Over the past few years, digitization has become a strongly prominent and dynamic topic within the retail industry. This trend will continue over the coming years across all segments, from fashion to food, drugstores, and DIY.
This dynamic development has its origins in two innovation drivers that are working in favor of digitization. Firstly, the maturity level attained by certain technologies generates a technology push that provides the basis for higher efficiency and innovative business models. Secondly, there is an increasing market pull that has its origin in latent, unsatisfied customer needs and the need within the industry to reduce costs.
The connected retail store
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- The high demands of digitization have brought about an extensive use of sensors. The past five years have seen a tremendous decline in the cost of sensors. At the same time, sensor technology has been continuously improving, so that retailers today have powerful low-cost sensors at their disposal.
- Over the past few years, the technology has also been getting easier to use. This means that even users who do not have a programming background can handle the technology.
- The availability of smartphones in the store allows staff to maintain devices based on notifications they receive. This releases them from time-intensive regular manual inspections.
- The availability of cloud technology permits a far more flexible and more modular use of new technologies than in the past.
- While cloud technology is beneficial in many cases, there are certain kinds of store data that retailers want to process locally. With the emergence of edge computing technologies, retailers can process data locally within a certain store and only send the KPIs to the cloud for storage. Particularly when it comes to real-time notifications, quick decisions on the device level are necessary, and latency needs to be eliminated.
- The past few years have brought about many enhancements in analytics algorithms. These improvements make it possible to handle even huge amounts of data and derive improvement measures from it.
- When it comes to shoppers’ behavior, online retailers have a big advantage over brick-and-mortar retailers: they know a lot about their customers’ preferences due to cookies. In order to build up this knowledge as well, today’s offline retailers can use Bluetooth technology, beacons, or cameras to learn about their customer’s journey through the store.
- Not only due to competition from online retailers, but also in keeping with the prevailing zeitgeist, customers have come to expect a higher level of service. Technology is needed to cover this demand.
- In general, there is a high demand to digitize physical devices on the store floor. Retailers want to be able to read the status of their devices in order to optimize, for instance, energy consumption and device functionalities, and to improve their customers’ experience.
- The retail industry has traditionally had a need to lower costs. Automation of manual processes on the store floor and beyond reduces manual efforts and frees up time for a higher service level.
- Store managers are investing in ways of increasing their customers’ loyalty and evaluating models to increase their customers’ comfort.
- Customers often experience the processes within retail stores as inefficient. In order to change this, retailers are investing in operational excellence.
- The mindset within retail companies is changing. Retailers are assessing digital use cases and business models in order to keep track with market demand.