{"id":74243,"date":"2024-05-24T11:57:33","date_gmt":"2024-05-24T09:57:33","guid":{"rendered":"https:\/\/intellias.com\/?post_type=blog&p=74243"},"modified":"2024-07-11T11:57:04","modified_gmt":"2024-07-11T09:57:04","slug":"the-future-of-retail-defining-digital-technologies-for-sustainable-growth","status":"publish","type":"blog","link":"https:\/\/intellias.com\/future-of-retail-defining-digital-technologies\/","title":{"rendered":"The Future of Retail: Defining Digital Technologies For Sustainable Growth"},"content":{"rendered":"

Till, stock, and two sales associates \u2014 that\u2019s how many retailers got started in the middle of the last century to later grow into multi-nation, cross-channel enterprises, counting thousands of branches, employees, and customers.<\/p>\n

Big-box retailers entered the digital age with a lot of heritage. For some its strong brand affinity and substantial local customer bases. For others \u2014 it\u2019s a massive estate of legacy software systems, which stall the progress in digital initiatives.<\/p>\n

In both cases, the sheer scale of operations makes it hard to \u201cgo agile\u201d with the help of technologies. Something as simple as adding contactless payment processing<\/a> can take a couple of weeks for smaller retailers and months of meticulous planning, procurement, and installation for larger players.<\/p>\n

Similarly, almost every retail SaaS vendor offers hot-key access to increased productivity, operational savings, and targeted promotions with its toolkit. The problem, however, is that such toolkits rarely scale to the required size.<\/p>\n

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Technology is often promoted as a \u201cmagic bullet\u201d to whichever obstacle the company is facing. And while technology indeed can be a powerful remedy to the cause, it\u2019s a tool to an end, not a solution in itself.<\/p>\n <\/div> \n <\/div>\n

To usher in the future of retail larger players need a step-by-step strategy for progressive evolution, aligned with the business goals and the new shaping forces on the market.<\/p>\n

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Retail Innovation<\/p>\n

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Explore the future of retail and grab its opportunities with Intellias<\/div>\n <\/div>\n <\/div>\n Learn more<\/span>\n\t\t <\/a><\/div>\n

From present to the future of retail: Building a path forward to profitability<\/h2>\n

\"From<\/p>\n

Consumer spending represents 60%<\/a> to 70%<\/a> of the total gross domestic product (GDP) in mature economies with the retail industry, driving a substantial part of it.<\/p>\n

When rising interest rates and inflation hit the market, retailers are the first to experience the squeeze effect of growing materials, logistics, and merchandising costs against declining consumer spending.<\/p>\n

That said, consumer spending never dries up completely, but rather it shifts across product categories and fluctuates in terms of purchase cycles. B2B buyers with better cash flow tend to create \u2018just-in-case\u2019 surpluses before another price hike, while others might want to delay some of the bigger-ticket purchases.<\/p>\n

Likewise, as pricing becomes a more sensitive issue, both B2B and B2C consumers shop around for deals and seek out better customer experiences (CX).<\/p>\n

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Over 70% of consumers say they will continue buying from companies that increase their prices if they feel valued as a customer. However, over 60% also expect immediate improvements in CX as prices rise.<\/p>\n\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\n\t\t\t\t\t <\/span> <\/span>\n\t\t\t\t<\/small>\n\t\t\t<\/blockquote>\n\t\t<\/section>\n

The challenge, however, is that improvements in CX must happen across channels. Shoppers want to seamlessly switch between digital, physical, and virtual in-store interfaces, with growing preferences for digital activity.<\/p>\n

\"The<\/p>\n

Source: Salesforce \u2014 State of the Connected Customer 2022<\/a>.<\/em><\/p>\n

Technology undeniably has become the driving force of the future of brick-and-mortar retail, as well as eCommerce. Faster response to demand fluctuations, leaner inventory management processes, and a multi-channel presence separate leading retailers from the laggers.<\/p>\n

The wrinkle, however, is that the retail \u201cback end\u201d cannot always catch up with the \u201cfront end\u201d. Sales associates lack visibility into inventory and need to perform manual in-store product counts. In-store and online assortment vary a lot and retailers struggle to identify consumers across channels.<\/p>\n

To deliver measurable improvements in CX retailers need to strike a better balance between their front and back operations. A series of targeted technology investments can help retailers achieve parity in digital and physical channels and establish future-proof retail operations.<\/p>\n

Customer experience alignment on the technology level<\/h3>\n

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\n\n\n\n\n\n\n\n\n\n
<\/td>\nFront-end (Customer)<\/th>\nBack-end (Retailer)<\/th>\n<\/tr>\n<\/thead>\n
Merchandising<\/strong><\/td>\nGood product selection, personalized recommendations; ability to easily locate preferred goods.<\/td>\nLocalized product assortment per branch, optimized product selection by channels, analytics-driven up-sells\/cross-sells.<\/td>\n<\/tr>\n
Inventory<\/strong><\/td>\nOption to verify product stock online\/in-store, timely re-stock updated, alternative ordering options (\u201cendless aisle\u201d)<\/td>\nUnified inventory management system, demand-driven stock planning, timely re-stocks, driven by real-time sales data.<\/td>\n<\/tr>\n
Labor<\/strong><\/td>\nCompetent assistance is available in-store and online. Tailored advisory, based on preferences, past purchase history, and loyalty status.<\/td>\nCRM system offers a 360-degree view of the customer, integrated with customer service tools and in-store customer\/employee devices.<\/td>\n<\/tr>\n
Pricing<\/strong><\/td>\nFair, competitive prices. Relevant sales offers and promotions.<\/td>\nDynamic pricing software with advanced sales forecasting and price optimization capabilities.<\/td>\n<\/tr>\n
Fulfillment<\/strong><\/td>\nWide selection of delivery methods. Efficient order pick-up experience.<\/td>\nIntegrations with multiple 3PL and logistics partners; data-driven in-store fulfillment hub.<\/td>\n<\/tr>\n
Returns<\/strong><\/td>\nEasy, channel-agnostic return experience. Fast refunds.<\/td>\nStrong reverse logistics function, and instant payment processing.<\/td>\n<\/tr>\n<\/tbody>\n<\/table><\/div>\n

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Mobile workforce solutions<\/h3>\n

Frontline workers \u2014 sales associates, store managers, cashiers, clerks, and order fillers \u2014 are a huge asset for brick-and-mortar retailers. They have direct contact with the customers and accumulate a wealth of data. Similarly, their daily actions shape your brand perception and hard metrics like sales-per-square meter, shopper yield growth, and ultimately \u2014 revenue volume.<\/p>\n

Yet, the future retail technology has yet to reach the frontline. In-store workers lack digital mobility \u2014 tools to perform back-room and customer servicing tasks on the go. Among US consumers, 54% expect sales associates to be equipped with a mobile device to assist them with stock availability verification, according to a survey by Newstore<\/a>. Also, 41% want store associates to have access to their loyalty accounts.<\/p>\n

In practice, however, over half of bix-box retailers<\/a> express dissatisfaction with the available digital tools, customer experience, or both. Apart from retail KPIs, missing digital capabilities directly affects retail employees\u2019 morale, job satisfaction, and performance levels.<\/p>\n

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Only one in eight retail employees feels omni-connected at work i.e., highly connected to each other, their leaders, and their work.<\/p>\n\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\n\t\t\t\t\t <\/span> <\/span>\n\t\t\t\t<\/small>\n\t\t\t<\/blockquote>\n\t\t<\/section>\n

The retail industry is facing record talent shortages with almost 9 in 10 retail executives<\/a> further worried about turnover rates. While better pay and benefits obviously play a role in staff retention, access to better technologies and a greater degree of connectivity also affect the employees’ decision to stay or leave.<\/p>\n

Accenture<\/a> found that omni-connected experiences account for 59% of a retail employee\u2019s intention to say. Omni-connection means increased connectivity, allowing staffers to forge better relationships, become more productive in their work, and grow their careers.<\/p>\n

By investing in better digital infrastructure for the frontline workforce, retailers can not only address the turnover rates, but also increase key business metrics around performance, productivity, and sales targets.<\/p>\n

Home Depot equipped its workforce with over 40,000 new mobile devices<\/a>, which include embedded barcode scanners, mag-stripe payment-card readers, and, most recently, \u2014 a machine learning (ML) powered app<\/a> for managing in-store stock. The new app, dubbed, Sidekick<\/a>, helps associates prioritize re-stocks and product placements in-store based on real-time data. The app alerts employees about which task needs to be completed first, provides instructions, and helps staff locate products faster using computer vision.<\/p>\n

Walmart also rolled out over 740,000<\/a> custom-configured Samsung devices to its US workforce to improve their on-the-job performance. Through a Me@Walmart app, employees can update their schedules and swap shifts, plus get access to a host of other workplace tools for assisting customers.<\/p>\n

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In-store mobile solutions help maintain an engaged, productive workforce, capable of delivering experience-driven customer service. Real-time access to stock information, the ability to place online orders for in-house customers, better inventory management tools, and mobile POS will be the pillar solutions in the retail stores of the future.<\/p>\n <\/div> \n <\/div>\n

Mobile solutions will become even more important as stores progressively evolve into phygital experience hubs \u2014 showrooms, where consumers can experience and engage with a curated range of products, then order them online.<\/p>\n

Small-format stores allow retailers to optimize operating costs while creating stronger ties with the local community of consumers. Retailers can create new opportunities to connect with customers and drive sales by offering tailored assortments and digitally-led customer experiences in small-format stores.<\/p>\n

Nike, for example, continues to expand its network of Nike Live stores<\/a> \u2014 digitally-enabled locations with localized assortment. Nike Plus members can chat with associates via an app prior to their visit, request specific sizing, get product information, book a slot for shoe fittings of reserved models, or place an online order. Such units are also equipped with ship-from-store capabilities, which speed up order fulfillment.<\/p>\n

Levi\u2019s also heavily extended its footprint of NextGen concept stores<\/a>. Equipped with digital features like its Fit Camp system for inventory lookup and Tailor Shop jeans personalization tool, NextGen stores are the retailer\u2019s response to growing online sales volume. The company\u2019s D2C stores and eCommerce sales accounted for 31% and 8% of total revenues respectively in Q4 2022<\/a>.<\/p>\n

Technology components<\/h4>\n