In recent times, digital transformation in retail has emerged as a revolutionary force set to reshape the industry. Brick-and-mortar and online businesses can effortlessly scale and adapt to rapidly changing consumer demands using retail digital transformation tools. From optimizing operating models and streamlining value chains, to delivering exceptional customer experience, digital transformation has the potential to do it all.
Investing in digital capabilities has had a huge payoff for retailers in terms of driving cost efficiencies and improving customer experiences. Gartner revealed this to be the case: In a survey among 2400 CIOs across 84 countries, 84 percent of the respondents said that the critical outcome of digital technologies in their businesses was generating revenue, and 65 percent had excelled in customer experience. When asked about the technologies that would be implemented in their retail businesses (by 2026), 91 percent said Artificial Intelligence (AI) and Machine Learning, 76 percent said Low-code/No-code platforms, and 74 percent of the CIOs chose Generative AI (Gen AI). It is a clear sign that retailers will be at the epicenter of enabling and embracing new technologies, especially AI-powered innovations.
The trend is expected to continue well into 2024 as the adoption of emerging technologies has delivered proven results for retail enterprises looking to transform their value propositions. This blog discusses the important trends that will define the industry in the near future and ensure that it is profitable and sustainable in the long run.
Gen AI: To Drive Better Customer Experience
In just over a few years, Gen AI has captured the attention of global businesses and it’s no different for the retail sector. An attentive and engaging customer experience is a pivotal part of the retail industry. To reach a wider customer base, retailers should provide convenience and flexibility. As such, a whopping 66 percent of retail executives see Gen AI as a driving force for analyzing customer data and creating personalized recommendations.
In the retail industry, Gen AI enables optimal sales, targeted marketing campaigns, and tailored product recommendations to the customers. While traditional technologies only facilitated cross-selling by recommending products, Gen AI has pushed the boundaries by harnessing customer data and helping customers discover relevant products. It empowers retailers to become well-suited to develop and deploy personalization.
Gen AI takes data analytics to the next level. It can synthesize data across customer search patterns, process unstructured data streaming in from purchasing systems in real-time, and create best-in-class personalization. With 82 percent of modern customers willing to share their personal data for a more personalized experience, leveraging Gen AI can enable retailers to use the data and link it back to a customer’s personal journey with their brand.
Low-code: To Build Business-ready Applications
Today, low-code is a booming tech phenomenon with a market size of USD 12.3 Billion. For the retail industry, low-code can be a catalyst for progress as it provides a two-fold advantage: It speeds up the IT processes and delivers robust retail software solutions.
Digital transformation in retail reaches its high point in low-code as it can create applications rapidly by combining people, technology, and data in a single workflow. Low-code allows organizations to build and change apps with drag-and-drop and reusable components. Its self-contained pieces of code can be a building block for complex retail applications. It is much faster than conventional development.
Low-code platforms have been gaining momentum in recent years. 81 percent of global enterprises consider low-code development to be of strategic importance. Retail businesses looking to modernize their IT ecosystems can leverage low-code capabilities to deliver a seamless, connected shopping experience.
Customization is a critical functionality retailers require to deliver custom-built solutions to customers. With incredibly shorter development cycles, low-code can help retailers develop solutions that are more aligned with business needs. For example, they can use low-code to automate contact centers, Point-of-Sale (POS) systems, customer lifecycle management, and loyalty program modules. It can offer more accessible updates so that businesses can reduce friction and set up new solutions rapidly.
When it comes to retail supply chains, companies can build comprehensive layers of solutions for digital dispatch, track and trace, and inventory control. In-store operations can become smoother as low-code streamlines order fulfillment, franchise management, and inbound delivery. Applications built on low-code can easily integrate with existing systems, accelerating the productivity of internal processes such as procure-to-pay and order-to-cash.
Additionally, retail businesses need to build robust software solutions to combat security risks, losses, and fraud. The retail industry faces in-store payment fraud, intercepted enterprise payments, and e-commerce transaction fraud. With the power of low-code, retailers can design powerful applications that can efficiently handle compliance, audit and inspection, and third-party risk management.
AI: To Accelerate Retail Processes
The World Economic Forum reports that AI services in the retail industry will increase from USD 5 Billion to above USD 31 Billion by 2028. In the retail industry, AI has reached an inflection point, helping businesses combat volatility and uncertainty.
A responsive and resilient supply chain is absolutely crucial in the retail sector. In the Fast-moving Consumer Goods (FMCG) section of a retail business, decisions must be made in real-time to avoid situations like stockouts. According to Gartner, 60 percent of Chief Supply chain Officers are expected to “make faster, more accurate, and consistent decisions.”
Now, AI plays an important role in demand forecasting. For instance, an AI-led risk intelligence platform helped a leader in frozen foods accurately forecast customer demand for stock-keeping units. AI can collect and process troves of data from consumers to help retailers make informed and timely decisions. Having actionable data is critical to analyzing the market demographics and predicting supply chain operations. AI can help businesses replenish goods on time and maximize sales. Analytical capabilities of strategic partners, for example, are a real relief for store managers, merchandisers, and marketing managers. The system provides solutions to efficiently minimize unanticipated stockouts.
The trio of tech stacks—Gen AI, low-code, and AI—is expected to form the digital backbone for the retail industry. Embedded into a retail company’s digital core, these technologies can help retailers optimize operations and innovate with new experiences in 2024 and beyond.
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