We’ve all experienced it – a new retail technology is introduced into the market and it begins to shape the way we shop. According to a recent report by Market Track, 78% of younger shoppers (ages 18-29) said they prefer online shopping to traditional in-store experiences. Couple this with the recent impending death of brick and mortars – massive store closings – like those of RadioShack, Sears, JCPenney, Macy’s… and it’s clear that strategic innovation through retail technology is a matter of survival.
To stay ahead of the competition, retail stores are investing billions in retail technology. For example, Wal-Mart spent more than $10.5 billion on IT in 2015, and those numbers continue to skyrocket. As publicly announced, Wal-Mart recently purchased Parcel, a tech-enabled delivery service, as well as Internet retailer Jet.com to help the company compete with retail giant, Amazon. Wal-Mart is also purchasing online retailers – Bonobos and ModCloth – adding to their arsenal of retail technology. Wal-Mart’s strategy is this: rather than trying to create their retail technology tools from scratch, they acquire the companies already mastering the space.
We often hear how huge retailers, like Wal-Mart and Amazon, are leveraging new technology, but what else is going on in retail technology for other stores and behind the scenes?
Using Artificial Intelligence and Virtual Reality in Retail Technology
Really cool buzzwords Artificial Intelligence and Virtual Reality are more than an article you read on Gizmodo – these technologies are hard at work for most big retailers at this point.
Artificial intelligence (AI) as a trend has the ability to change the way we all do business. And retail customers seem to be on board, too. “70% of US millennials and 62% of millennials in the UK say they would appreciate a brand or retailer using AI technology to show more interesting products. Furthermore, 72% and 64%, respectively, believe that as the technology develops, brands using AI will be able to accurately predict what they want,” as detailed in research by Sonar.
Here’s how AI works to deliver a personalized retail experience: When a shopper visits an AI-powered e-commerce site, like one created with the Salesforce AI tool, Einstein, the site uses data on the shopper to create a completely unique experience personalized for them and their interests. So, when you think that a brand has 200,000 regular customers, there could conceivably be 200,000 iterations of their website personalized to each shopper. Not only helpful for e-commerce, now thanks to AI, retailers also have a better understanding of how their shoppers are purchasing and can make better decisions about product bundles, deals, and store planning.
Another digital trend emerging as a retail technology is virtual reality (VR). The number of active VR users is quickly growing, and expected to reach 171 million by 2018. Retail stores including IKEA, Lowe’s, and The North Face have already begun experimenting with VR in their stores. IKEA uses virtual and augmented reality as a way to help bring the store into customers’ homes. Imagine this: A customer is shopping at IKEA for a new kitchen. The retailer now provides headsets that allow people to “cook” in that new kitchen, seeing how far it is from the stovetop to sink, etc. That’s not all – By using the Ikea Place app, launched in September 2017, shoppers can virtually try out furniture in their homes using a smartphone.
Converting Online Customers to an In-Store Retail Experience
Many online retailers are beginning to offer a happy medium solution for buyers looking to expedite the sales experience, but also prefer to see products in-person before making their online purchase. For example, over the past few years, Gilt.com (known mostly as an online-only retailer) has been offering the option to schedule in-person appointments that merge the in-store retail experience with their online strategy.
A unique spin on a showroom, prior to the Gilt appointments, customers begin by noting the occasion or pieces they’re shopping for. The Gilt personal stylist pulls the appropriate pieces ahead of time and assists the customer in selecting the best items for their event, personal style, and budget. The shopping appointments offer exclusive Gilt members a super-personalized approach that gives their stylists the opportunity to get to know their clients and communicate in-person, leading to more high-quality sales and increasing customer loyalty.
Using Retail Technology for an Omnichannel Approach
We’re witnessing a very quick strategic shift in not only how physical stores are operating, but also how online shopping is optimizing to meet customer needs. According to Bain & Company, during last year’s holiday shopping, physical stores on average saw their Net Promoter Scores (a scoring system that can help to understand customer satisfaction) stay relatively flat, while the Net Promoter Score for the physical stores’ websites also dropped. Using this logic, many retailers are optimizing both the digital (online and mobile) and in-store shopping experience with an omnichannel approach.
The omnichannel approach in retail is why you may be noticing online retailers adding physical stores to their strategy, while physical retailers are expanding e-commerce. The strategies that combine the best of the digital and in-store retail experience can meet more customers’ needs, and thus increase sales.
“For omnichannel retailers, websites and mobile apps are not just a means of ordering: They are front doors to their stores. They offer inspiration and community, and they function as test labs, help desks, purchase points, pickup and return locations, and shipping centers,” as explained by Bain & Company.
Using Virtual Assistants to Boost Sales
Virtual assistants like Siri, Alexa, Cortana, and Google Home were created to improve the users’ quality of life, and in return boost consumer spending.
Amazon was the first to clearly and successfully develop the virtual assistant, Alexa, to encourage easier, quicker and more efficient consumer spending with Amazon. Alexa has innovated the space to where even our refrigerator can sense a grocery need, and order it for us. Amazon’s innovation in this area has attracted the attention of brands like LG, who now produces appliances enabled with Amazon’s technology. The use of virtual assistants to boost sales will continue to grow as our world becomes more inundated with retail technology.
So, Is Retail Technology Boosting Holiday Sales?
All of this retail technology is innovative, strategic, and just really cool! But has any of it helped to improve holiday sales this year?
During this year’s Cyber Monday, online sales hit a record $6.59 billion, making it the largest online shopping day in U.S. history, according to Adobe Analytics. That’s up to $1 billion (16.8%) from last year. And $2 billion of those online purchases were made with a smartphone. From November 1 through Cyber Monday, Americans spent $50 billion in online shopping – also a 16.8% increase from the previous year.
Surveys show customers are the most confident in spending they’ve been since 2000, according to The Associated Press. And while it’s too early to know how retail technology affected the holiday shopping season, The National Retail Federation said sales for this year’s holiday season “are on track to meet or exceed NRF’s holiday sales forecast for an increase between 3.6 and 4 percent over last year.”
Here’s hoping all of this innovation in retail technology can provide a much-needed boost in sales for retailers! Happy Holidays and happy shopping!