Top 6 retail technology trends for 2023

Today, retail technologies are radically changing the world of retail, from the consumer's shopping experience to the retailer's operations. Let's examine six retail technology trends for 2023 and the advanced technologies retailers need to know about and invest in to integrate their online and offline businesses.

Modern AI solutions

AI and ML technologies are now an integral part of various industries, and retail is no exception. In fact, the retail industry has long served as a fertile ground for the experimentation and implementation of AI solutions. The recommendation engine, a concept pioneered by Amazon two decades ago, is a prime example of the application of AI in retail. This ML-based system offers customers product suggestions that are tailored to their previous shopping experiences, geographical location and the buying patterns of similar consumers.

We can’t emphasize enough about the significant role of advanced analytics and AI technologies in retail. These tools equip retailers with invaluable insights into their customers' shopping behaviors, including their shopping choices' when, where, how, and why. 

In light of these developments, it is clear that the future of retail lies in further investment and exploration of AI and related technologies.

AI in retail: Applications and use cases      

Here are seven ways retail companies can use AI applications:

Demand planning and forecasting: Predictive analytics using AI allows retailers to analyze historical sales data, market trends, and external factors in real-time. This enables them to accurately predict future demand and plan inventory accordingly, minimizing the costs associated with overstocking or out-of-stocks.

Personalized marketing: AI-powered recommendation engines analyze customer data to provide personalized product recommendations, targeted marketing campaigns, and special promotions, increasing customer engagement.

AI-Powered chatbots: Chatbots and virtual assistants powered by conversational AI provide instant customer support by answering questions and handling customer service issues, improving response times and overall customer satisfaction.

Product catalog management: AI helps retailers automate product tagging, generate high-quality text and image content for products, and rank product catalogues for better search and discovery, increasing the accuracy of product catalogues.

In-store operations: AI-powered smart shelves and in-store video analytics provide insights into shopper behaviour, helping retailers manage queues, replenish inventory, place products, and optimize store layouts.

Dynamic price optimization: AI algorithms analyze real-time data on market conditions, competitor pricing, and customer demand to dynamically adjust pricing strategies, helping retailers maximize sales and optimize margins.

AI, also known as machine intelligence, is at the heart of the next wave of retail solutions. For example, machine vision, a subset of AI, is fundamental to technologies such as facial recognition, visual exploration, and autonomous delivery vehicles. Comprehensive linguistic models form the basis of interactive AI chatbots and auditory assistants.

The innovative AI tools made possible by the rapid development of deep learning models, such as ChatGPT, are another AI technology for retailers to consider.

What is generative AI?

Generative AI, a type of artificial intelligence, crafts content in various forms, such as text, images, sound, code, and synthetic data, in response to inquiries posed in our natural language. Shradha R., Head of Product Marketing at Vue.ai, an AI solution provider for retailers, provides insight into the use cases of generative AI for retailers. She uses the example of clothing brands that aim to create imagery of models with diverse body and skin types. She asserts, “With this kind of generative AI, brands can fully automate their processes, eliminating the need to photograph models wearing their products.”

Automation

Retailers are expected to ramp up their automation investments in the following years, as the process of using technology to perform recurring tasks with minimal human intervention. Ongoing labor gaps have increased the need for automation in all areas of retail sector, from warehousing, inventory management, and order fulfillment to consumer-facing features such as contactless payments.

According to McKinsey, 52% of all retail activities can be automated with existing technology. It reduces human errors, enhances quality and speed of service, boosts employee productivity, and saves money. Automation can create an additional margin of 300 to 500 basis points, a boon for retailers facing margin pressure. This makes automation not an option but a necessity in the hyper-competitive retail environment.

Recent advancements in AI, ML, and robotic technologies are powering a new era of intelligent automation where machines can make data-driven decisions independently. For instance, AI-powered marketing automation software can analyze historical customer data and personalize promotions across different channels, from SMS to emails and social media ads.

Retail automation examples

Stores, supply chains, and corporate functions must all use automation. Here are some examples of how automation is being implemented in various aspects of retail:

In-Store Automation

• Self-service kiosks and self-service payment terminals: These devices allow customers to check out their purchases without needing a cashier, reducing wait times and improving customer experience.

• Electronic shelf labels: These digital displays can automatically update product information and prices, reducing the need for manual price changes and ensuring accurate pricing.

• Facility management with cleaning robots: Robots can be used to clean stores, reducing the need for manual labor and ensuring a clean and safe shopping environment.

• Shelf scanning robots for inventory management: These robots can scan shelves to check inventory levels, reducing the need for manual stock checks and ensuring accurate inventory management.

Warehouse and Delivery Center Automation

• Automatic product loading and unloading systems: These systems can automatically load and unload products, reducing the need for manual labor and improving efficiency.

• Product recognition scanners: These devices can automatically identify products, reducing the need for manual scanning and improving accuracy.

• Automated Guided Vehicles (AGVs): These vehicles can transport products between warehouses and delivery centers, reducing the need for manual transportation and improving efficiency.

• Automated Storage and Retrieval Systems (ASRS): These systems can automatically store and retrieve products, reducing the need for manual storage and retrieval and improving efficiency.

• Warehouse drones and robots for inventory counting and management: Drones and robots can be used to count inventory and manage stock, reducing the need for manual stock checks and ensuring accurate inventory management.

Other Retail Automations

• Robotic Process Automation (RPA) tools: These tools can automate tasks such as answering frequently asked customer questions, creating invoices, managing inventory, managing orders and returns, and managing product catalogs.

• Marketing automation and sales automation tools: These tools can automate marketing and sales processes, improving efficiency and effectiveness.

These examples illustrate the wide range of applications for automation in retail. As technology advances, we can expect to see even more innovative automation uses in this sector.

Smart store technologies

RFID and QR codes are technologies that help identify, track, and manage inventory in real-time using tags and codes. Shoppers can scan these tags in fitting rooms and receive information such as product details. It is also possible to request similar or related garments from service staff for browsing, through the fitting room.

More than 70% of Gen Z and Millennials are willing to shop or spend more at retailers that offer contactless payment, so adopting self-service payment solutions such as mobile point of sale (mPOS) is inevitable. These ensure a seamless experience across all customer touchpoints, whether online, in-store, mobile, or social media.

Organizations can optimise various aspects by visualizing a complete picture of the retail space, understanding how people move through a store over time, which areas are being explored or overlooked, or which areas require more staffing.

Cameras and sensors are also crucial for upcoming smart store technologies like smart carts that assist with automatic billing and smart shelves that track inventory.

For instance, Amazon has a "just walk out" technology that relies on sensors, cameras, and AI. Customers can simply take the product they need, and the cameras and sensors track product, bill it, and automatically detect payment from shopper's digital wallet. This technology is currently used in Amazon Go stores, providing a seamless shopping experience that eliminates need for traditional checkout lines.

Augmented Reality (AR)

AR is the next big thing in retail. It's been popular in retail for some time. But AR technology has become even more important as shoppers look to bridge the gap between online and physical shopping.

Augmented reality delivers interactive experiences by adding computer-generated digital content to real-world objects. Say you're shopping for trainers on your smartphone. You find one you like. With AR, you can see how they look on your feet just by pointing the camera at them. Trying on products virtually is one of the most successful use cases for AR. Fashion and make-up retailers are among the leading users of AR technology with virtual try-on applications and virtual fitting software.

60%  of millennials are willing to shop or spend more with a retailer that offers virtual fitting rooms or virtual staging capabilities. 

Source: TCS. 

Related: Learn more about “The 5 biggest trends in digital transformation for 2023”

Data analytics

Retailers must leverage robust retail data analytics and insights platforms to fully harness technology's power. Data fragmentation, legacy infrastructure, and inability to share and ingest data from disparate sources prevent retailers from taking full advantage of analytics today. And the insights gathered can be used for personalization, product management, price optimization, and streamlining store and warehouse operations to drive more sales.

Data sources for retail analytics

Here are some sources where retailers can collect data on customers, inventory, and other business information:

• Websites,

• Mobile apps,

• Social media marketing platforms,

• Point of sale/self-service systems,

• Enterprise Resource Planning (ERP) software,

• Customer relationship management (CRM) software

• Inventory management systems,

• In-store sensors, cameras and monitors,

• Supply chain management software RFIDs, and QR codes,

• Syndicated third-party data,

Leading retailers have embraced advanced analytics, while others are still using basic tools to avoid potential headwinds. Retailers must immediately analyze which processes can be improved through better data analysis. To do this, retailers can use cloud data integration solutions and e-commerce data integration software to combine data from different channels and gain actionable insights using analytics platforms powered by AI and ML.

Image credits: Downloaded via Freepik by rawpixel.com

Sources:

• "Retail Technology Trends 2023: The Future of Retail Technology" - Retail Tech Magazine

• "The Future of Retail: 2023 Retail Industry Trends" - Business Insider

• "Top 6 Retail Technology Trends to Watch in 2023" - Forbes

• "The Future of Retail: 2023 and Beyond" - McKinsey & Company

• "2023 Retail Technology Trends: What's Next for Retail?" - Retail Dive

• "The Future of Retail: Technology Trends Shaping Retail in 2023" - TechCrunch

• "Retail Technology Trends: The Digital Future of Retail in 2023" - Digital Trends

• "The Future of Retail: How Technology is Shaping the Retail Industry" - Harvard Business Review

• "Retail in 2023: The Role of Technology in the Future of Retail" - Retail Week

• "The Future of Retail: Top 5 Technology Trends for 2023" - Retail Gazette