The Indian retail ecosystem, both online and offline, has embraced technology with open arms in the last few years. The pandemic accelerated digitization and retail businesses are now focused on enhancing the shopping experience and customer satisfaction more than ever.
At a time when the Indian retail industry is expected to double in size and reach US$1.4 trillion by 2024, it is important to understand a few critical tech trends that are reshaping the future of the retail industry. From predicting customer purchase behavior and shopping patterns to catering to the evolving customer preferences, let’s have a look at a few tech trends and innovations that will act as a key driving force for the retail industry:
Retail Analytics - The global retail analytics market is projected to witness a CAGR of 17.7 percent in the forecast period, 2021-2028. Predictive analytics is immensely beneficial to deliver a personalized customer experience. Employing predictive analytics arms retail businesses with a critical capability required for smooth and smart functioning of business i.e. forecasting. While e-commerce businesses can use analytics to predict abandoned carts, offline retailers can use it to merchandise products together in-store to push certain items. Online retailers can do better customer profiling based on customer journey and interaction across touchpoints. From inventory management to better staffing decisions, predictive analytics has vast applications for both the online and offline retail industry.
Artificial Intelligence/ Machine Learning - Another key technology that will change the landscape of retail is artificial intelligence and machine learning. Artificial intelligence is a powerful tool to forge stronger customer relationships. AI and machine learning together facilitate demand forecasting and inventory planning. While online retailers can gather data from the online activities of a customer via social media and other digital mediums, offline retailers too can implement AI for tracking customer buying patterns, backend stock forecasting, and replenishment, among others. AI and ML can play a pivotal role in enhancing the customer experience - a key factor for offline retail.
Digital Transformation - While technological advancements were taking over the e-commerce world at a rapid pace, a significant number of traditional retail stores were still lagging behind in terms of technology adoption. In the wake of COVID-19, retail stores with traditional approaches are now increasingly relying on the latest technology to offer customers an engaging and safe retail experience. From expanding presence to the digital domain, facilitating contactless payments and e-carts for in-shop retail to creating an omnichannel experience, physical stores have ramped up the use of digital mediums to optimize every aspect of retail operations.
While the above is a brief overview of the emerging technology trends across the online and offline retail sector, it is also important to understand how these tech adoptions are benefiting the retail sector as a whole, across areas like backend operations, customer engaging, sales, and marketing as well as the overall growth of the segment. Some key areas that are undergoing a positive disruption brought about by digital transformation, include:
Customer Engagement With Loyalty Apps - Even as mobile shopping trends are transforming the retail landscape, there is rising popularity of loyalty apps that are boosting customer engagement and retention. For a price-sensitive market, loyalty apps are leveraging big data to offer customers customized discounts and special offers, while retailers are gaining deep domain insights into not just customer data and buying patterns but also details of products and categories that are preferred, based on demographics, and geography, as well as have front-row attention of the customer. And while the loyalty apps facilitate instant gratification for customers who can earn points and redeem their rewards, the concept of gamification of shopping experience further motivates repeat business, leveraging data-driven insights to take customer engagement to a new height.
Vendor Management - Traditionally, vendor management, on-boarding and eventually building a long-term partnership, is a long process and built on mutual trust and faith. With technology-enabled solutions, like data-driven vendor management, blockchain, and automation process for procurement and payment, the process of vendor onboarding and management has become faster, easier, and more trustworthy. From selecting vendors, comparing price and quality, conducting a background check for authenticity, to analyzing the monthly demand and seeking accurate quotations, tech adoption has taken the physical process of filtering and guesswork out of the process. The process has also largely reduced the turnaround time and cost of new vendor procurement and management, resulting in business efficiencies and thus profits. Additionally, technology adoption can pave the way for productive vendor relationships as buying, selling and fulfillment processes are automated via a unified platform.
Inventory Management - Integrating technology can effortlessly eliminate inefficiencies in inventory management. Overstocking slow-moving products and running out of stock for high-demand products can result in significant losses. AI and retail analytics can keep a tab on the movement of products and send out an alert when the count for a product goes below a certain pre-decided number, allowing retailers to re-stock in time. Not only can this save a lot of time and human effort, it also ensures optimal stock availability, which translates into never having to lose a customer because of the unavailability of the product!
Impactful Marketing Campaigns - One of the key benefits of AI and big data for retail has been the data-driven insights into customer behavior, preferences, buying patterns, and identifying the finer nuances of how they engage with a brand - all of which are a goldmine of information for the marketing department. These aids greatly in gaining a better understanding of the customer and thus tailoring impactful marketing campaigns, with higher efficacy, becomes easier. Irrespective of the purchase platform - online or offline, targeted campaigns always have the ability to be more personalized and thus drive higher customer loyalty. Additionally, retailers can use geo-fencing to update customers about special discounts or offers, based on their location and capitalize on sales opportunities.
Seamless Omnichannel Experience - Leveraging AI, IoT, and ML, brick-and-mortar retailers, including multi-brand and multi-store retail chains, can enhance customer experience multi-fold. For example, virtual aisles can help brands to retain customers even when they are physically out of stock for a particular product, by allowing customers to go online, look up and buy the product, from within the physical store. Virtual trial rooms are another example of omnichannel experience in retail that has gained popularity in the post-pandemic world. Upselling through geo-sensors allows potential customers to stay updated about special offers and discounts via instant messages when they are in the vicinity of a physical retail store.
Technology is becoming more mainstream in the retail industry and it is now a strategic imperative for retailers to stay relevant and profitable. It enables retailers to extract key information and insights, track competition, build loyalty, drive operational efficiencies while also enhancing customer experience. With technology transforming operating models across the retail sector, it is safe to say that most retailers will rethink and move away from their traditional approach to thrive in this tech-dominated landscape.