The retail industry is amid an accelerated digital transformation—one that doesn’t show any sign of letting up. The digital space is becoming increasingly crowded as competitors advance their digital strategies and tactics. However, innovative use of technology can drive a differentiated experience that fuels customer satisfaction, brand loyalty, willingness to spend, and overall marketing effectiveness.
The following are our top 10 retail technology predictions based on what we see in the retail market and what's on the docket for our clients.
#1 - Growing Focus on Omnichannel Marketing
Your customers expect you to be everywhere. There's a shrinking tolerance for friction in the shopping and buying experience. Customers are looking for a hybrid experience—they want to be able to research products online, see how they work in-store, and make the final purchase through a frictionless app experience. In other words, the shopping experience should be easy and meet consumers where they are.
To meet these high expectations, we expect companies to channel energy and resources into robust hybrid shopping experiences, ensuring customers can shop where and when they want. So, look for an uptick in the adoption of next-generation e-commerce platforms and smart omnichannel shopping baskets that connect customers' online and offline shopping experiences.
#2 - One-to-one Hyper-Personalization
One-to-one hyper-personalization is taking audience segmentation to the nth degree—and creating messages, positioning and experiences for a segment of one across e-commerce, marketing automation, tech-based loyalty solutions, and customer engagement platforms.
If this degree of personalization sounds like a tall order, that's because it is. It requires vast amounts of organized customer data, such as the times they like to shop, the offers that appeal to them and whether they prefer their shirts in orange, green or purple. They also expect you to understand when you should (and shouldn't) contact them.
One-to-one personalization represents the peak of the personalization maturity curve—and very few retailers have reached this level of personalization. But it's worth the effort—when customers get more relevant offers and a differentiated experience, it can increase their engagement and investment in specific brands. That's why 80% of customers are more likely to do business with a company if it offers a personalized experience.
Recent advances in cognitive technologies will help retailers move closer to true one-to-one personalization that extends to the entire customer experience. This year we'll see more companies leveraging data, analytics, AI, and automation to create custom and targeted experiences such as unique landing pages, tailored recommendations, and dynamic pricing.
#3 - Contactless Stores
Customers don't want to bother with wallets and credit cards anymore. Sometimes they don't even want to bother with other people. Luckily, consumers now have numerous contactless buying options—including e-commerce, contactless delivery, self-service checkout kiosks and mobile wallets—but they still want more. And the retail automation market is expected to grow to 18 billion by next year.
Over the next year, we expect retailers to find ways to reduce contact in the shopping experience. This could mean refining curbside pickup and buy online and pick up in-store (BOPIS) processes to limit human interaction. Another example may be deploying turn-by-turn navigation for a retail store as a mobile app feature.
We'll also likely see more retailers offering cashier-free shopping experiences like Amazon's Just Walk Out. While it's unlikely to make waves in 2023, we're also excited about an AI "predictive touch" technology that uses machine learning along with eye and finger movements to allow you to input numbers on touch screens without actually making contact with the screen's surface.
#4 - Increased Use of AI & Machine Learning
Artificial intelligence (AI) and machine learning are profoundly changing how retailers market to their customers. While the size of the AI retail market is already significant (5.79 billion in 2021), it's expected to increase at a compound annual growth rate of nearly 24% through 2030.
AI is foundational to most next-generation technology solutions and is already taking retail to places we never thought possible. Examples include pay-by-face, pay-by-voice and virtual try-on with clothing and make-up. AI can also collect and organize customer information in real-time, allowing insight-driven interactions essential to the predictive analysis required for one-to-one personalization.
When allocating technology spending for 2023, we expect companies to opt for solutions with robust machine learning and AI capabilities. This strategy will set companies up for success—though it may take them time to fully leverage AI and machine learning capabilities.
#5 - Remote Selling
Remote selling—or virtual selling—is a buying cycle where sales and post-sales communications occur between a customer and a sales associate in different physical locations. The business value is that a sales associate can sell to a customer anywhere in the world.
While the pandemic is over and the need for remote selling has ended, many people now prefer to shop remotely—and not just when buying toilet paper and milk. Customers also want to purchase big-ticket items like designer clothing and new vehicles without stepping into the store.
But $50,000 sales don't magically happen. They still require a skilled salesperson to usher customers through the buying experience. While AI predictions can be undeniably astute, there's no replacing a perceptive sales representative who knows a customer better than a machine learning model could ever hope to.
That's where remote selling platforms come in. Through a personalized mobile app experience, remote selling platforms facilitate a customized shopping experience through video calls, impromptu text conversations, and personal recommendations.
We anticipate growth in remote selling tools that allow sales reps to ply their trade in-store and remote—while collecting a wide swatch of customer data to help a seamless customer experience across sales reps, locations, and time.
#6 - Data Automation and Management
Data is central to nearly all retail technology efforts. No longer is data relegated to customer service and point-of-sale. As companies prioritize omnichannel efforts and one-to-one personalization, it's clear that they need vast stores of data and to be able to use it effectively.
While companies have become better at collecting customer information through connected systems, there's still significant room to improve data organization and management. Priorities include data clean-up and organizing data into detailed customer profiles, including preferences and behaviors.
In 2023, modernizing data management will be a priority for many companies. We predict increased spending on advanced data technologies such as customer relationship management systems (CRMs) and customer data platforms (CDPs).
#7 - Live Commerce and Social Commerce
Using live commerce, you can sell products through live video while shoppers interact with your brand in real-time. Live commerce accelerates the buying process, increases audience size, and boosts conversions.
A prime application for live shopping is social media. Social commerce sales are estimated to reach 2.9 trillion U.S. dollars by 2026, up from 992 billion in 2022. What's behind this rapid growth? More eyes on the screen. The average person now spends about 2.5 hours on social media each day.
As we head into the next year, we expect companies to create or strengthen their social selling strategies for YouTube, Facebook and Instagram. Eyes will also be on TikTok to see if it becomes the next powerhouse for social sales—in a recent survey, 48% of consumers said they would buy directly from the platform.
#8 - Heightened Focus on Data Privacy and Security
The influx of data brings both grand opportunities and challenges around data security and privacy. Without vigorous oversight, customer and business data is at risk. In fact, one study found that 30% of retailers lost critical business data due to cyber attacks.
Changes are happening to ensure that customer data isn't put at risk. New privacy regulations in California, Colorado, Connecticut, Utah, Virginia, and other places around the world put the power back into consumers' hands, changing how businesses can use customer data.
For companies with a national or global audience, failing to have the appropriate measures in place could lead to hefty fines. But even if your sales are limited to states without extra data privacy guidelines, you're not off the hook. The future will likely bring changes impacting the data you can collect and use.
That's why curating cybersecurity and implementing a data privacy strategy will be priorities for retailers this year.
#9 - Preparing for a Cookieless Future
Companies have been bracing for a cookieless future for some time—a change that will profoundly affect personalized ads and targeted content. Google has communicated that they won't be phasing out third-party cookies from their Chrome browser until 2024. So, online retailers have extra time to develop their plans for what comes next.
Companies will prioritize finding new ways to connect with their audience, starting with being transparent and adding value to each customer interaction.
In 2023, we expect companies to focus on devising a mobile strategy to gather first-party data and deploy contextual advertising.
#10 - Leveling up Technology Talent
The explosive growth of retail technology has resulted in a need for more skilled resources who can plan and implement massive digital transformation efforts.
We've seen a trend in retailers upskilling their technology resources—an effort linked to increased retention and job satisfaction. But for many retailers, the more significant challenge is hiring and retaining technology employees who can build transformation plans and see them through to completion. And in some cases, having a large contingent of full-time technology resources may not make sense for some retailers.
Bringing on digital navigators can help businesses level up their tech for short or long-term transformation projects.
We Predict Success In Your Future
Change can be a challenge, but it's also an opportunity to set your business apart. We're ready to help. Learn how retail technology can help you win at the checkout, now and in the future: download the e-book today.