Retail is on the precipice of a global paradigm shift powered by the accelerated capabilities of disruptive technology. The sheer computing power and processing of extensive complex data, coupled with the ability to derive actionable insights, is moving at a pace where consumers and retailers are continuously playing catch up—with no signs of slowing down.
Amazon, Walmart, Target, and other leading retailers have been aggressively adopting new tech in their digital transformation efforts, but they’re not the only ones driving this rapid evolution. An explosion of startups is accelerating innovation, bringing fresh ideas and new approaches to the sector through partnerships with established retailers.
But why is this technological revolution so crucial? Because it enables retailers to gain an unprecedented understanding of the challenges in the customer journey, enhance the shopping experience, and, ultimately, revolutionize the industry.
In this installment of the Reshaping Retail series, we’ll explore how modern technology narrows the customer journey execution gap in retail through enhanced customer experience (CX) and streamlined operations. We’ll also look closely at the transformative potential of blockchain and artificial intelligence (AI) and how to deploy these innovative technologies.
Artificial Intelligence: The Catalyst For Retail Transformation
According to the IDC worldwide Spending on AI-Centric Systems Forecast to Reach $154 Billion in 2023 of which 13.4% (c$20 billion) is across Retail, indicating a significant leap of faith that will accelerate progress. As a result, the pace of AI transformation in retail is steadily gaining momentum as benefits become proven and competitive imperatives grow. It’s reaching an inflection point, and those who move quickly now will have an advantage.
In a previous article about generative AI, we covered how tools like OpenAI’s Chat GPT can enhance retail CX with personalized recommendations, customer behavior predictions, and automated customer support. But generative AI is only the tip of the iceberg: general AI has unlimited potential.
The combination of AI and advanced analytics, for example, allows for real sentiment analysis, especially in relation to social listening and other online platforms, enabling retailers to gauge customer sentiment and opinions about a brand or product to identify trends in customer feedback and improve brand perception.
Using the same rich data sets and analytics computing power, retailers can also segment customers based on their behavior, preferences, and demographics. This segmentation allows for targeted and personalized marketing campaigns, increasing the chances of engagement and conversion and fostering customer loyalty and retention.
Moreover, advancements in neural networks and virtual assistance capabilities like Alexa, Google Assistant, and natural language chatbots enable hands-free and personalized CX. Voice is becoming an important new shopping channel that doesn’t necessarily require a human to respond since digital AI workers can provide 24/7 support and service. Retailers can funnel routine inquiries through these virtual assistants, freeing up human support teams to focus on more complex issues, thus improving response times and CX.
While consumers expect retailers to deliver hyper-personalized, contextualized interactions across channels like apps, websites, and stores, they also value human connection, empathy, compassion, and emotional intelligence. Therefore, the goal should be to augment human-to-human interactions rather than replace them.
Blockchain: An Engine For Operational Excellence
Although AI is attracting the most attention, blockchain technology has emerged as another transformative force in retail, garnering increased focus and large-scale investment in the industry.
One of its most significant applications is in supply chain transparency. Blockchain facilitates end-to-end visibility across the supply chain by capturing and analyzing every transaction, movement of goods, and relevant data on a decentralized and secure ledger. This level of transparency allows retailers and consumers to trace the origin of products, verify authenticity, and monitor compliance with ethical and sustainability standards.
The retail industry often falls victim to counterfeit products, so improved product authentication is critical. Unique product identifiers, recorded on the blockchain, can be easily verified by consumers, bolstering consumer trust, enhancing brand reputation, and protecting revenues.
Blockchain also revolutionizes payment systems in retail. It enables secure, tamper-resistant payment transactions, allowing retailers to leverage emerging payment methods through cryptocurrencies or stablecoins. These facilitate borderless and fast transactions, reducing processing fees and transaction times. Additionally, blockchain’s smart contracts automate payment processing and enforce contract terms, ensuring transparency and reducing the need for intermediaries.
Data protection is a significant concern in the retail industry, and blockchain’s decentralized nature and cryptographic protocols enhance data security and protect customer information. This gives consumers greater control over their data, deciding who can access it, thus fostering trust and customer loyalty.
However, retailers must address critical dependencies to realize these benefits, such as ensuring a robust technological foundation. Investment in scalable and secure blockchain platforms that can handle high transaction volumes without compromising efficiency or data integrity is crucial.
While some retailers have attempted to implement blockchain in singular areas, such as the supply chain, to unlock its full potential, industry-wide standards and collaboration are essential. Retailers, suppliers, logistics providers, and other stakeholders must agree on protocols, data formats, and interoperability to create a unified blockchain ecosystem. Data interoperability and integration wrapped into a regulatory and legal framework will be critical while working across borders, systems, suppliers, and each touch point.
Only then can blockchain live up to its potential to become a transformative force that redefines the retail landscape, improving customer experiences while optimizing operational efficiency.
Other Innovations For Enhancing Customer Experience
Along with AI and blockchain, a wealth of additional technologies and use cases are emerging as powerful ways to narrow the retail customer journey execution gap.
Extended Reality (XR): XR, which includes virtual reality (VR), augmented reality (AR), and mixed reality, is transforming the way customers interact with products. Customers can now visually overlay and interact with products, advancing experiences like virtual try-ons. This enhances CX, simplifies the supply chain, and supports retail ESG efforts, especially concerning returns.
Mobile Commerce and IoT: Smartphones have completely revolutionized shopping, enabling purchases anywhere, anytime. This transformation necessitates a robust underlying mobile strategy. With the Internet of Things (IoT) and smart appliances, stores can track inventory and conditions in real-time. Smart appliances not only simplify reorders but also enhance the data and personalization strategies that organizations can adopt.
5G Networks: The rapid growth of 5G networks is unlocking innovation across connected devices, allowing for seamless video streaming in stores and real-time XR experiences. The expectation for faster speeds and seamless integration across IoT devices is ever-increasing, and consumer expectations are higher than ever.
Automated Stores: With advanced sensors, computer vision, and secure payment processing, checkout-free stores like Amazon Go use IoT and connected devices with existing customer accounts to create hassle-free checkout lines. This is a complete leap of faith and re-writing the traditional retail playbook with a completely differentiated shopping experience. While automation is currently prioritized for enhancing the in-store customer experience, it’s highly likely to extend to logistics integration in the near future. Companies may develop tighter integration between warehouse automation, inventory management, and in-store automation, driving greater efficiency and creating a seamless shopping experience from warehouse to store.
Preparing For New Tech: The Foundation For Success
Deploying disruptive innovation presents an underlying challenge, especially for traditional retail giants operating on legacy, disjointed, and archaic technology infrastructures with complex data sources and disparate systems. Despite these challenges, retailers with legacy systems can still greatly benefit from digital capabilities with the right strategy.
This strategy involves adopting an incremental approach, focusing first on augmenting legacy systems versus replacing them. It’s about applying technology to improve targeted processes like pricing or inventory management rather than overhauling everything at once. The key is prioritizing data, carefully assessing which data from outdated systems are essential for modern tools, and migrating this data into an accessible data architecture.
A focus on cloud migration is also crucial, shifting legacy systems like transaction databases and data warehouses to the cloud. This enables stable access from anywhere, removing the physical and stability restrictions often faced by retailers. Additionally, developing and building APIs and interfaces that allow modern digital tools and AI to connect and share data symbiotically with legacy systems such as CRM or ERP software is essential.
Once these foundations are in place, retailers can pursue focused pilots, testing new capabilities on high-impact areas like customer recommendations or targeted marketing. This approach allows them to demonstrate benefits without overhauling legacy systems initially. However, retailers will likely need to replace aging systems to unlock their potential fully. A strategic roadmap is crucial for this transition.
Specifically, regarding AI, retailers face challenges with consumer perceptions and confidence as expectations for the technology are evolving rapidly. Responsible AI, designed around the consumer, will drive adoption and efficacy, so organizations must deploy transparent and ethical use of AI that respects privacy and combines the best human and artificial capabilities.
When AI works seamlessly in the background to enhance experiences, consumers are very receptive. However, poor AI can frustrate users, underscoring the need for a balanced, thoughtful approach to AI implementation in retail. Still, we believe organizations shouldn’t wait for the AI curve to mature—these complex models are still evolving and constantly adapting to the questions and data sets they are using, so any hesitation will only put you on the back foot.
From our viewpoint at Webhelp, there has never been a more opportune time to revolutionize the retail industry. With the right approach, AI, blockchain, and other new technologies can become the primary catalyst for eliminating the customer journey execution gap and preparing the industry for a transformative future.
