The Evolution of Retail: 6 Key Retail Technology Trends for 2023

What will the retail landscape look like in the future?

Will intelligent sensors know you as you go into the store? What about holographic floating product displays that alter as you walk down the aisles?

Perhaps an army of artificial intelligence (AI)-powered robots will serve you. Alternatively, a smart mirror equipped with augmented reality (AR) technology will display your preferred clothing. With a single swipe, you may change the color of the dress and see what footwear might go with it. And when you're done buying, you'll scan and pay instead of waiting in line at the checkout counters.

Perhaps you'll simply shop from home using virtual reality (VR) headsets, and drones will bring packages to your door. Many of these would have seemed unbelievable just a few years ago, but not any longer. These technologies exist and are used in a variety of retail establishments, both online and offline, today.

Retail technologies are changing everything from how people purchase to how the retail business runs.

What exactly is retail technology?

Retail technology, sometimes known as retail tech, refers to a collection of innovative digital technologies used by brick-and-mortar and online merchants to improve and streamline many parts of the shopping experience. It spans from simple point-of-sale (POS) systems in storefronts to advanced AI and automation technologies in retail organizations' front and back offices.

Let's look at the cutting-edge technologies that merchants should be aware of and invest in as they connect their online and offline operations.

  1. 6 retail technology trends to watch in 2023

    We asked six retail experts from around the world which technology they believe businesses should bet on as they merge their online and physical stores in the post-pandemic future. Here's what they had to say about it.

  1. 1. Artificial intelligence (AI), machine learning (ML), and generative AI

    AI and machine learning technology have permeated all industries, including retail. Indeed, the retail business has long served as a testing ground for AI technologies. The recommendation engine released by Amazon over two decades ago is the most popular usage of AI by a merchant. Customers are recommended comparable products by the ML algorithm based on their previous buying history, geography, and purchase patterns of other similar customers. Retailers must invest more in AI and related technologies in the future.

    “Retailers should bet on ML and AI technologies to help analyze data from multiple channels. ML algorithms can help retailers optimize assortment, innovation, pricing, inventory levels, and supply chain operations.”

    Brad LaRock

    Vice-President of Marketing, Datasembly

    According to Gabriella Bock, Rethink Retail's director of editorial relations, advanced analytics and AI enable retailers to obtain vital information into when, when, how, and why their customers choose (or do not choose) to purchase with them. AI's transformational powers have the potential to generate $400 billion to $800 billion in yearly revenue for the retail industry.

    Applications and use cases of artificial intelligence in retail

    Here are seven ways retail businesses can leverage artificial intelligence applications:

    • Demand planning and forecasting: Using AI-powered predictive analytics, merchants can examine past sales data, market trends, and external factors in real-time to precisely forecast future demand and manage inventory appropriately, reducing expenses associated with excess inventory or stockouts.
    • Personalized Marketing: AI-powered recommendation engines evaluate consumer data to provide personalized product recommendations, targeted marketing campaigns, and customized promotions, increasing user engagement.
    • AI-powered chatbots: Conversational AI-powered chatbots and virtual assistants provide instant customer support, answer enquiries, and handle customer service concerns, boosting response time and overall customer satisfaction.
    • Product catalog management: AI assists retailers in automating product tagging, creating high-quality text and image content for products, and assorting product catalogs for better search and discovery, hence boosting catalog accuracy.
    • In-store operations: AI-powered smart shelves and video analytics in stores provide insights into customer behavior and assist merchants with queue management, stock restocking, product positioning, and store layout optimization.
    • Dynamic price optimization: AI algorithms assess real-time data on market conditions, rival prices, and customer demand to dynamically modify pricing tactics, assisting retailers in maximizing revenue and profit margins.

    Artificial intelligence is also at the heart of next-generation retail systems. For example, computer vision, a branch of artificial intelligence, lies at the heart of facial recognition, visual search, and driverless delivery vehicles. Conversational AI chatbots and voice assistants are built on large language models.

    Another type of AI technology that shops should consider is generative AI tools, which have been made possible by rapid advancements in deep learning models such as ChatGPT.

    What exactly is generative AI?

    Generative AI is a sort of AI that generates content such as text, photos, sounds, codes, and synthetic data in response to inquiries asked in descriptive terms in human natural language.

    Shradha R, head of product marketing at, an AI solution provider for retailers, elaborated on generative AI use cases for retailers, citing fashion businesses needing to generate photos of models with various body and complexion types as an example. "With this type of generative AI, brands don't have to take photos of models wearing their products and can completely automate their processes," she said.

    Levi Strauss & Co. is already on board with this. It intends to deploy AI-generated models to broaden the range of bodies available on its e-commerce channels. Many more retailers are also getting on board with generative AI.

    Shopify Magic, which is based on generative AI technology, was recently released. The program may generate product descriptions depending on the keywords that businesses want to appear in search results. Amazon intends to include ChatGPT-style product search into their web shop. The possibilities are infinite.

    Given the strong momentum, retailers should try out AI tools to prevent falling behind.

  1. 2. Automation

    Another area where merchants must increase their spending in 2023 is automation, which is the use of technology to execute repetitive operations with minimal human participation. According to Gabriella Bock, the continuous labor shortages have fueled the need for automation in every part of the retail business, from warehousing, inventory management, and order fulfillment to consumer-facing features like contactless payments.

    According to McKinsey, existing technology can automate 52% of all retail processes. It lowers human errors, improves service quality and speed, increases staff productivity, and saves money. For merchants facing margin difficulties, automation can deliver 300 to 500 basis points of incremental margin. In the hypercompetitive retail market, automation is no longer an option but a need.

    Recent advances in AI, ML, and robotics are ushering in a new era of intelligent automation in which machines can make data-driven decisions on their own.

    For example, AI-powered marketing automation software may evaluate past consumer data and personalize promotions across several channels, such as SMS, emails, and social network ads.

    Examples of Retail Automation

    Automation is used in retail, supply chains, and corporate activities.

    It includes the following:

    Retail automation

    • Self-service kiosks and self-checkout terminals.
    • Electronic shelf labels that display product information and automatically adjust prices.
    • Cleaning robots for facility management.
    • Inventory management robots that scan shelves.

    Warehouse and fulfillment center automation

    • Product loading and unloading systems that operate automatically.
    • Scanners for product identification.
    • AGVs (automated-guided vehicles) are used to transfer products between warehouses and fulfillment centers.
    • ASRS stands for automated storage and retrieval systems.
    • Inventory counting and management using warehouse drones and robots.

    Other types of retail automation

    • RPA tools for duties like as answering frequent customer enquiries, creating invoices, inventory management, orders and returns management, product catalog management, and so on.
    • Marketing and sales automation software.
  1. 3. AR (augmented reality)

    For retailers, augmented reality is the next big thing. It has been popular in the retail industry for quite some time. However, since the pandemic, AR technology has grown in importance as shoppers attempt to bridge the gap between online and real buying.

    “As consumer expectations grow, demands have shifted from a customized to a more immersive shopping experience. (They) seek more virtual experiences... AR plays a pivotal role in making this happen.”

    Subhransu Sahu

    Market Research Analyst, G2

    Augmented reality creates interactive experiences by combining real-world objects with computer-generated digital content. Assume you're looking for sneakers on your smartphone. You choose the one you like. Simply position the camera at your feet to view how the shoes look on your feet.

    One of the most effective AR use cases has been virtual product testing. With virtual try-on apps and virtual fitting software, fashion and beauty businesses have been early adopters of AR technology.

    60% of millennials are willing to shop or spend more money at a retailer that provides virtual fitting rooms or virtual staging. Source: TCS

    L'Oreal, for example, provides AR apps that allow customers to put on makeup without touching their faces. H&M is experimenting with smart mirrors on store floors for virtual try-ons and styling. Source:L’Oreal

    In retail, how is augmented reality (AR) used?

    Aside from virtual try-on, G2's market research researcher Subhransu Sahu cites the following AR retail uses.

    • Product visualization: AR allows shoppers to see products in their surroundings. IKEA, for example, has an AR purchasing app that allows customers to see how new furniture would look in their home.
    • Interactive in-store experiences: Retailers such as Adidas have integrated interactive AR exhibits to their stores to provide memorable and novel experiences for their customers.
    • In-store navigation: AR solutions can help shoppers find what they need faster in huge department stores, malls, and warehouses, in addition to boosting in-store shopping. Lowe's, for example, experimented with an AR app to aid in-store navigation.
    • Marketing campaigns: Augmented reality experiences increase brand engagement and serve as an organic marketing tool. Shoppers using AR cosmetic filters on Snapchat, for example, share their experiences with their social circles, thereby increasing brand visibility and engagement.

    The data demonstrate that AR has some advantages. With an AR experience, 56% of shoppers are more confidence in the quality of a product. Most significantly, clients who utilize AR while buying spend more time browsing and are more likely to buy a product than those who do not. Returns are also less likely as a result of AR experiences.

    However, according to Sahu, organizations have yet to deliberately incorporate AR tech capabilities. "Traffic to these (AR) categories (on G2) has been erratic, with many peaks and valleys over the last year." However, category traffic for Virtual Fitting Software has increased by 34%, indicating that demand from businesses looking for AR-based virtual fitting solutions is increasing," he said.

    Sahu further observes that the majority of traffic comes from merchants and e-commerce companies looking for such solutions for their online apparel divisions. However, he believes there is still opportunity for greater active engagement of retail businesses in AR categories.

  1. 4. RFID, QR codes, and other smart shop technology are examples of this.

    Adopting smart store technologies is critical for traditional merchants trying to improve their omnichannel experience. DeAnn Campbell, chief strategy officer at Hoobil8, stated that inventory management tools, such as radio-frequency identification (RFID) and QR codes, should be a key focus for any firm.

    RFID and QR codes are technologies that use tags and codes to help identify and track an item. It is useful for real-time inventory checking.

    “(These) tools are also important because they factor into other critical retailer needs like theft prevention and enabling customer experience enhancements such as AR, product education and endless aisle viewing...”

    DeAnn Campbell

    Head of Retail Strategy & Insights, AAG Consulting

    River Island, for example, employs RFID tags on its merchandise. Customers can scan the tags in fitting rooms to get product information such as size and available colors on a smart screen. From the fitting room, they can explore and request comparable or related clothing from service professionals with a single click.

    Retailers must install self-checkout solutions such as mobile-POS (mPOS) because more than 70% of Gen Z and millennials are eager to purchase or spend more at retailers that offer contactless checkout. These provide a consistent experience across all customer touchpoints, including online, in-store, mobile, and social media.

    Cameras and sensors that provide a 360-degree view of customers are other smart store technology that businesses should examine, according to Campbell. They are a valuable tool for analyzing consumer journeys in-store when combined with RFID and advanced video analytics. They can provide a complete view of the retail area, such as how visitors walk through a store over time, which sections are investigated or not, and which sections require additional employees.

    Cameras and sensors are also required for other emerging smart store technologies, such as smart carts for automatic invoicing and smart shelves for inventory tracking.

    Amazon, for example, has "just walk out" technology that is powered by sensors, cameras, and artificial intelligence. Customers may simply grab the item they require and walk away as cameras and sensors follow the item, bill it, and detect payment via the shopper's digital wallet.

  1. 5. Mobile technologies

    Because smartphones are so prevalent, mobile technologies such as shopping apps, mobile payment systems, and tailored marketing via phones are unavoidable in retail. While shopping in-store, two-thirds of shoppers use their phones to hunt for more product information. Furthermore, mobile commerce, also known as m-commerce, is expected to account for more than 10% of all retail transactions in the United States by 2025.

    150 is the average number of times people check their phones every day. Source: The Economic Times

    While the pandemic has expedited its acceptance, Tim Koopmans, CEO and creator of Retail Rush, believes that mobile technologies have enormous possibilities in the future for improving consumer experiences and streamlining shop operations. For example, he emphasized the location-based promotions that shops may give through smartphone apps and push notifications.

    “Leveraging GPS technology in mobile phones, (retailers) can send push notifications, alerts, and personalized offers to customers when they are in or near a retail store.;

    Tim Koopmans

    Founder & CEO, Retail Rush

    It assists stores in promoting unique events and providing relevant information to customers, hence increasing foot traffic. Koopmans also emphasized the need of stores providing employees with handheld digital devices.

    Giving retail employees mobile devices with payment capabilities, such as tablets or smartphones, allows them to perform purchases anywhere within the physical store, he says.

    Smartphones can also help warehouse workers with inventory management, while front-end staff can utilize them to engage with consumers more quickly. Using the devices, they may check product availability, locate products in-store, find bargains for customers, and find upselling opportunities in real-time. This minimizes stress, makes their job easier, and gives employees more time to focus on high-impact assignments.

    Mobile technologies, when combined with RFID, QR codes, and other in-store technology, aid in faster checkout, online order fulfillment, and better customer service.

  1. 6. Datafication

    Finally, in order to properly exploit technology, retailers must use strong retail data analytics and insights platforms. Issues such as siloed data, obsolete infrastructure, and the inability to share and receive data from multiple sources frequently prevent businesses from effectively embracing analytics today.

    “It's becoming increasingly important for online and offline retailers to buy systems that bring data together…to provide a unified view into a given channel, workflow, and business.”

    Shradha R

    Head of Product Marketing,

    Integrating granular store-level data obtained from online and physical locations provides retailers with unprecedented insight, according to Datasembly's Brad LaRock. These information can be leveraged to increase sales through personalisation, product management, price optimization, and optimizing store and warehouse operations.

    Sources of data for retail analytics

    Here are some places where retailers can get information about their customers, inventories, and other company data:

    • Websites
    • Mobile apps
    • Social media
    • Marketing platforms
    • Point-of-sale systems/Self-checkout systems
    • Enterprise resource planning (ERP) software
    • Customer relationship management (CRM) software
    • Inventory management systems
    • In-store sensors, cameras, and trackers
    • Supply chain management software
    • RFIDs and QR Codes
    • Syndicated third-party data

    While prominent merchants such as Walmart and Amazon have implemented advanced analytics, some continue to rely on simple techniques, potentially missing out on a windfall. Retail organizations must immediately assess where they stand and what procedures may be improved through better analytics of existing data.

    Retailers can utilize cloud data integration solutions and e-commerce data integration tools to aggregate data from many channels and then employ analytics platforms driven by AI and ML to gain actionable insights.

    Data connectivity and analytics provide a 360-degree view of customer shopping activity as well as inventory visibility. "Having this shopper data allows retailers to quickly adjust their product mix, marketing, or merchandise display to boost sales, reduce wasted expenditures, and grow customer and employee engagement-all of which are critical aspects of improving bottom-line revenue," Campbell added.

  1. How to Begin Adoption of Retail Technology

    Given that shops will face more difficult times in the coming months due to inflation, labor shortages, and competitive pressure, it is critical for retailers to invest in technology in order to reap its benefits and avoid falling behind.

    However, implementing retail technology can be difficult. The technology is brand new. The implementation process is fraught with practical challenges, ranging from a risk-averse culture to a lack of information. However, the situation is not hopeless. Examine what experts suggest for balancing the demand for innovation with the practical challenges of integrating new technology.

  1. Take stock and make plans.

    "Define the gap between your company's current capabilities and where you should ideally be to meet sales and valuation goals," Campbell advised. Examine your retail tech stack to determine what technology is required to deliver a unique consumer experience. Do you have the time, money, and skilled personnel to implement new technology?

    Understanding this is essential for setting realistic goals for tech adoption. Create a road map that divides the time and money required into planned milestones. After the initial assessment, the grunt labor begins.

  1. Put yourself in the mentality of transformation.

    The greatest impediment to adopting new technology is often an organization's resistance to change. Most businesses are risk-averse, and implementing new technology such as automation and AI can be intimidating. It alters procedures and practices that have been in place for years.

    To address this, Shradha emphasized the importance of merchants adopting transformational mindsets and change management methods. Retailers must have digitally knowledgeable leaders who are enthusiastic about technology adoption and the subsequent transformation. Internally, they must push the relevance of the new technology and demonstrate how things function differently.

    Furthermore, Brad LaRock and Koopmans emphasized the importance of extensive employee training on emerging technology. Formally training personnel before using technology is extremely important, as is creating staff confidence and the essential skills to use technology with ease. It also overcomes internal barriers to technology adoption.

  1. Run Pilots

    Experts stressed the importance of making targeted investments to run pilots rather than widespread adoption in the first instance. For example, before extending the use of drones for inventory management, IKEA executed various pilots at its warehouses with a variety of partners. Such pilots aid in assessing the real-world impact of technology in a controlled environment while also collecting valuable input from staff and customers.

    Retailers can also gain insights into the technology's potential benefits, cost-effectiveness, scalability, and general viability, allowing for more informed decision-making for wider adoption.

  1. Assess the impact

    Shradha also stressed the importance of key performance indicators (KPIs) and return on investment (ROI) for new technology projects.

    “ROI is the name of the game. Every application has to show concrete ROI in terms of cost saving, revenue growth, and faster time to market and operational efficiency.”

    Shradha R

    Head of Product Marketing,

    Retailers may measure and assess the impact of their initiatives by creating KPIs and setting quantifiable goals from the start. Based on their assessments, they can make informed and data-driven judgments about additional optimization or future changes.

    Finally, and most critically, merchants must recognize that technology is not a one-size-fits-all solution for every retailer. "Adopting the next shiny new toy for the sake of being tech-forward is not recommended—what works well for one retailer may not make sense for another and may even drive loyal customers away," Gabriella Bock highlighted. Retailers should prioritize technological innovation that alleviates customer pain points.

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