Digital Trends in the Retail Industry
Technology and digital trends in the retail industry have changed dramatically over the last few years as retailers continue to implement and adopt tech solutions to get an edge over their competitors.
From the mid-2010s to today, the accessibility of new tech, both in terms of availability and affordability, to SMBs in particular, had a profound effect on the business processes of retailers today.
Today, we’re going to be taking a look at what trends are influencing the industry, and how recent events have further shaped how the retail industry is approaching technology implementation.
Recent Changes in Digital Trends in Retail
The last couple of years had an enormous impact on the retail industry. During the pandemic, stores shuttered down and businesses had to expand their online customer base in order to survive.
As you might expect, the industry saw a massive shock during the spring of 2020. Sales plummeted in April 2020, picking up significantly in May and June, before returning to normal levels by August of that year.
In 2021, online retail increased by 25% with almost 70% of Americans having shopped online. Since shopping migrated from physical store fronts into online shops, e-commerce saw the following trends emerge:
- Online payment systems: E-commerce merchants looked to solutions that allowed customers a quick and safe method of payment.
- Digital marketing: SMBs had to develop and implement online campaigns to drive traffic to their shops. Social media as a marketing channel grew.
- AI in Retail: Businesses currently use tech to analyze customer behavior, track data, and make decisions. Product inventory and customer relationships can also be managed with AI.
- Omnichannel e-commerce: Retailers implement a number of channels to drive sales. Websites, apps, social media, as well as a physical store need to be managed to increase sales.
Unsurprisingly, brands that are the least reliant on traditional means are the ones that have seen the most growth.
The question is, how has the industry come back for those growing brands, and what will enable other SMBs to continue to respond?
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Using Multiple Channels to Drive Sales
With the aftershocks of the pandemic lockdowns still affecting retail, organizations have had to reassess their ability to adjust their business model to react to unforeseen events.
For most retailers, this means looking at their digital and ecommerce abilities and analyzing whether their strategies are good enough to cope with the retail industry as it currently stands and, in the future, too.
It’s still anyone’s guess as to how much of an effect COVID-19 will have had on the industry as a whole, but retailers have to contend with increased digitization as a result, and the possibility that consumers will have heightened expectations for digital experiences.
Currently, retailers have had to implement an omnichannel strategy, which is the seamless integration of multiple customer channels, both online and in person.
An omnichannel retail strategy uses universal data. In contrast, a retailer managing a multichannel business would focus efforts on increasing the number of channels, but not necessarily unifying the data. An omnichannel retailer would use the customer data gathered from the different channels to make decisions, improve the customer relationships, and ultimately drive sales.
Related Blog: How to Use Audience Data in Omnichannel Lead Generation
Retailers Must Be Able to Respond
For many businesses, e-commerce has been a test of their capabilities to respond to shopping behavior changes.
In other words, is the organization agile enough to meet the demands of the customers?
As far as digitization goes, this means addressing key aspects of e-commerce that a retailer needs to be competent at.
Are online channels being optimized? Does the site have a chatbot to improve customer service? How is social media being used to engage and retain potential and current customers?
These are the types of questions that SMB decision makers should be asking themselves as they formulate their strategies for digital retail.
More than two-thirds (70.7%) of respondents agree that digital transformation is an essential part of their future plans.
Most Significant Digital Trends in the Retail Industry
Digital Maturity in Retail
Most retailers view digital transformation as a central part of their future plans. The maturity of technology areas within organizations varies, but indications suggest an emphasis on the following areas:
Financial applications of technology are considered the most mature form of digitization across the industry, with 63.7% of retailers stating a mature implementation of finance-related tech.
Sales follows at 62.2%, then customer service at 59.7%, and finally front-line retail operations at 59.2%.
Tech Budgets Are Increasing
As online growth continues, so too do the IT budgets of retailers. 40% of them predict an increase for their technology spend, compared to 18% who predict a decrease.
This is despite the economic effects of the pandemic. Businesses recognize that investing in digital technologies will be crucial to making sure they’re agile enough to deal with future disruption, as well as adjusting to current consumer behaviors.
Automated Retail Technologies
70% of retailers see artificial intelligence as a change catalyst they are already investing in.
AI has a number of uses for a business, chiefly the ability to automate processes that are typically manual and predictable in nature.
For practices that are more frequently being taken online, automation can play a vital role. For example, a customer service bot can reduce time spent by employees on customer queries. An automated system for fulfilling orders from start to finish can make processing orders more efficient.
Automated retail technologies leave repetitive tasks to the tech while the people can focus on the creative aspect of a business.
For instance, robotic process automation (RPA) is a technology that uses software robots to emulate humans and perform certain tasks alongside their human counterparts. Watch the video below to learn what RPA technology can do for your business.
Related Blog: 7 Uses of Robotic Process Automation (RPA) for SMBs
Another example of automated retail technologies is automated inventory management. An automated inventory software conducts inventory counts, sends data, and can notify a retailer if stock is running low. That way a business owner can restock their merchandise or materials before they run out without having to worry about conducting inventory.
Digital marketing can also benefit from automated retail technologies. For example a customer relationship platform (CRM) allows you to segment customers with similar qualities into groups, so that you can target specific campaigns to them, and ease their journey along your sales funnel.
Processing sales, returns, and deliveries can also be automated. With automated retail technologies, the time human employees spend on repetitive tasks is diminished while processes are done effectively.
Related Blog: What Are the Benefits of a CRM in Retail?
Customer Experience Is Key
Customers more frequently desire positive and personalized experiences from retailers online.
This includes a number of different approaches in regard to technology, including buying online and picking up in-store (BOPIS) and offering real-time in-store recommendations to customers via smartphones.
48% of shoppers have left a brand’s website and made a purchase from a competitor because of a poorly personalized shopping experience.
This also means providing a positive experience through an omnichannel approach through social media, digital marketing, and dedicated apps.
The global changes in the last couple of years quickened the pace of digital transformation in retail, and businesses have been tested on their ability to respond effectively to disruption.
Those who were possessed tech maturity or were working on it tended to be the ones who were affected the least. Although, it’s notable that many retailers already acknowledged the need for better digitization, only for the pandemic to speed up their plans.
The principal areas of importance have been bigger investment in technology such as automated retail technologies, getting better control of business finances through software, and improving the customer experience through a multiple channel approach and the use of AI.
If you’d like to learn more about implementing technology in your business and which strategy is best for you, read our free Checklist: What Businesses Need for a Successful Business Intelligence Strategy. With it, you can learn how to choose the right tools and platform that best fit your needs.