Trends & Technologies Shaping the Future of Retail

Retail is an industry accustomed to reinvention. Modern history has seen the evolution of retail from independent specialty shops to one-stop-shopping in department stores, malls, and big-box chain stores. In the pursuit of sourcing cheaper and raising margins, supply chains have gone from local to global while the dot-com boom of the 90s signaled the birth of e-commerce as we know it with the founding of Amazon and eBay.

Perhaps never before, though, has the retail industry been so reliant on technology and innovation as the tools to navigate yet a new phase of reinvention—one shaped by a set of forces that have been building over the past several years, and have now been accelerated and amplified as a result of the pandemic.

In this blog, we’ll present some of the forces shaping the future of the retail industry, along with key trends, game-changing technologies, and practical industry applications, highlighting how organizations are finding and leveraging innovative opportunities.

Forces shaping the future of the retail industry

1. Accelerated disruption

The threat to conventional brick-and-mortar retail has been building for some years due to the disruptive nature of e-commerce. However, the pandemic has accelerated the permanent digital reform of the retail landscape and forced retailers to reimagine the true merit and potential of the shopfront. As a result, customer experiences (CX) that are immersive, low-touch, and digitally integrated with e-commerce have emerged as the ultimate priority. These initiatives will consolidate technologies such as automation, robotics, AI, and IoT to elevate CX.

Related trends that speak to consumers’ desire for enhanced CX include Transformation Economy and Hybrid Engagement. Both seek to provide value above and beyond conventional one-way and transactional brand engagement. Going forward, the survival and success of brick and mortar will hinge on retailers’ ability to merge in-store, e-commerce, and virtual elements into seamless, omnichannel, and meaningful experiences.

Extended Reality and technologies like Machine Learning, Internet of Behavior (IoB), and predictive analytics enable brands to craft and scale these more memorable and hyper-personalized experiences.

Inspiration: ‘Mini Macy’s’ mark next step in ongoing reinvention of giant department. stores

For a company best known for a Thanksgiving Day parade that ends at its massive 10-story, 1.2 million-square-foot flagship store in Manhattan, the notion of a string of “Mini Macy’s” popping up in neighborhoods, rather than as an anchor tenant in a mall, is certainly a break from the norm. As much as Macy’s and the entire department store category have struggled to reinvent themselves in the face of an increasingly digitalized, omnichannel retail world, the core philosophy of the one-stop shop has remained largely intact, at least until now. This “next evolution” for the retailer is occurring via physical stores that are less than a quarter of the size of the typical 250,000-square-foot hub.

2. Consumer choice

E-commerce has enabled the rise of increasingly discerning consumers who demand more for less and are willing to do their research before making a purchase. They have the ability to control nearly all aspects of their purchase journey, choosing from a host of omnichannel conveniences like on-demand delivery, curbside service, and free returns. Rather than being sold to or channeled towards certain purchases, consumers have the power to dictate their terms when it comes to CX and value—which is especially important for price-sensitive consumers who have experienced changes to their disposable income.

Retail is moving progressively from a B2C to a C2B model. The balance of power is shifting to consumers. Yet, there remains a need for more varied and accessible channels to obtain information, engage with brands, and play a more participatory role in the retail value chain. This touches on trends such as Personalized Commerce, Inclusive by Design, and Facilitated Co-Creation.

Conversational Systems, augmented by Natural Language Processing, hold immense potential for enhancing two-way communication while reducing operational costs. Access to 24/7, multilingual, and personalized support through chatbots and virtual sales associates can serve as a critical differentiator for consumers spoilt for choice.

Inspiration: Michael Graves Design teams up with CVS to create a more stylish and accessible line of home health care products

CVS Pharmacy and Michael Graves Design are now teaming up on a direct-to-market line of home health care products that will build on the legacy of inclusive design beget by its namesake in the inspiring last decade of his life and career. The initial round of products focuses on bathroom safety and mobility aids and includes a foldable cane, travel walker, shower chair, 3-in-1 commode, and raised toilet seats.

3. Supply chain resiliency

The COVID-19 pandemic continues to impact global retail supply chains as major manufacturing countries across the Asia-Pacific region experience factory shutdowns, and ocean freight prices are at record highs. As a result, retail brands are pouring resources into fortifying their supply chains. Strategies range from reshoring and distributed manufacturing to optimized and digitalized workflows. The sustainability of supply chains is also a growing imperative, with consumers demanding good corporate citizenship, transparency, and the ability to trace goods to origin.

It is becoming evident that Green and Lean supply chains are resilient supply chains, and that this is a requisite for navigating a future characterized by increasing disruptive drivers of change. Retailers must leverage smart technologies that improve resource efficiency along the entire supply chain—from Localized Production and sourcing to Value-Driven Delivery.

Blockchain Track-and-Trace ensures supply chain traceability and integrity, removing the margin for error or fraud. Additionally, Unmanned Deliveries are a key solution for making the final leg of the supply chain—last-mile delivery—affordable, scalable, and sustainable.

Inspiration: Aura Blockchain Consortium and Mojix join forces to bring transparency and traceability to the luxury industry

Aura Blockchain Consortium and Mojix have announced a collaboration to enhance transparency and traceability in the luxury industry. Members of Aura Blockchain Consortium can tag their products with secure blockchain-based identities, tracking their journey from raw materials to the end customer. Connecting Mojix's cloud-based platform to Aura Blockchain will enable precise track-and-trace functionality, verifying each item's original material. This partnership promotes digitization and item-level intelligence, generating new opportunities for Aura Blockchain Consortium members to gain trust and transparency in the luxury ecosystem.

4. Data security and privacy

The dominance of e-commerce currently relies heavily on advertising technology (adtech) and the ability to track online users as they move from site to site using third-party cookies. However, even while consumers enjoy the benefits of data sharing—such as omnichannel engagement and personalization—they are demanding an end to involuntary data surveillance. With more countries enacting data privacy regulations and an impending end to third-party cookie tracking, retailers will need to rethink their Programmatic Advertising strategies. This means emphasizing contextual targeting and more creative, diverse ad content.

Emphasizing first-party data in lieu of third-party cookies will require retailers to establish Quality Content Channels. These channels and platforms must provide customers not only with compelling and authentic content, but also reassurance that their data privacy and security are safeguarded. Brands that embrace Radical Transparency regarding their data policies and usage—and that can demonstrate tangible value in exchange for opting in—will win favor amongst increasingly data-conscious consumers.

Inspiration: CleverTap acquires Patch for better in-app communication between brands and users

5. The sustainability imperative

With greater consciousness of environmental and social issues, retail is forced to respond to the sustainability imperative. The effects of mass consumerism and exploitative business models like fast fashion are evident, and as a result, consumers are spending their money more intentionally. This translates to a greater focus on local retail, supply chain transparency, shared value, and circular practices like product resale, repair, and rental or subscription models. Brands are under increased scrutiny to embody the values associated with sustainability—to go beyond mere messaging and take real, meaningful action that resonates throughout the value chain.

Consumers are seeking Easy Ethics when it comes to their retail purchasing behavior. They value brands that not only follow through on sustainability pledges and promises made, but that provide them with means of contributing to and participating in different initiatives themselves. This is linked to the Recommerce Revolution in which more mainstream retailers are getting involved, as well as the switch to Packaging Substitutes in the fight against the Plastic Pandemic.

3D Printing is emerging as a key technology to improve the environmental footprint and sustainability of retail manufacturing. By employing 3D assets and digitalizing the design-develop-produce workflow, retailers can localize production, minimize waste, and extend the life of products.

Inspiration: Sony wants to have zero environmental footprint by 2030

Sony has announced that it is accelerating its goal of achieving carbon neutrality across all of its divisions by ten years, from the initial goal of doing so by 2040 with a new target of 2030. The company also plans to gain carbon neutrality across its entire value chain—every company it works with—by 2040, a reduction of time from its previous goal of 2050.

6. Data prowess

The ability to collect, analyze, and act on relevant data is essential for retailers to remain competitive as their industry faces widespread disruption. Building data analytics capabilities allows retailers to predict and react to changes more efficiently and effectively—from delivering greater personalization and omnichannel engagement to anticipating fluctuations in demand and improving inventory management. As retail business models progressively shift towards digital-first platform ecosystems, those retailers that can seamlessly embed data analytics throughout their end-to-end value chain, from planning and production to customer touchpoints, will gain strategic advantage.

Together, Edge Computing, Internet of Behavior, and Geofencing allow retailers to capture the right audience at just the right time—for instance, when they are in proximity of a physical store. Shoppers can receive personalized messaging and promotions based on their location, patterns, and preferences.

Inspiration: Lubrizol creates Foresee Lab to anticipate beauty developments

Lubrizol Life Science Beauty, the personal care branch of specialty chemicals firm Lubrizol, has unveiled a program combining science, future thinking, and consumer and market insights to bring a clear picture of the future of beauty. The company uses AI to identify millions of consumer reviews across different beauty segments, while video analysis captures consumer behavior for quick feedback on ideas and concepts.

Finding innovation opportunities in the retail industry

Applying an industry lens to the process of environmental scanning helps your foresight teams direct their focus and resources more optimally. By gaining an understanding of the technological developments and trends that may present future opportunities in your industry, you can equip yourself with the foresight intelligence needed to take decisive, strategic action and, ultimately, gain a competitive advantage.

Get started by exploring the ITONICS Technology Radar and Trend Radar for the retail industry. These analyst-curated radars display the drivers of change that are most relevant and impactful for the industry.

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