The pace of technology development and consumer adoption is accelerating at a breathtaking speed, and retailers must find ways to stay ahead.
Generative AI took the world by storm last year, with ChatGPT signing up a million users in just five days. AI was recently selected by the Collins Dictionary as the word of the year for 2023. Businesses are increasingly experimenting with this exciting new technology to explore its potential, as the pace of change steps up a gear.
For leading retailers, technology has become a battleground to unlocking growth potential, with investment to enhance customer experience, speed up supply chains, unlock data-driven opportunities and improve operational efficiency.
The Retail Horizon 2024 Technology report, the second in our Retail Horizon series, explores the technology landscape to examine the opportunities for retail.
Subscribers can read the full Retail Horizon 2024 Technology report today.
Key trends for 2024
- Language processing using AI
- Visual data processing in AI
- Intelligent supply chains
- Personalised experiences
- Investment for efficiency and growth
Language processing using AI for deeper understanding of customers
The integration of natural language processing AI can be used to enhance customer experience with 24/7 customer support available through chat interactions.
Crucially, for business development, it also enables retailers to extract valuable insights by analysing large data sets including customer reviews and feedback, social media mentions, and discussions.
This analysis helps retailers measure customer sentiment and enables real-time trend spotting, leading to data-driven decisions and innovation.
Retailers can also leverage AI tools to analyse competitors, markets and refine strategies for competitiveness.
Case study: Iconic London
In July, cosmetics brand Iconic London trialled an AI-powered negotiator bot called Nibble on its website, allowing consumers to negotiate prices for the items in their baskets.
While the bot was discreetly authorised to offer discounts of up to 15%, most customers who engaged accepted discounts in single digits.
According to the retailer, average order values increased by 50% during the trial period.
Visual data processing in AI for better productivity
Computer vision has the potential to be applied across the entire retail value chain, from managing manufacturing processes to enhancing the customer experience.
It can detect defects during manufacturing and it helps retailers identify and prevent substandard products, ultimately improving quality control and reducing the number of recalls.
Footfall tracking and sales analysis can be leveraged to forecast demand, optimise store layouts and assist in scheduling staff shifts.
The technology is used to power automated checkout-free stores, improving the overall shopping experience by reducing wait times and offering greater convenience. It also captures unusual customer behaviour to reduce shrinkage and increase store security.
Furthermore, visual search technology can empower customers to find products using images, enhancing product discovery, offering recommendations for similar products and driving potential sales.
Case study: Amazon
In May, Amazon introduced AI imaging stations in two fulfilment centres in the US to screen orders and speed up picking and packing.
Usually the responsibility of Amazon’s warehouse workers, imaging stations can detect damaged items efficiently and remove these to ensure they do not reach the customer.
The imaging stations play a critical role in automating fulfilment operations and enhancing operational efficiency.
Intelligent supply chains bring many advantages
With every stage traceable in a transparent supply chain, retailers can detect issues, identify bottlenecks and develop solutions to mitigate future potential risks. This leads to better quality control and inventory management.
It results in less waste and fewer losses, helping to identify areas where waste can be further reduced and carbon footprints lowered.
Moreover, a transparent supply chain enables the retailer to build trust and loyalty with its customers by offering information to help them make informed choices in areas such as provenance and sustainability.
Case study: Nobody’s Child
In September, Nobody’s Child launched digital product passports (DPPs) for its Fearne Cotton x Happy Place collection, to encourage more sustainable and informed consumer choices.
The DPP stores comprehensive product lifecycle data on the blockchain. Customers can access this data by scanning a QR code or a barcode on the care label.
It lists a product’s sustainability, environmental impact, recyclability, manufacturing process and sourcing information, providing authentication for the product.
The case for retail investment in technology is clear – from deeper understanding of customers to new product development, smarter supply chains and greater operational efficiency.
Retail Horizon 2024 is Retail Week’s exclusive strategic toolkit for subscribers.
Across four in-depth reports, Retail Week research director Lisa Byfield-Green and our team of analysts explore the most significant trends that will shape the sector in the year ahead across consumer, technology, sustainability, and industry, economy and policy.
The Technology report is part two, following the Consumer report earlier this month.
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