The Retail Tech Revolution is Here: Are You Prepared?

It feels almost quaint to discuss the “digital transformation” of the retail industry. Ten years ago, that mostly meant “have a website” and “digitize inventory.” Now these tools are table stakes, and the true digital transformation is the rapid expansion and harnessing of emerging technologies in artificial intelligence (AI), machine learning (ML), augmented reality (AR), virtual reality (VR) and the Internet of Things (IoT).

Even two years ago, it would have been impossible to weigh the impact these technologies would have in shaping the future of retail, yet here we are. In fact, some industry experts already feel like these technologies are moving too fast. As a retailer, it can be daunting to look at these technologies and feel like you’re already behind the ball if you’re not going all in on implementation.

By understanding the benefits of these emerging retail tech tools, the potential challenges they present, and the best ways to prepare for their integration, retailers can begin to road map the next 10 years and create innovative, customer-centric experiences that help maintain a competitive edge in the industry.

How Emerging Retail Tech is Impacting Operations and Customer Experience

Of all the industries poised to benefit from the use of emerging technologies in AI, AR, VR, and IoT, retail is near the top of the list. Dealing with complex supply chains and inventory management, as well as providing a personalized customer experience that connects the physical and digital realms are challenges the industry faces and areas in which this technology thrives.

Retailers are just beginning to scratch the surface of the potential for AI and ML. What makes it such an exciting prospect is its ability to impact both operations and customer-facing services. AI can be used in inventory management by forecasting demand and optimizing supply chain operations. It can also be used to automate marketing collateral to streamline promotions. Many brands have already begun leveraging AI in customer service to automate low-level customer inquiries to preserve bandwidth for support teams to focus on high-level interactions.

AR and VR are an emerging frontier in the retail space, particularly for clothing, furniture, beauty and accessories brands. Using AR for virtual try-on or placing furniture in the actual room where it’s going to go is an incredibly powerful conversion tool. It also creates a more engaging brand experience for customers.

While IoT has a host of domestic applications, it can also transform the retail experience. Smart shelves and other in-store displays can create a more immersive in-store experience, and integrations within manufacturing and logistics can help with predictive maintenance and expand the longevity of crucial infrastructure.

Where to Start With Retail Tech

All of these emerging technologies have value, but they all come with their unique drawbacks. This includes the major challenges brands face when building the necessary infrastructure to connect product information management (PIM) solutions, CRMs, inventory management and other core systems so they can accommodate automation. Not to mention employee training to manage these tools. As a retailer, it’s important to first analyze deficiencies within your own operations or customer experience and see where technology fits in to correct them.

Since many of these tools are relatively new, their cost to entry can be prohibitively high and their return on investment hasn’t been fully justified. Many brands are taking a wait-and-see approach for this very reason. With the way this technology is evolving, it’s not imperative, necessarily, to be an early adopter. It may be more prudent to see how other companies are successfully deploying this tech and then invest wisely.

As a retailer road maps the next 10 years, however, it’s important to prioritize flexibility and scalability in order to adapt to the ever-changing market. Retailers looking to integrate technologies such as AR, VR, and IoT should start by evaluating their current tech stack against future consumer needs, identifying what technology their systems can support and where these technologies can add value — e.g., utilizing AR for virtual try-on experiences or IoT sensors to optimize inventory management. Having a composable tech stack, which is a flexible and modular set of technologies that can be easily reconfigured to meet changing needs, is crucial for retailers to rapidly adapt and innovate in response to evolving market demands and consumer expectations.

By understanding the role AI, AR/VR, and IoT can play in transforming the retail environment, their risks and challenges, and what it takes to implement these tools, retailers can begin to build a road map that scales technology appropriately over the next 10 years. When executed successfully, these tools can revolutionize the retail experience for both customers and brands.

Kristin Naragon is the chief strategy and marketing officer at Akeneo, the product experience company.