How has digital technology impacted Retail?

In the last 15 years, retailing has undergone a radical transformation, changing the way companies offer their products to a consumer who has changed his purchasing habits. Customers have become more demanding in the quality of the product, they ask for the brand to be sustainable and to be able to make their purchases whenever and wherever they want. Thanks to the Internet and mobile devices, consumers have access to countless consumption options, providing access to products without geographical or temporal limits. According to Vector ITC, a Spanish technology and digital group, this change has forced retailers to an accelerated adoption of new technologies. In fact, global spending on technology by the retail sector has skyrocketed to 203.6 billion dollars in 2019, according to Gartner data.

Against this backdrop, major brands have had to make large investments in online platforms, in the optimization of their supply chains and in digital transformation both internally and externally. In this way, the objective of the companies is to integrate the advantages of electronic commerce within their stores so that the purchase is a unique experience, creating the concept of Smart Store. However, companies still have weaknesses in aspects such as the integration of suppliers, which do not reach their technological level. On the other hand, small and medium sized companies have a big challenge ahead of them, as they do not have the necessary budgets to make investments of this size. In addition, they must balance their business, maintaining the physical stores and looking for greater online presence, to retain more customers without losing the current ones.

Next, Vector ITC details what technologies are influencing and transforming the retail sector:

1. Internet of Things (IoT): According to a study by Grand View Research, the IoT software market in this segment is expected to experience substantial growth, with a revenue share of more than 40% by 2025; this growth can be attributed to the growing adoption of retail analysis software to monitor consumer behavior. Through the use of intelligent electronic devices both at the point of sale and in the supply chain, retailers have improved their processes. From the consumer’s point of view, the use of wearables will allow them to have a better user experience.

2. CRM and automation platforms: The implementation of this type of solutions will be fundamental to attract new clients and to know even more their profile, with the objective of segmenting and fidelizing the existing ones. CRM (Customer Relationship Management) provides greater access and control of customer information, such as their names, shipping and billing addresses, email addresses or nicknames. On the other hand, automation is key to saving time in processes and investing it in improving decision making. This is also very important when programming marketing campaigns and improving effectiveness, especially in e-mailing and for the design of offers and promotions.

3. Data analysis and exploitation: Customers demand personalization and a seamless experience between online channels and physical stores. Data exploitation and predictive analytics are now fully established in Spain, except for the large Big Data projects, which are still in development and implementation process. The technology applied for this purpose allows us to know the models and patterns of consumption, so we can hyper-segment customers and design strategies and campaigns tailored to each consumer. In addition, Predictive Analytics allows companies to anticipate user tastes, trends and habits.

4. Artificial Intelligence: This technology is fundamental for the retail sector, as it allows to automate processes, reduce costs in the medium term and improve the customer experience. Some examples refer to logistics optimization in stock management, the use of digital assistants or Chatbots, the execution of intelligent campaigns and the improvement of product delivery times. With all the information gathered from the customer, companies will be able to generate the insights necessary to provide an optimal shopping experience for the user and enhance customer loyalty.

5. Blockchain: Although the tools based on this technology are still in the development phase, the retail sector has not been oblivious to its benefits and expects to increase the implementation of this technology in its processes in the coming years. The main areas where its impact will be felt are loyalty programmes, platforms to optimise traceability and transparency in the supply chain and the management and protection of customer data, especially for companies working in different markets. In addition, it provides better experiences in contracts, payments and processes for exporting and importing products.

In relation to the concept of physical store, according to Vector ITC, there were great advances in the implementation of technology at the point of sale, aimed at placing the shopping experience in the foreground. In this sense, the use of Virtual and Augmented Reality through intelligent shop windows and kiosks, geolocation and heat maps, including in-store facial recognition, are key to improving the user experience.

“Present and future technologies are radically impacting and transforming the retail sector. Companies have had to change their focus and focus not only on the product, but especially on the customer and their experience. The barriers between the physical and the virtual have changed the rules of the game, as have the demands of consumers. The sector has to evolve and build the relationship with the customer from an omnican point of view”, says Marina Marugán, Director of Retail, Industry and Services at Vector ITC.