Today innovative disruption has impacted almost every aspect of business. A new relationship between companies and customers is taking center stage, which is driven by a new wave of digital transformation.
Retail industry has been undergoing a radical shift over the past two decades. Retailers are using digital technologies to create game-changing business innovations that are changing the existing dynamics and developing new ones. Consumers today are hooked on the real-time, personalized world of digital landscape, while retailers have to reach them in new and exciting ways. Thus, “digital transformation is all about reimagining how to bring people, data, and processes together, create value for customers, and maintain a competitive advantage”.
While every sector is fundamentally impacted by technology in many ways, but retail industry has been affected the most by the underswell of digital transformation. Retailers can leverage huge amounts of data via machine learning and artificial intelligence to open new opportunities.
They are more than able to turn data and insight into intelligent action, thereby making every human interaction impactful and driving every business outcomes. At its core, digital transformation in retail is basically about moving from obsolete product-centric model to one that is customer-centric. Since focus has been shifted to customer experience, retailers today are using innovative ways to reach out to their customers.
Today, mobile devices and apps have replaced the traditional elements of shopping experience, demanding store environments to evolve. More and more customers are moving to online platforms, while retailers are trying to cater to their needs by redefining delivery models and enriching shopping experiences across all touch-points and channels.
Tools for Digital Transformation in Retail
Retailers are successfully making data-driven decisions with the help of machine learning. Customer shopping habits can be tracked through data sources such as CRM databases, loyalty programs, social media activity, purchase history, consumer demand, and market trends. According to a recent report carried out by McKinsey, U.S. retailers who incorporated data and analytics registered 19% increase in operating margin over the span of last five years. Unlike the traditional programming, machine learning allows an engineer to teach computer what to do.
When provided with new data, these computer programs learn, change, and develop to make more accurate decisions. Machine learning helps identify human actions of both shoppers and employees, including crouching, bending, reaching overhead. Also, machine vision can change the inventory systems of the future by generating accurate and real-time estimates of all products in a given store.
Predictive analytics is being used by retail enterprises to get through to the target audience, make connections with them and possibly convert them. Predictive analytics can actually predict the behavior of customers, tell what kind of products will become successful in a particular season and planning strategies for communication. In a field where companies succeed by effectively uncovering what customers will need next, predictive analytics can make a big difference between a strong revenue stream and a plunging sales pool. It’s not just bigger players are benefiting through the use of big data. Even smaller retailers can combine customer insights with predictive analytics to reveal new potential sales, display emerging trends, or even give an idea of new products prospective customers may want. Retailers can now focus their efforts to highlight areas of high demand, quickly pick up on emerging sales trends, and optimize delivery.
Artificial intelligence (AI)
Artificial intelligence is one of the most effective ways to deliver high quality customer service that shoppers now expect. According to a recent report produced by Tractica, global revenue from AI will see a huge increase from $643.7 million in 2016 to $36.8 billion by the year 2025. With the help of AI, retail companies could significantly reduce the costs of labor and make their shopping processes far more efficient. AI-based algorithms can be used retailers to tailor their marketing based on customers’ previous purchases, search habits, clicks, age, gender, and other variables. AI-driven chatbots, for example, can act as an online (or smartphone) store associate, instantly responding to customer queries through texts or messages. This allows retail companies to make more sales online and also provide more items on their online stores. By integrating AI in marketing, retailers will be able to take big data sets and use them to their advantage. Retail companies will create far more targeted ads that could differ from store to store.
Smart retail solution with beacon technology
Digital transformation has allowed retail companies to utilize the location-based proximity marketing solution called “beacon technology”. Beacons are a low-cost wireless network devices, which retailers can attach anywhere in a retail store to send out personalized content to consumers. A beacon emits a low energy Bluetooth signal that can be processed using a beacon-enabled app. It gives retailers an opportunity to provide contextually relevant ads to engage customers. The beacon technology also provides valuable data about the customer shopping habits, while rewarding customers for location-based actions. Beacons can easily figure out interested customers, loyal consumers, and prospective customers. Beacons solutions will act as a bridge between the online and offline shopping by capturing and sending consumer data to retailers. Thus, beacon analytics will further retailers in creating better business insights, improving the store layouts, and maintaining service standards and operations.
Internet of Things (IoT)
The Internet of Things is a network of interconnected devices embedded with sensors. IoT allows these devices to communicate, analyze and share data about the physical world around us via networks and cloud-based software platforms. With numerous applications, IoT helps increase customer loyalty, boost sales, offer a personalized experience, and improvement inventory management. Today, there is an increasing use of adoption of IoT in the retail sector. According to a recent report provided by Global Market Insights, IoT in the retail market is predicted to reach over $30 billion by 2024. For example, smart shelf system is a form of IoT device that has already started working its way into the retail industry. It has three elements: an RFID (Radio-frequency identification) tag, an RFID reader, and an antenna. Retailers can now easily monitor inventory and transmit data about items movements and whereabouts to an IoT platform. It will help companies get valuable information about customer needs and preferences.
Digital transformation has completely changed the retail landscape. With the advancements in technology and better customer insights playing a key role, retail industry will witness a sea change in terms of customer behavior, high-quality service, inventory management, and operational costs. These technologies can help businesses gather, process and analyze data to glean insights, which in turn can help them understand trends and customer sentiments better.