Embracing a Strategy for Digital Transformation
Irrespective of how well-established an industry is, it cannot avoid the significant influence of technological advancements. Even industries that traditionally had minimal reliance on technology like the retail industry, are experiencing the impact of technological developments. Thriving retailers prioritize investments in the newest technology to enhance the services they provide to their customers, understand what their consumers want, and comprehend their purchasing behaviour patterns.
According to a joint survey by JDA and PwC, digital transformation is the topmost investment priority for retail CEOs. Chinese retailers seem to have taken the lead in this aspect, with 58% of them having already embarked on their digital transformation journey. However, American retailers are not far behind, with 40% of them having started their planned digital transformation projects.
To drive innovation and improve competitiveness, the retail industry is capitalizing on the potential of big data, artificial intelligence (AI), and the Internet of Things (IoT). Predictive analytics, which uses past and current data to predict future trends, is an effective way to work with vast data sets. Furthermore, AI and IoT technologies are rapidly becoming vital components of the retail industry. The collective utilization of these three factors is expected to usher in a new retail era very soon.
Predictive Analytics and the Significance of Big Data in Retail Industry
The demand for software that incorporates predictive analytics is witnessing a remarkable surge. Recent projections indicate that by 2023, the market for this type of software will reach a value of USD 10.95 billion, growing at an annual rate of 21%. Predictive analytics offer several benefits to the retail industry, providing a decisive advantage enabling them to stay ahead in the competition.
Understand Your Audience and Tailor to Their Needs.
Comprehensive understanding of the customer base is crucial in the retail sector to create effective marketing strategies. Retailers must leverage data to meet the growing demand for personalized recommendations from consumers. Self-reporting may be unreliable, so access to customer data is necessary to acquire insights. With the aid of big data, stores can now obtain the information required to satisfy customer expectations.
Consumer data offers a vast ocean of information for retailers, including transaction data, interaction data, and external data, that provide insights for their marketing strategies. Transaction data pertains to the details of a single purchase, including the date, item(s), and payment method. Interaction data, however, entails data on what a user clicks on while browsing a website or social media platform. External data, meanwhile, comprises of all data unrelated to direct purchasing decisions yet relevant to the decision-making process, such as seasonal trends or traffic patterns. By collecting and analyzing this information, retailers can fine-tune their marketing strategies to best cater to the needs of their customers.
Retailers can leverage predictive analytics to identify potential regular shoppers and engage them with tailor-made promotions. 59% of online consumers have reported finding it easier to discover unique items on curated online stores. To motivate such customers to return, retailers may offer specific incentives such as discounts or complimentary delivery.
In the forthcoming years, data scientists will significantly enhance the utilisation of big data to predict customer churn. Retailers will be able to predict when a customer is inclined to switch to a competitor and take steps like offering discounts to retain them. Additionally, while predictive analytics are presently useful in predicting the behaviour of specific demographic groups, shortly, businesses will be equipped with comprehensive insights into the behaviour and potential actions of individual customers.
Optimisation of Pricing
For a business to maximize its profits, it’s crucial to set prices that are equitable to both customers and the company. Prices should neither be too low, leading to a loss, nor too high that customers look elsewhere. With the aid of predictive price analytics, businesses can establish the best price point for a product by considering several factors such as past prices, customer interest, supply and demand, competitive pricing, and profit margins. This ensures that the retailers can attain maximum profits while still making sales.
It’s imperative for retailers to keep track of their competitors’ pricing, as it plays a crucial role in determining their own pricing strategies. Predictive analytics can offer invaluable guidance to retailers, helping them to determine when they should undercut their rivals by reducing their prices and when they should refrain from doing so. In addition to offering insights into pricing adjustments, predictive analytics also monitor competitors in real-time, allowing merchants to implement necessary changes rapidly and effectively.
The Art of Inventory Management
Multiple outlet retail business owners frequently wrestle with inventory management. It’s often a challenge to ascertain which storage areas require what, and without dependable data, it falls to guesswork. During festive times, it’s crucial not to overstock specific items as retailers must avoid drastically reducing prices of their merchandise later, affecting profits. Conversely, if stocks of a popular product are inadequate, customers might opt to shop elsewhere.
Predictive analytics serve as an invaluable tool for retailers to anticipate their inventory needs and avoid depleted stocks. Efficient inventory management is a promising strategy to guarantee the accurate procurement of products, taking into account factors such as existing stock levels, future demand, promotional activity, pricing, and others. This inventory control strategy is critical for businesses to maintain ample product supply to meet consumer demand, without any excessive stockpiling.
The potential for predictive analytics to expand within inventory management is noteworthy. Currently, big data is useful for retailers to manage inventory levels ensuring there are neither excess nor shortages. However, in the next 5 years, data scientists will design programmes to project prospects for profit increase. Analyzing consumer behaviour and market predictions would enable businesses to identify product lines such as accessories or shoes best suited for high-profit revenue.
Anticipations by the Firm
Leveraging the potency of predictive analytics can help retailers to more precisely gauge their annual sales figures. The potential uncertainty surrounding slow and busy trade periods throughout the year can be significantly reduced, allowing businesses to rely on dependable predictions of future performance to make informed decisions. Such an approach gives retailers a substantial advantage in preparing for the future and staying a step ahead of their competitors.
The retail sector is undergoing a transformation with the introduction of Artificial Intelligence (AI). This technology greatly depends on colossal datasets and is reforming the way we shop, having an extensive impact on the industry. The use of AI allows retailers to comprehend their customers better and customize their services to suit them, leading to a more efficient and personalized shopping experience.
Improving Retail with AI
Analysts predict global investments in artificial intelligence (AI) for the retail industry will reach an estimated $7.3 billion annually by 2023. This investment will be directed towards three pivotal AI technology areas projected to increase: automated marketing by 30%, demand forecasting by 16%, and customer service and sentiment analytics by 54%. The retail industry has various potential applications of AI, and this article will examine current methods and the probable future developments that may emerge from technological advancements.
Tools for Fabricating Artificial Environments, like Augmented Reality (AR) and Virtual Reality (VR)
Augmented Reality (AR) and Virtual Reality (VR) are extensively applicable in the retail industry as both exploit Artificial Intelligence (AI) to alter a user’s experience. With the use of AR and VR technology, retailers can offer customers an engaging and immersive shopping experience.
The ‘IKEA Place’ app by IKEA utilises augmented reality technology to enable customers to virtually experiment with how furniture from the IKEA catalogue would look in their homes. By using their webcam, users can preview and evaluate how individual products would fit and appear in their space, assuring their purchase satisfaction and reducing the volume of returns to IKEA due to size or buyer’s remorse.
CONVERSE’s Sampler app is a significantly favored augmented reality application that permits customers to try on footwear virtually from the comfort of their home. The app allows users to specify the desired shoe style, point their iPhone camera towards their feet and then make their purchase decision based on the augmented experience.
Retailers are likely to integrate augmented reality (AR) features in their marketing tactics in the near future. Customers could utilise an AR app to preview how a certain furniture item, like a sofa, would appear in their home. This approach can offer customers a lifelike visualisation experience and additionally display particulars, such as delivery information and price, directly on the screen.
Over the next five years, there is anticipated growth in the implementation of immersive visualisation for product catalogues. Customers will be able to engage with items before purchasing, such as testing them digitally or displaying them in their personal space.
Insights into Virtual Reality
Accompany me on a journey into the realm of virtual reality. Lowe’s offers the Holoroom software that allows users to fabricate a virtual version of a room within their home and convert it to a YouTube 360° video. Depending on the location, customers can utilize either Oculus Rift or Google Cardboard to experience their virtual space.
TOMS shoe store has exceeded expectations by delivering their customers an exclusive virtual reality encounter. Through a four-minute, 360-degree virtual video, viewers are transported alongside TOMS on one of their humanitarian trips to Peru. Blake Mycoskie, the CEO of TOMS, expressed:
Virtual Reality (VR) is indisputably one of the most powerful means for establishing an emotional link between users. Through enabling people to perceive the world from another’s viewpoint, VR can encourage empathy and comprehension of another person’s life and challenges. This ground-breaking technology is available nearly anywhere thanks to the reliable AT&T network. VR empowers users to encounter stories previously unattainable, thereby imparting an invaluable resource for those seeking to widen their perception of diverse perspectives.
As per a study, 62% of customers are intrigued to experiment with virtual reality shopping and 35% of them have stated they would be more inclined to utilize digital product try-ons when online shopping. Additionally, 63% of the buyers await the inclusion of virtual reality in their future purchasing experience. In the coming years, augmented and virtual reality is projected to be utilized progressively to connect the divide between in-store and online shopping experiences for consumers.
The uptake of augmented and virtual reality experiences in-store has led to a renaissance of customers returning to physical brick and mortar establishments. Nevertheless, this tendency is expected to be fleeting. Alibaba in China has already developed a digital shopping plaza, empowering people to shop without abandoning their home comfort. Given how speedily consumers have adopted online shopping, it is probable that buyers will similarly adopt virtual reality shopping.
For physical retailers, this scenario signifies that they must either accept change or encounter failure. In the next five years, we are likely to witness the closure of a significant number of non-technology oriented stores. If these retailers are unable to offer customers an innovative and thrilling experience utilizing virtual or augmented reality, they will undoubtedly succumb to their competitors. Wouldn’t it be convenient if one could virtually test and compare clothes without the need to step out, join queues or brave through crowds? In order to guarantee consumer contentment and involvement, integrating this technology is a crucial agenda for retailers.
As the progress of Artificial Intelligence (AI) techniques persists, the prevalence of chatbots is also on the rise. By 2023, it is estimated that AI-backed chatbots will be accountable for 85% of customer service interactions. Already, leading organisations have taken the reins in this arena, and Small and Medium-sized Enterprises (SMEs) are also embracing this trend. A case in point, introducing TacoBot in 2023 has enabled Taco Bell customers to place orders without exiting the app. AI chatbots can also provide tailored recommendations to a larger audience, rendering them a crucial asset in the retail sector, where maintaining direct communication with customers is crucial.
IBM’s Watson Artificial Intelligence system has gained widespread recognition among stores like 1-800-FLOWERS.COM, who have adopted the online gift concierge GWYN (Gifts When You Need) service. This AI-enabled service interacts with web users in an extremely natural manner and has the capacity to serve as a digital assistant for customers during online purchases, offering customized recommendations.
It is probable that we will witness an increase in the prevalence of voice bots by 2023. This year, 2018, has been forecasted to be a year of amalgamation between voice and chatbot technologies as both have demonstrated significant advancements.
Companies worldwide are progressively embracing Artificial Intelligence (AI) technology to introduce chatbot systems as a means of interacting with customers and providing personalized assistance across all digital platforms. Many of these bots run on Machine Learning (ML) algorithms, which are developed to evolve and progress over time. By leveraging ML, companies can access precious data that can be utilized to enhance the customer service experience they offer.
The Internet of Things and Retail
The implementation of the Internet of Things (IoT) is revolutionary for numerous industries, with retailers reaping significant benefits from it. Studies reveal that a substantial number of retailers (77%) agree that IoT solutions provide customers with an advanced shopping encounter, allowing businesses to furnish a ‘smart shop’ environment. Additionally, the utilization of ‘smart signage’ and digital displays is extending the possibilities for retailers to expand their operations.
Supermarkets and large retailers can extract significant value from smart shelving solutions. The system involves RFID tags affixed to each item, which are then scanned by an RFID reader. This facilitates easy monitoring of stock levels for specific products and their expiry. As an add-on to customer behaviour monitoring, smart shelves can also provide information to store managers about merchandise that is presently selling at a high pace. Additionally, the tracking of each item serves to decrease the probability of theft.
The assimilation of Internet of Things (IoT) technology and predictive analytics software has the potential to dramatically alter the shopping experience for customers. As an illustration, IoT smart shelves can trigger notifications when supplies of a particular product are running low. Predictive analytics can be employed to identify the regular buyers of the product on a weekly basis. Consequently, if the item is no longer available, the system can send them a text message notifying them of a neighbouring store that carries the product in stock.
In all likelihood, within the next five years, we will witness the introduction of speech technology that permits customers to place orders while in a connected automobile that is passing a store with the specified item in stock. This technology has the potential to transform retail in the coming times.
Businesses are increasingly utilizing beacons as a tactic to lure in customers. These beacons are Bluetooth-enabled devices, which identify when a person’s smartphone is nearby a store, triggering the customer to receive a push notification. Several stores are leveraging this technology to tempt potential customers by offering them coupons and other appealing incentives, persuading them to enter the store.
The Utilization of “Smart” Displays
As an increasing number of cities become more and more technologically advanced, they are bringing in digital billboards. These billboards utilize various electronic technologies, including LCD and LED displays, to showcase digital content like videos, images, and text. Businesses are also capitalizing on this technology for hyper-targeted marketing, which enables them to exhibit advertisements customized for specific individuals or groups. For example, a mother and child who cross a billboard may be offered a discount from a children’s store. Additionally, intelligent displays in stores can scrutinize customer data and adjust prices accordingly.
New Technology is the Future of Retail.
Retailers need to fulfill the burgeoning requirements of ever more technologically advanced customers to remain competitive. While only the most established retail brands are anticipated to have incorporated all three of the notable technologies (big data, artificial intelligence, and the Internet of Things), smaller firms are starting to utilize equivalent instruments to enhance the quality of their customer service.
Customers these days anticipate more than just a mobile experience when making any purchase, whether it be online or in-store. Augmented reality and internet connectivity are already widespread, therefore, retailers should harness the supremacy of big data to create a memorable encounter for their customers. By leveraging big data, stores can make well-informed decisions on which technologies to invest in, rather than taking risks and squandering resources. Retailers who adopt these innovations are likely to witness an upsurge in both sales and customer loyalty, ultimately leading to an increase in revenue and brand recognition.