Retailers Hesitant to Invest in Emerging Technology
Among one of several key themes to emerge from Total Retail's 2018-2019 Retail Technology Report is the fact companies are not yet spending on emerging technology such as artificial intelligence (AI), voice commerce, and augmented and virtual reality. Just 10 percent of the 235 respondents to our recent survey said they were currently using AI. The numbers drop even further from voice commerce, augmented reality and virtual reality (all tied at 6 percent usage).
So what are retailers spending their technology budgets on? For the most part, solutions that have seen more widespread industry adoption and proven return on investment. Fifty-seven percent of respondents said they are currently using an e-commerce platform, the top choice among the 30 technologies listed as answer options. Following behind e-commerce platform were point-of-sale system (49 percent); analytics (45 percent); inventory management software (44 percent); and order management system (38 percent).
As of today, the hype surrounding emerging technology has exceeded adoption levels. Why? For most retailers, any technology investment comes down to ROI. They want to see proven, quantifiable results before taking the plunge — and investing significant dollars. As technologies such as AI and voice commerce become more mainstream, and their impact to retailers’ bottom lines more quantifiable, expect to see these numbers to increase.
Retailers Betting on the Continued Growth of E-Commerce
And why wouldn't they? According to the U.S. Department of Commerce, e-commerce sales in this year's third quarter increased 14.5 percent year-over-year. E-commerce sales in the third quarter of 2018 totaled $130.9 billion, accounting for 9.8 percent of total retail sales. It's these types of consistent growth numbers that have retailers looking to upgrade their online shopping experiences through technology.
According to our survey, retailers indicated that they would be devoting more budget in 2019 to established technology solutions. The growth of e-commerce, including mobile, has retailers’ attention, and as such that’s where they plan to increase investments. Nearly half of respondents plan to increase tech spending on their e-commerce platform (49 percent) and mobile website (46 percent).
Creating personalized, one-to-one relationships with customers is also in retailers’ 2019 plans. Thirty-three percent of respondents indicated they plan to increase spending on their CRM platform in the next 12 months, and 31 percent will be upping their budget on personalization solutions. Developing long-term customer loyalty has become increasingly important for retailers as the cost to acquire a customer continues to rise.
Spending cuts are most likely to occur on emerging technology solutions — sensing a theme here? Respondents indicated they’re most likely to cut spending on drones (7 percent said they’re decreasing spending on the technology) as well as virtual and augmented reality, 3-D printing, and voice search (all 6 percent).
The 2018-2019 Retail Technology report is a valuable resource for retailers looking to learn more about the technology landscape within their industry. Take advantage of the opportunity to benchmark yourself against the competition and discover future technology adoption and spending trends that can help position your business for success. Download the report today!
Related story: The 2018 Retail Technology Report