Rachit Khare is the vice president of client solutions at The Smart Cube, a strategy consulting, market research and analytics firm.
Related story: E-Commerce Trends to Watch in 2018