Digital Transformation In Retail: Emerging Retail Technology Trends
Consumer tastes and shopping habits have changed significantly in recent years for a variety of reasons. Among these are conscious wellness-related decisions, such as favouring healthy products, and choices based upon value due to the rise in inflation and falls in disposable income.
Another factor is greater environmental awareness, triggering a rising demand for more sustainable purchases, but perhaps the biggest difference relates to lifestyle – in terms of how we buy rather than what we buy.
Digital retail innovation has altered the landscape completely since the emergence of the internet in the late 1990s and another seismic shift occurred during the Covid-19 pandemic at the start of the 2020s.
What is digital transformation in retail?
Retail digital transformation reflects the impact of technology on the way we shop. Due to the explosion of the online retail marketplace, there is far greater competition than ever before to attract consumers and therefore having a robust tech operation in place is of fundamental importance.
While some of the requirements are basic, e.g. a secure, user-friendly website, click-and-collect services and in-store contactless payment, the next phase of digital transformation in the retail sector involves developing technology to create increasingly personalised shopping experiences.
What are some digital transformation in retail examples?
A key aspect of success in this sector is the ability to analyse consumer behaviour – and digital technologies in retail are helping greatly in this regard.
For example, when a consumer is browsing an e-tailer’s website, algorithms can generate and present additional or alternative suggestions for purchases to complement the interest being displayed in certain products.
The next generation of retail digital transformation is likely to focus on the increased utilisation of Virtual Reality. By means of a headset, users can navigate a virtual store, interact with avatar staff, browse products in 3D and even personalise items before placing an order.
Benefits of digital transformation in retail
Quite simply, the advantages of digital retail innovation are so clear that they can be classed as ‘no-brainers’. Anything that refines a consumer’s experience by easing their decision-making process and increases the retailer’s operational efficiency obviously must be taken into serious consideration.
In turn, digital transformation in the retail industry is likely to strengthen relationships with consumers and enhance brand loyalty, while a smoother, more streamlined purchasing process will lessen the need for customer service departments designed to resolve dissatisfaction.
Challenges of digital technologies in retail
Inevitably the biggest challenge of upgrading digital technology in retail is cost, for implementing new systems is not cheap. There is also the human aspect involved – will staff fully embrace significant changes being made to how they do their jobs, even if it benefits the business as a whole?
In addition, if a company is looking to make sweeping changes to its operations due to digital retail innovation, there needs to be an awareness that there could be teething troubles and with so much choice available, consumers may elect to take their business elsewhere even after a singular sub-optimal experience.
Five digital retail trends emerging in the landscape
Hybrid/omnichannel customer journeys
Put more simply, this means giving a consumer a combination of the most appealing online and offline shopping experiences.
In a hybrid journey, the customer would, for example, select an item of clothing online and then visit one of the retailer’s stores to try it on or collect it to save on delivery costs.
Omnichannel goes further – where an item is available on a variety of different online platforms, your search criteria would be retained across each of them to enable easier price and availability comparisons and negate the need to continually re-input information.
As mentioned in the introduction, consumers in recent decades are giving more thought to who receives their custom, rather than purely what they want to buy. For example, they may favour giving their business to a company with a strong reputation for social or environmental awareness.
The term also incorporates the methods by which the items a consumer buys have arrived in the marketplace, e.g. the journey of food products, such as meat, chicken and eggs, and the potential impact that would have on climate change.
Customer journey personalisation
Just like when they are shopping in a store and they consult a sales assistant, an online consumer wants to benefit from a personalised experience – research shows over 70% of customers feel frustrated when that expectation is not met.
Data processed by businesses as a result of digital transformation in the retail sector should be utilised to cultivate the best possible user experience in order to engender the maximum level of brand loyalty.
Augmented and Virtual Reality
Augmented reality enables a consumer to point their smartphone at an object for sale and, utilising built-in software, a video stream will demonstrate the qualities of the product.
A Virtual Reality headset, meanwhile, can give the consumer a lifelike experience of how an item would look if they were wearing it or, in the case of furniture, in a room of their home.
It is becomingly increasingly uncommon for consumers to use cash to pay for purchases, a trend that was accelerated during the Covid-19 pandemic when there were health risks attached to bank notes and coins changing hands.
But as well as contactless debit cards, paying by using a smartphone via apps developed by the likes of Google and Apple has become mainstream, while autonomous stores negate the requirement for checkout staff by allowing customers to pay for their goods at a self-service terminal.
KBS Supporting Digital Transformation In Retail
KBS Corporate oversaw the sale of Hervia Bazaar, a designer clothing store in Manchester, to Parabellum Investments.
As digital transformation in the retail sector continues to be embraced, landlords are becoming more innovative in the use of their space.
One possible result of this digital retail innovation is an increase in pop-up shops which could be an attractive lifeline for independent retailers – creating a healthy and relevant shopping experience to the communities they serve which will no doubt drive sustainable levels of high-street footfall.