'Tech'ing up Retail
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Peter Liddell, Partner and Asia-Pacific Head of Supply Chain, KPMG Australia, observed that by 2020, retailers across the world will have shifted focus away from ‘on-shelf availability’ to ‘on-demand availability’, aiming to provide 100 per cent product availability and cater to orders across formats anytime and anywhere, using a low-cost approach for distribution. With that, he succinctly stated the way future retailers need to operate, and some of the leading retailers have already started the process of transformation, gradually.
For the last 5 years, the top 250 retailers across the globe have registered a CAGR of 4.8per cent, with an estimated aggregate retail revenue pegged at USD 4.4 trillion. These companies on an average, have operations spread across 10 countries. With an e-commerce boom, the retail industry has experienced considerably more demand. However, more competition, increasingly homogeneous products and services and greater access to product variants have meant that the shopper is clearly in the driver’s seat. Also, the retailer needs to constantly shift attention and resources between offline and online identities, thereby dealing with the massive ‘omni-channel’ conundrum. Considering these scenarios, it is important to analyze how new technology is expected to revolutionize the retail industry completely, augmenting every step of the process while transforming the complete picture.
Transforming the Retail Supply Chain
As mentioned by Peter Liddell, the immediacy of order delivery is something that will define the retail of the future. Many of the retail powerhouses today are working on revamping their delivery mechanisms to ensure same-day, superfast deliveries. However, they still cannot compete with the immediacy offered by offline stores. The continued investment in physical stores by e-commerce giants such as Amazon who are primarily responsible for their apparent demise shows that offline retail will always form an integral part of the global retail fabric.
But, how do retailers walk the tight-rope then? This is where technology comes in. By combining the convenience of e-commerce with the instantaneous nature of service and personal satisfaction offered by offline stores, technology can herald the development of a ‘Retail 3.0.’ It will go far beyond omnichannel, which could not devise a strategy that allows offline and online identities to complement each other.
By employing predictive analytics to accurately forecast demand and maintain sufficient inventory levels, retailers can optimize the retail supply chain and significantly reduce wastages. Modern technology can serve as the perfect bridge between the market and the retailer, by allowing for a demand-determined supply framework that works ahead of time, resulting in seamless operations.
Transforming Your Store Through Virtual Reality
Recently, cosmetic brand Sephora introduced an augmented reality mirror that allows buyers to see how make-up accessories would look on their face through a virtual app. This has led to substantial sales growth and convenience for customers, and the brand has established its identity as a future-ready cosmetic giant.
New developments like mobile payments, interactive kiosks, RFID tagged products, BLE technology and smart shopping carts have transformed modern-day retail stores. So much so, that even online retail giants such as Amazon are using these technologies to provide an augmented experience.
The smartphone-equipped customer has become an easily approachable customer with virtual tools. Through these devices, customers can be informed about the latest products and offers, new inventory etc. and the process of payments can be made faster. Furthermore, innovations like interactive kiosks and virtual mirrors could also refuel the desire of customers to shop in a physical store. Retailers should also look for ways to leverage technology to enhance the in-store experience.
Revolutionizing Customer Outreach
Probably, the biggest transformation has happened in the customer outreach department on the back of predictive analytics technology and big data. The buying process begins right at the home of the customer, where he/she can access all the information needed to optimize their shopping journey. All throughout this journey, the customer leaves bits and pieces of behavioural information which the retailer can now piece together with the help of cutting-edge technology. These insights are then used to encourage customers to spend more time at the shops.
Several technology trends over the past five years have considerably altered the retail environment. These days, each and every customer is a digital customer, with fast-rising expectations regarding quality and seamless shopping experience. They are taking more control of their shopping experience. Retailers also need to up their game to appeal to the tech-savvy buyers of today. But first, they have to be honest with themselves regarding their choice of strategies, think hard about their strategies and prepare a blueprint which could be implemented strongly by the spread of technologies. IT investment in retail is essential not just for the success, but for the survival of the industry as well. The future offers new systems with emphasis placed firmly on continuous improvements in effectiveness, efficiency and profitability.