The retail industry has always been at the forefront of adopting new technologies. From the first cash registers to the latest augmented reality fitting rooms, technology has consistently shaped the way we shop. In this guide, we’ll delve deep into the world of retail technology, exploring its many facets and understanding its significance in today’s digital age.
What Is Retail Technology?
Retail technology, often abbreviated as retail tech, refers to the suite of tools, platforms, and solutions used by retailers to enhance both their business operations and the shopping experience of their customers. It encompasses everything from the software that manages inventory to the apps that offer personalized shopping recommendations.
For instance, consider the self-checkout kiosks you might find in supermarkets. These are a prime example of retail tech in action, allowing customers to scan, bag, and pay for their items without cashier intervention.
The Difference Between E-Commerce and Retail Tech
At first glance, one might assume that e-commerce and retail tech are synonymous. However, there’s a clear distinction between the two:
E-Commerce refers specifically to buying and selling goods and services online. Think of platforms like Amazon or eBay where transactions are conducted digitally.
Retail Tech, on the other hand, goes beyond just online sales. It encompasses the broader spectrum of technologies employed in the retail sector, both online and offline.
For example, while an online store is a product of e-commerce, the software that manages its inventory or the AI that recommends products to its visitors falls under the umbrella of retail technology.
Use Cases of Retail Technology
The applications of retail tech are vast and varied. Here are some prominent use cases:
Point of Sale (POS) Systems: Modern POS systems do more than just process transactions. They integrate with other business operations, track sales data in real-time, and even manage loyalty programs. For instance, a cafe might use a POS system that automatically adds loyalty points to a customer’s account with each purchase.
Inventory Management: Gone are the days of manual stock-taking. Today’s retail tech offers real-time inventory tracking, alerting store managers when stock is low or when there’s an anomaly.
Customer Relationship Management (CRM): Retailers use CRMs to understand their customers better. For example, a bookstore might use a CRM to track a customer’s purchase history and then recommend new releases based on their past preferences.
AR and VR in Retail: Some fashion stores now offer virtual fitting rooms, where customers can “try on” clothes virtually using augmented reality.
Data Analytics: By analyzing sales data, retailers can gain insights into customer behavior, helping them make informed decisions. For instance, if a store notices a spike in umbrella sales during rainy days, they might decide to place them at the store’s entrance during such weather.
Interactive Displays: One of the most transformative use cases of retail technology is the integration of interactive displays such as Outform’s within physical stores. These high-tech screens offer customers an immersive shopping experience, allowing them to engage with products in a dynamic way. Shoppers can view product details, watch promotional videos, or even virtually “try on” items using augmented reality features. For instance, a cosmetics store might have an interactive display where customers can virtually apply different shades of makeup to see how they look. Not only do these displays provide valuable information, but they also add an element of entertainment to the shopping process, enhancing customer engagement and potentially driving sales. As the line between digital and physical shopping continues to blur, interactive displays stand out as a testament to the power of retail technology in bridging this gap.
Leading Retail Technology Businesses
The retail tech space is bustling with innovative companies pushing the boundaries of what’s possible. Some market leaders include:
Shopify: An e-commerce platform that allows anyone to set up an online store.
Square: Known for its POS systems and payment solutions.
Adobe Magento: Offers a suite of tools for e-commerce, including analytics and inventory management.
These companies, among others, are shaping the future of retail, making shopping more efficient and enjoyable for consumers.
Verticals in Retail Technology
Retail tech is a vast domain with several verticals:
E-Commerce Platforms: Websites and apps where consumers can shop online.
In-Store Technology: This includes interactive kiosks, smart shelves that alert staff when they’re empty, and digital price tags.
Supply Chain and Logistics: Technologies that ensure products move efficiently from manufacturers to retailers to consumers.
Payment Solutions: With the rise of digital wallets and contactless payments, this vertical is rapidly evolving.
Marketing and Advertising Tech: Tools that help retailers target their advertising campaigns more effectively.
The Future of Retail Technology
The retail landscape is undergoing a seismic shift, driven by rapid advancements in technology. As we look ahead, the fusion of AI and Machine Learning (ML) is set to redefine the contours of personalized shopping. These technologies are not just about recommending products based on past purchases; they’re evolving to predict future needs, analyze real-time shopping behaviors, and even assist in virtual try-ons. Imagine walking into a store, and a virtual assistant, powered by AI, immediately curates a selection based on your online browsing history, preferences, and current trends.
Contactless payments, already on the rise due to global events, will likely become the norm, driven by both convenience and safety concerns. Biometric verification, such as facial recognition or fingerprint scans, could further streamline the checkout process.
Challenges and Considerations
However, with great technology comes great responsibility. Retailers must ensure that customer data is secure and used ethically. As the retail tech space grows, businesses will face challenges in integrating new technologies without disrupting their existing operations.
Statistics: The Numbers Behind Retail Technology
Consumer Preferences and Behavior
Personalization Matters: Almost half (48%) of shoppers have left a brand’s website and purchased from a competitor due to a poorly personalized experience.
Privacy Concerns: 41% of shoppers find it creepy to receive a text from a brand when they walk by a physical store, feeling that using their location was invasive.
Email Influence: 71% of mobile purchases are influenced by personalized emails from a retailer.
Inclusivity and Shopping Behaviour
Size Inclusivity: In 2023, more retailers are expected to offer extended price ranges, catering to the growing plus-size market, especially in the US.
Sustainability: 65% of shoppers care more about sustainability than they did a year ago, and 50% say environmental concerns impact their purchasing decisions.
Customization: Complete product customization is set to grow massively in 2023, offering unique looks for each consumer.
Flexible Payments: Retailers offering plans like Afterpay and Klarna have seen conversion rates increase by up to 30%. Moreover, brands are expected to offer multiple payment options like Apple Pay and PayPal for easier checkouts.
Speedy Deliveries: 88% of consumers are willing to pay more for same-day or faster delivery.
Unique Experiences: Over half of consumers would attend a pop-up store, and 42% would participate in an experience-driven event inside a store.
Seamless Shopping: Consistency in pricing, in-store pickups, and free in-store returns are expected to become the norm.
Guest Checkout: 35% of cart abandonment rates are due to the lack of a guest checkout option.
Free Shipping: More customers now expect free shipping than those who expect to pay for it.
Security: 84% of customers will abandon their cart if the website is not secure.
Sales Assistance: 53% of millennials believe sales assistants lack the necessary tools for good customer service.
Transparency: Unexpected fees are a major reason for cart abandonment. Thus, transparency in pricing and fees will be crucial in 2023.
Data Sharing: 57% of online shoppers are comfortable sharing personal information if it enhances their shopping experience.
Product Comparisons: 46% of consumers expect eCommerce sites to offer product comparisons.
Trustworthy Reviews: 68% of people trust reviews as a major influencing factor in their shopping decisions.
Influence Channels: According to Adobe, company emails influenced 69% of mobile purchases, followed by online ads at 67% and Facebook at 54%.
Technology in Retail
Voice Shopping: By 2023, 55% of smart speaker owners are expected to make voice purchases.
QR Codes: 4 in 10 users scan a QR code on their mobile devices monthly.
Augmented Reality (AR): Over 120,000 stores are expected to use AR technologies by 2023.
AI and Predictive Analytics: 42% of consumers believe AI will lead to faster checkouts, and the use of predictive analytics in eCommerce is set to rise.
Social Media Payments: Integration of payment services like Apple Pay and PayPal with social media networks is anticipated.
Dynamic Pricing: This strategy, which adjusts prices based on consumer behavior and insights, is predicted to drive significant profit for retailers.
Mobile Shopping: 42.9% of eCommerce sales are expected to be made on mobile devices by 2024.
Google Shopping: This platform has boosted conversion by over 17%.
Social Media Shopping: 55% of online shoppers have made a purchase through a platform like Facebook, Instagram, or Pinterest.
TikTok: With 1 billion users, TikTok is becoming a major channel for eCommerce brands in 2023.
Subscription Models: The number of subscription-based business models is expected to rise in 2023.
B2B eCommerce: Sales in this sector are projected to reach $6.6 trillion by 2023.
Owned Marketing: 2023 will see brands growing their customer lists to reduce dependence on third-party advertising.
Going International: Expanding to international markets will be a key growth strategy in 2023.
PWA (Progressive Web Apps): With more mobile-savvy customers, the growth of PWAs for eCommerce is anticipated.
Non-Commerce Experiences: More retailers will offer experiences like live music or workshops.
Streaming Ads: These will be a part of a well-rounded omnichannel approach in 2023.
Secure Payments: PayPal transactions have a 70% higher checkout rate than non-PayPal transactions.
Global Purchases: 57% of online shoppers have bought from an overseas retailer.
SEO: 43% of eCommerce traffic comes from organic Google search.
Price Comparisons: 90% of shoppers will visit Amazon to check and compare pricing.
Retail technology is revolutionizing the way we shop. From enhancing business operations to offering personalized shopping experiences, retail tech is at the heart of modern commerce. As consumers, it’s an exciting time to shop. And for retailers, it’s an era of endless possibilities.
Hi, I’m Oren, founder at BIGINTRO, a content strategy agency that helps B2B companies drive growth. We develop search, social, PR, and content marketing strategies tailored to business goals. I also have a dog named Milo.