The Definition of Retail
Retail is the direct sale of products or services from a business to a customer. A retail transaction operates with small quantities of goods meanwhile wholesale refers to purchasing of goods on a bigger scale. Retail transactions are not the same as online transactions. And that’s because goods must be sold from a single point directly to a consumer as their final users.
What Do We Mean Under Smart Retail?
Smart retail is the application of smart technologies to change the in-store experience. It provides better customer service, personalizes and modernizes the retail industry to make it competitive with drastically emerging e-commerce. Lately retailers have found themselves in a fierce competition against eCommerce companies in an attempt to win their customers back.
All the major retailers in the US such as Amazon, Best Buy, Walmart and Target continuously improve services on their websites and mobile apps in an effort to earn their consumers loyalty, but it seems like it isn’t enough, consumers demand more from retailers. Therefore, retail is a dynamic and highly competitive industry – there is no guarantee of success. That is where smart technologies are called upon.
Increase in Smart Retail Solutions is on Its Way
The market size value in 2020 is likely to be 19.3 billion US dollars. It is forecast that the size of the global smart retail market revenue will reach 58.23 billion US dollars by 2025, according to a recent report by Grand View Research, Inc., progressing at a compound annual growth rate of 23.9% from 2018 to 2025. In the modern day retail industry, conventional physical stores are facing intense competition from the rapidly expanding eCommerce sector.
Thus, traditional retailers need to incorporate smart retail technology to bring their customers back. Smart technology enhances and digitizes shopping experiences in physical stores. Examples are: personalization of customers demand, excellent assistance in a store as well as end-to-end connection experience to the internet environment, and overall enhanced customer experience.
Smart Retail Market Report Highlights
- The visual marketing segment occured as the largest market in 2017 and is estimated to reach 16 billion US dollars by 2025.
- The software segment is going to witness the highest compound annual growth rate of 26% over the forecast period
- The Asia Pacific smart retailing market is likely to experience the highest compound annual growth rate during the same period. Growing adoption of smart retail solutions such as radio frequency IDentification, facial recognition, and big data analytics by retailers in China and Japan in order to provide ease of online shopping experience within a physical store.
- Key players include Intel Corporation, IBM, Amazon, Google, Microsoft Corporation, Softbank Robotics Holdings.
Role of AI in Retail
Everything around us is becoming increasingly interconnected through technology. IoT devices provide a remarkable opportunity to receive services and connect to information wherever you are. Era of connected customers is what we are witnessing nowadays. We are connected to our homes and can manage them via IoT smart devices for home. If not, then we are connected to our favourite brand stores receiving notifications for wristbands from them.
Artificial Intelligence can help consumers “try on” things they want to buy. It increases the probability of online purchases as people will have a more realistic view over things they pay for. IoT (internet of things), AR, VR are those smart technologies retail is relying on. AI robots can help with inventory management or can help clients improve in-store experience by providing information on location of the products, prices or sales.
Artificial Intelligence which finds its application both in IoT solutions and AR can be helpful in:
- identifying repetitive clients;
- define location of clients and their needs;
- predict product demands and price discounts;
- conduct analytics based on data from the external world (wearables and IoT devices, smartphones, Google trends);
- empowering voice payments;
- enhancing security and theft detection;
- customer behaviour prediction.
AI helps businesses benefit from behavioural economics which studies customer’s behaviour. Algorithms process customer’s emotional responses during shopping experiences in-store and online. AI can measure internal and external supply chain expenses, lower freight costs, predict course of actions when unexpected things happen. The application of technology solutions in retail could save up to $340 billion each year for the industry by 2020. Artificial Intelligence systems are 80% of these savings in returns and supply chain management.
Just imagine: you walk into the store searching for that one particular product, a bottle of favourite fragrance. As soon as you enter the store, your smartphone rings to notify you about a map of the store opened via smart app. The map shows you where the product that you were looking up online is. You make your way to the product, observe it, like it and decide to purchase. A retail robot approaches you asking whether you need any assistance finding something else. When you have finished shopping, you just walk away from the store.
On your way out, the sensors scan your items and add them up – the final price is then deduced from your smart shopping app. Also, by shopping there recently, you can get an automatic discount. The shelf where you picked up the goods, meanwhile, notifies the inventory system about a recent purchase, so the retail store’s manager knows to restock the product. And this is not a mere fantasy: smart AI robots in retail already exist.
Replenishing Customer Experience with Emotions
Smart retail is all about making the customer experience more satisfying and personalized by using smart technologies. The idea of smart retail is obviously to provide an unforgettable experience for people so that they will want to return to the store over and over again. Concepts such as “customer journey” are very relevant.
The customer journey is the complete summary of shopping experiences, emotions and impressions that a client gets while interacting with your company, brand or a store. The customer journey is that important route that the customer takes which starts from entering the store and observing the goods until the client leaves the smart retailing establishment not empty handed.
Technologies That Drastically Improve Your Shopping Experience
- Smart shelves
Shelf-edge technology is great. These are video transmitting devices equipped on shelves. Product companies can design advertisements and send them remotely to the IoT devices. Such an approach to displaying advertisements in-store increases ROI, customer satisfaction and strengthens brand recognition.
Smart shelves are wireless inventory control systems, usually with weight sensors. The weight sensors are built in the shelf itself or installed under regular shelves. These weight sensors regularly notify the back-end system about current quantity of the items on the shelves. They also might use radio frequency IDentification tags and scanners.
In that case, they scan the number of products, and if an item is being taken from the surface, shelves send a signal. It’s helpful in case the item falls off the shelf since some products like meat, fish, or ice cream need to be under specific conditions. All in all, smart shelves make it possible to control the quantity of items more efficiently and automate your process.
You can place beacons in stores, so that they are able to send customers in or near the store notifications. They might include sales, special offers, new products, or brand collections. Small beacons are devices that can connect customer smartphones if they are somewhere near and then send notifications about discounts, special offers, and so on to their smart app. In the smart retail industry, this helps to increase customer loyalty, attracts more potential clients to your smart retail store. And also such advertisements encourage people to buy the product you offer. According to Swirl Networks Inc. research, over 70% of customers admit that beacon-triggered ads and offers increased their likelihood to purchase in-store.
- Mobile apps
With no doubt, mobile apps are an important part of smart retailing. Smart apps allow customers to explore your product range and offer improved overall mobile experience. Besides, all customers have more trust for the store if it has a website or smart shopping app available for your smartphone.
- Virtual fitting rooms
Virtual fitting empowered by AI and AR can be a great advantage for new generations Y and Z who want to save time on shopping but find the product they are looking for and even try it on in virtual reality.
- Employees made of steel
Even though it might seem weird and quite unconvincing to communicate with a talking microwave on wheels, this is what the future of smart retailing is all about. Robot employees are gaining popularity amongst leading companies all over the globe—more and more establishments adopt this tendency. It’s a little scary to trust a machine to be your customer service representative, yet it is also a fantastic opportunity to cut down on menial tasks burdening your flesh&bone workforce.
OSHbot, the newest robotic employee of Lowe’s, assists customers with finding specific goods. It also provides information on discounts, promotions, and inventory. Plus, the new employee is bilingual and can communicate in both English and Spanish. Other major retail stores, such as Target, use robots to roam around the smart retail store. They take notes of misplaced items or products that need restocking. By taking over simple inventory tasks, Target’s robot employees frees up Target’s human workforce to focus on providing more intimate customer assistance.
- Will retail survive in 2020?
Some people suggest that one day the stores will vanish. We are going to purchase everything online, and if we want to see and “touch” the items that we wish to order, we will be able to do so straight from our homes, with the help of virtual reality.
Is 2020 going to push retailers to the edge? The future of retail is really under question especially when the covid-19 spread is on. People’s mindsets are changing to go shopping online rather than to visit stores which means exposing their lives to the risk of inflammation.
On the other hand, it is pretty hard to picture the world without street markets, shopping malls and department stores. A lot of people prefer going to a physical store and they also enjoy the process of looking for the product, it’s an undeniable pleasure for them, even when they can easily buy anything from their computer. After all, statistics state that consumers of all ages – including 62% of baby boomers and 58% of gen Z, still prefer shopping in a physical store.
Also, check the benefits of retail predictive analytics!
To sum up, retail is transforming into smart retail, which is today AI in sales analytics, inventory management, customer needs and behavior learning and other things happening behind the scenes. In the future we can expect robots in stores, digital devices and beacons everywhere in malls. Smart retail solutions heavily rely on AI, AR and IoT solutions which develop rapidly and can as well accelerate development of smart retail. The only dubious questions remains – whether or not e-commerce and completely online experiences of clients will completely overshadow retail, especially when everything “remote” invades people’s lives very and very quickly.