Today many ambitious startups are infiltrating the quiet world of retail as digital invaders and changing shopping habits.
From automated supply chain to seamless personalized shopping: retail is in the midst of digital upheaval.
In this article, we will look at the technological trends in retail, challenges, and possible solutions to enhance your business.
We all know that retail is the sale of goods and services to the end customer. However, if we generalize this term, retail is not only about selling goods in outlets but about the trading arrangement.
If we take a closer look at industry classification, there are at least 4 main industries in retail:
Distributors – the entire logistics process and delivery of a product or service from the manufacturer to the end consumer
Internet and direct marketing – different ways of selling goods and services online
Multiline retail – it includes supermarkets, hypermarkets, that is, stores that offer a huge number of diverse products
Automotive retail – all stores of highly specialized products: sales of cars, clothes, food, etc.
Why Is Digital Transformation In Retail Important?
Companies are realizing that close customer relationships and good customer service are indispensable keys to success.
To stay afloat, retailers are digitizing every sector of their business, from convenient shopping, cost reduction, and personalized shopping, to improving self-service.
Bonus programs are being introduced to increase customer loyalty, and additional features such as mobile coupons, custom content integration, social media sharing, and Click & Collect as the link between the online store and the branch complete the offering.
With a sufficiently granular database, targeted services can also be implemented in CRM: from active and geolocation push notifications for events and campaigns to appointments and personal advisor buttons for premium customers.
Mobile devices such as smartphones, tablets, and wearable devices offer many new opportunities to increase productivity through digitization, especially in branch management. Sales managers can be completely free of paper forms, tablets, fax machines, and complex computer technology thanks to integrated task management solutions.
Scenarios of digitization of internal processes in retail are diverse and cover the entire sequence of operations from logistics and delivery to the call at the cash desk.
Numerous studies show that prospects of retail industry growth are tremendous. Deloitte analysis shows that online spending in the retail industry grows 10% a year. This rate is keeping up such pace up to date.
This number can tell us that it is not only about the growth of the retail industry but also about online selling in particular.
The pandemic and restrictions have only had a positive effect on this segment.
Retail Sectors And Trends For Investments
As for 2021, there are four major areas for investment in retail industry:
The digital transformation includes automation of many processes, IT infrastructure of stores and retailers: execution of orders, entering data about customers, work related to the financial department. In more advanced retailers, it could be shelf automation, delivery robotization. A good example could be the automated sale of medicines in a pharmacy. All these things increase the profitability of the stores
Supply chain and inventory management: logistics processes, inventory management, warehousing.
This area allows offering various products for automation of warehousing, calculation of storage space, and more rational placement of goods. This also includes logistics from the manufacturer to your store.
It’s worth noting that this is one of the hottest areas for investments today. By 2025 the warehouse automation market size will grow to a whopping mark of $1.5 billion in the Middle East alone, not to mention other lucrative regions like Europe and the US.
Back-office automation: includes the part of the store that doesn’t interact with customers. This may include data entry and analysis, research, claims processing, accounting, human resources, IT support. So this is a sector where you can automate many processes that many retailers still do manually or with the help of Google Sheets.
Customer experience: This may include both offline outlets and interaction of a customer with product, and online stores (web pages, apps, personalized design and content, VR/AR solutions, VR mirrors, AR fitting rooms).
To sum up, here are the best technological retail trends of 2021 you should keep in mind:
• Inventory management systems based on artificial intelligence
• E-commerce marketplaces
• Data analytics for cost and security management
• Agile marketing strategies
• Collaborative analytics
• AI-enabled transactions
• Purchasing and payment applications
• Robotic delivery
• Food delivery
• Payment card cybersecurity software
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Main Pains Of Retail Industry And Solutions
Retail sub industry
1. Inability to meet consumer demand due to possible lockdowns in production regions
Solution: development of demand forecasting based on real-time data, taking into account unforeseen and crises, production capacity allocation in accordance with the data
2. Loss of customers due to declining brand loyalty because of a large number of small retailers.
Solution: creating a unique shopping experience, implementing loyalty programs by using data to predict the needs of customers for products, prices, and services
3. Loss of customers due to the difficulty of finding products in supermarkets. According to the retailtouchpoints, 67% of customers leave without buying anything because they can’t find the goods.
Solution: creating an app with product location.
Distributors sub industry
1. Inability to track the activity of each outlet in the network. With several outlets, it’s very difficult to evaluate key performance indicators, which complicates store management
Solution: Development of an ERP to track each outlet, analyze, evaluate distributors’ performance, and manage the sales team.
2. Ineffective merchandise flow management, a lot of write-offs, losses, a large percentage of low-turnover merchandise, which freezes money. Difficulty in collecting data from all distribution channels, inaccuracy of metrics.
Solution: WMS development for document flow automation, which will allow analyzing and planning sales and coordinating turnover.
3. Financial discipline of clients and late payments
Solution: Development of Revenue management system that will monitor and analyze accounts receivable. This includes ranking counterparties, creating stop lists, setting up communication between counterparties, setting up an alert system, creating reports on debts.
4. Loss of customer loyalty and trust due to poor security. This pain has become very relevant in the background of Covid. Accordingly, the end customer and the business need to know that the products are safe, and in case of anything, they can safely return these products.
Solution: Integration of a non-contact return option.
Internet & Direct marketing retail
When it comes to digitalization and Internet marketing pains, companies resort to different solutions. The main difficulties and pains and their solutions:
1. Loss of customers because of lack of personalization, lack of statistics on potential customers and leads
Solution: creating an instrument for gathering such information and its analytics
2. limited opportunities for business growth due to the technical complexity of scaling
Solution: Implementation of hybrid IT technologies, use of cloud services
3. Loss of customer loyalty and trust because of untimely responses to customer requests
Solution: The development of chatbots, speech recognition technologies, for instant response to the client.
4. Difficulty of operational control due to ineffective reporting
Solution: the creation of an automated reporting system.
The main pains of this sub-industry are lack of personalization, time of purchase, and loss of relevance of traditional sales channels.
The main solutions are online site integration for all sales channels, CRM systems. For better personalization, virtual halls with virtual reality integration are being created where the customer can get acquainted with the goods and visually compare them or test them, as well as the development of contractors for specific products (cars, jewelry, watches, clothes, etc.).
The digital breakthrough in the retail industry is profound and is shaking the industry to its very foundations. In the future, companies will succeed if they realize that these digital solutions are a necessary step for businesses to thrive and compete with the big brands.
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