The COVID-19 pandemic accelerated the need for digital transformation. As customer demands for shopping experiences change and become more sophisticated, retailers chase advanced technologies for higher customer satisfaction and loyalty. Many are now actively experimenting with cutting-edge technologies, such as computer vision, deep learning, artificial intelligence (AI), machine learning (ML), and other retail technology trends.
According to McKinsey, the right investments in technology can accelerate the time to market for digital offerings by three times and optimize run costs to save up to 20 percent, which can be reinvested in digital-innovation projects. There is no better time to start investing in retail technology than now.
If you’re not sure where to begin, this article will take a deep dive into the future of retail technology and how it will benefit your business to help you get a competitive edge.
In this article:
Best Retail Industry Technology Trends
Future retail technology trends are about understanding customer needs and improving your business processes to service them. For example, some customers prefer to minimize interaction with staff, in which case contactless store experiences come in handy.
Availing goods and services in virtual reality (VR), like Meta's Metaverse, tracking customer behavior patterns through security cameras, collecting retail analytics, predicting customer demand for specific services and goods, and other trends will lead 2023 to a powerful digital transformation.
Now, let’s dive into discussing some major trends.
#1. Contactless Stores for Shopping and Autonomous Delivery
A booming current trend is optimizing customer efforts and time for buying products and services. That is why no-contact stores are becoming so popular.
This is a collective name for a suite of technologies and customer experiences for cashless, contactless, and autonomous shopping and delivery of goods and services. Its main goal is to minimize friction and delays along the shopping flow and reduce human contact to zero in the entire buying experience.
This trend became especially valuable when the COVID-19 pandemic restrictions were introduced. However, the need isn’t new, as many people prefer to minimize human interaction due to high levels of anxiety.
The key features of such stores include:
- Ability to buy online and pick up in-store (BOPIS)
- Self-service checkout kiosks
- NFC-based payment cards and/or mobile wallets as a payment method.
If you include neurolinguistic programming into your technology set, such stores will also learn to recognize human language and assist customers with their buying experience.
A good example of a contactless store is the Amazon Go network, where the advanced Just Walk Out technology enables a 100% cashier-less checkout experience. The technology uses a combination of computer vision, AI-enabled cameras, RFID strips, infrared lead sensors, microphones, and mobile apps. The customers can just walk in, put everything they need in a cart, and pay upon leaving the store using their predefined contactless option.
#2. VR Shopping Experiences in Metaverse
Metaverse is a highly immersive virtual world where people can create digital avatars to gather for socialization, playing, working, and, of course, shopping.
More and more online retailers joined Meta's VR to develop their consumer products in it: Amazon, Roblox, Nike, Louis Vuitton, Coca-Cola, and Disney, to name just a few. For example, Louis Vuitton launched a mobile game—Louis the Game—with exclusive, embedded NFTs. It’s an adventure game with many challenges (e.g., traveling the virtual world and collecting 200 candles to celebrate Louis Vuitton’s birthday) that provide a more subtle way of promoting the brand.
The key feature of Metaverse is the unraveled retail experience it offers to consumers: gamified, custom-tailored, and well-targeted.
The experience occurs during virtual events or live music concerts. Interaction with the brands happens via mobile devices, VR headsets, haptics, and smart glasses that allow an unsurpassed impression when a person first discovers these online shopping experiences. It’s no wonder the global Metaverse market is expected to reach $679 billion by 2030.
Since Metaverse is characterized by decentralization, everything in this augmented reality (AR) is accessible to all participants, and there’s no central authority governing the process. As such, the platform allows, for example, including luxury brands that are usually not freely available in brick-and-mortar stores.
Retailers interested in establishing their presence in Metaverse and offering unique customer experiences to their clients will require professional IT partners with strong tech skills in 3D software engineering, gesture recognition, spatial mapping, machine learning, and artificial intelligence. The infrastructure for AR needs to be based on cloud computing.
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#3. Artificial Intelligence-Enabled Security Cameras
Computer vision (CV) clearly shapes the future of retail technology. Video security cameras with built-in CV technologies, 5G, and AI can be programmed to detect the presence or removal of certain types of objects in stores or trace the activity of shoppers in them, like movement patterns.
With the help of computer vision and image recognition, IP cameras with AI capabilities can make retailers’ lives much easier. Here are a few use cases where they may help:
- Crime prevention. AI-enabled cameras can read license plates and QR codes on certain objects or even recognize human faces. This makes them especially useful for crime prevention, such as recognizing shoplifters.
- Detecting similar items in stock. Installing cameras in the warehouse can help keep track of your inventory and potentially even notify you when certain items are running low or are damaged.
- Monitoring in-store shelves. AI cameras can monitor store shelves in real time and send alerts about missing items.
- Track customer behavior. AI cameras also have marketing value, supporting retailers with insights about customer in-store behavior. With the help of these cameras, retailers can create a vast searchable library of footage. By incorporating deep learning technologies into the camera software, retailers can get numerous insights about customer demand for certain products.
Recently, one of the largest chains of grocery supermarkets in the United States, Kroger Co., used AI-enabled security cameras in their stores to optimize self-checkout and contactless payment processes for their customers.
Since most customers are not trained to scan the product labels as quickly as cashiers, self-checkouts would take customers a while to use. Besides, the process was prone to errors and excessive friction. Cameras with AI-powered object detection were used to identify the products being scanned by customers. The software recognized whether they were billed accordingly and sent an alert for the staff to assist the customer in case an error occurred.
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#4. Interactive Experiences with Virtual and Augmented Reality
A couple more similar retail digital trends are VR and AR, also used to enrich shopping experiences. Retailers create this kind of technology-aided interaction with their brand to help customers make more informed shopping decisions and offer a more delightful time during virtual shopping.
The easiest way to incorporate VR and AR technology into your retail business is through QR codes. They allow customers to find more information about a specific item by simply scanning a code with their phone and using a filter they can visualize themselves in social media or dedicated apps for the products you sell.
An example of a VR experience offered by some retailers to their consumers is virtual fitting rooms.
VR fitting rooms allow shoppers to try out items like clothing, accessories, furniture, cosmetics, or beauty products without physically touching them. The technology places a certain item over a live image of the customer or their room interior. A good example is IKEA’s Place app in which customers can virtually "place" IKEA products in their space.
The trend is booming, and the global virtual fitting room market is predicted to grow from $4.03 billion in 2022 to $14.87 billion by 2029.
#5. Retail Video Analytics
Before, brick-and-mortar retailers couldn’t gain as many insights about their shoppers' behaviors as owners of online e-commerce sites without the help of modern data analytics technologies. Now it is possible!
Retail video analytics as a trend partially overlaps with AI-enabled security cameras, though the goal of capturing real-time information from security camera footage may be a bit different. Using video cameras and the footage they capture, sellers can monitor and analyze visual data to improve internal business processes and drive larger customer traffic. Here are a few examples:
- Analyzing foot traffic. For instance, with the help of video analytics, retailers in large shopping malls can track customer flow into their stores. What will push a customer to enter this or that store? This question can be answered after the camera footage is analyzed.
- Tracing customer movement in-store. Is it convenient for buyers to move from one shelf to the next? Is the store layout convenient? Are all items clearly visible to customers? How easy is it for all customers to reach the top and bottom shelves? These and many other questions can be answered with retail video analytics.
- Determining the impact of online promotions on foot traffic. Retail video analytics monitors the customer service experience, within a specific store or the entire shopping mall, at checkout and solves customer compliance issues for product display, spills, and cleanliness in the store.
Computer vision and AI are key technologies that power this retail trend. If you struggle to drive insights from the data you capture with your in-store cameras, leverage video analytics for your profitability. In addition, you can use machine learning operations (MLOps), since a benefit of MLOps is creating reproducible models of behavior to help you shape the customer experience.
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#6. Retail Demand Planning
An emerging retail technology trend is using technology for planning potential demand for certain products and services. The main goal of demand planning is to utilize a variety of data insights for better forecasting accuracy. Another important area is satisfying customers' demands with an optimal inventory.
With the help of ML and advanced analytics, sellers can accurately forecast the demand for products across their retail stores and other sales channels. Several factors help them plan for the demand:
- Internal – customer data, historical demand patterns, store management, and certain decisions.
- External – competitor offers and global buying patterns on the retail market.
Using technological decisions for demand planning improves forecasting accuracy and considers unpredictable 'black swan' events that potentially affect inventory planning and supply chains, like pandemics or wars. Some key technological drivers of this trend include in-memory computing, hybrid analytical and transactional data processing, and cloud computing.
With the help of these and other technologies, retailers can streamline their store and distribution center replenishment, achieve better workforce planning, optimize product promotions, discounts, and assortment planning, improve space planning in-store and at warehouses, and fix budgeting, cash flow, and inventory management issues.
The Importance of Technology in Retail
The supremacy of innovative technology in the retail industry can hardly be denied in 2023. In addition to keeping up with modern-day trends and changing customer behavior patterns, technology helps retailers streamline their store operations and improve cost savings. In addition, it helps gather valuable data and insights about real customer experiences and brand loyalty, as well as establish a closer connection with their customer base and meet their buyers halfway.
If you are still wondering how emerging technologies fit your business model, consider consulting an experienced tech vendor. Companies that offer retail software development services will help you choose and implement the right technological solution to keep up with technology trends in retail.
One such company is Geniusee, where software developers decide on an individual approach for custom retail solutions. This helps ensure that our custom-made solutions keep up with retail tech trends of 2023 and increase your customer satisfaction rate.
Retail Technology: Geniusee’s Experience
With vast experience in retail software development, Geniusee engineers consult clients on what technologies can positively impact their business decisions. The most wanted technologies include e-commerce platforms and POS systems, diverse omnichannel solutions for the retail industry, predictive analytics platforms, innovative data processing with artificial intelligence, and online ordering systems, to name just a few.
Here are a few retail technology cases we developed:
- Swyft – a grocery delivery app. Here, we created a mobile app for Android and iOS that allows users to order groceries and have them delivered within 15 minutes. The key challenge was to help the app become the fastest delivery service in Poland.
- Crave Retail – a set of virtual fitting rooms for mobile, which we helped improve and made available for Android phone and tablet users.
- Swoon – a furniture brand for which we conducted business analysis, helped improve their website, and integrated a payment system.
- Validify – a retail technology discovery platform that we helped create. We built the platform, its infrastructure, features for adding vendor profiles, and other functionality that helps the company curate a database and offer users complete information about the featured technologies.
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For retail technology trends in 2023 and onwards, the companies that implement them first and offer new shopping experiences to their consumers earn a competitive advantage and higher ROI.
Most retailers are still hesitant about whether technology is a good area for investment. However, if nothing else, the COVID-19 pandemic showed us that early adopters are already enjoying higher customer loyalty and revenue increases after offering novel, technology-driven experiences through their marketing channels. If you want to be among these retailers, don’t stall!
Once you nail the basics of implementing new technologies for your retail store, in tandem with a reliable software vendor, it is still too early to rest on your laurels. Keep on experimenting with new retail tech trends—from inventory management, automated delivery models, and supply chains to no-contact stores and retail demand planning.
A professional software development partner like Geniusee will help you implement the most trending technologies for your e-commerce and/or brick-and-mortar store. With Geniusee, your retail platform will get custom-tailored advancement that will result in a higher customer satisfaction rate and larger revenue.