June 17, 2024

5 Technology Trends that are Redefining the Retail Sector

Angam Parashar, co-founder & CEO at Simultaneous Dots. ShelfWatch by ParallelDots enables CPG and retailer to improve their retail execution.

As 2020 dawned upon us, demand for many household products increased and stocked retail shelves became a common sight around the world. At the same time, e-commerce has shown unprecedented growth. Later in 2021, the global economy was hit by a supply chain disruption.

With rising labor costs and ever-increasing inflation, the retail sector is facing some unexpected challenges. As a result, the retail sector as a whole is looking to technology to help them navigate these turbulent times. In this article, we look at five technology trends that are changing the retail industry.

1. Digital Transformation

Digital transformation is a top priority for CPG manufacturers and retailers. By 2021 studyCPG manufacturers will spend $24 billion on digital transformation by 2030. A significant portion of this spending would involve adopting technologies such as AI and machine learning to drive efficiency and automation.

There are various use cases going on here, such as optimizing inventory management, improving shelf presence, shortening / eliminating queues at the billing counters, improving retail, supply chain and logistics operations, and more.

2. Slowing E-Commerce Growth

After the insane growth of e-commerce during the pandemic, it seems that growth is finally slowing down and offline retail is making a comeback. According to StatesmanE-commerce revenue will decline for the first time ever due to negative growth of 2.5% in 2022 compared to 2021.

Although it is hard to imagine that the number of e-commerce will decrease, it is only natural that the growth of e-commerce will slow down. We will achieve a balance between online and offline channels, both driving significant volumes for the industry. Successful companies will have no choice but to be omnichannel as they build for the future.

3. Rise of D2C Brands Globally

As consumer habits continue to change, D2C brands are gaining more acceptance, not only in developed markets but in many developing markets as well. D2C brands have more freedom to experiment with their product lines and also have simpler operations and supply chains, giving them an unfair advantage over the big traditional manufacturers.

These new-age D2C brands have proven effective in attracting millennials and Gen Z with their sassy marketing. As millennials and Gen Z spend more time on Instagram and TikTok, D2C brands have successfully translated this engagement into revenue.

According to s studied by KPMG, the D2C market in the US is expected to grow at a CAGR of approximately 23% between 2019 and 2023. In China, D2C accounts for approximately 20% of all e-commerce sales. In India, that ratio is only one in fifty. However, that also presents a huge opportunity in developing markets. According to StatesmanIndia, one of the fastest growing D2C markets in the world, is already home to 600 or more direct-to-consumer brands with an estimated market size of around $55 billion in 2022, which will only continue to grow from here.

4. Retail ‘Platformation’

‘Platformation’ of retail through technology is an interesting case study from the Indian retail ecosystem. Open network digital commerce (ONDC) is a buzzword in the Indian retail industry these days. The government of India is driving this platform to bring merchants, consumers and logistics solution providers on one platform.

There are many factors that led the Government of India to launch ONDC, such as increasing the number of taxpayers in the country, enabling small merchants to compete with the e-commerce giants and further driving digital payments. The vision is to bring transparency and convenience to shoppers and help merchants not only survive but thrive in this age of e-commerce.

If ONDC succeeds in India, it may inspire other developing countries to also look at how they can empower their small merchants to compete in the world of ‘tech commerce’ without having to muscle in on the big companies.

5. Augmented Reality And Virtual Reality

I argued that this is not a trend—yet. There are clearly early signs of how technologies such as augmented reality and virtual reality could be the next big things to fundamentally change retail as we know it. Companies like it Walmart, among others, are already investing in these technologies to develop immersive experiences for consumers to shop in the augmented and/or virtual environment. However, it is still too early to comment whether consumers will accept such an experience.

Conclusion

These upcoming trends will create many new business use cases and opportunities for startups and technology companies to drive their growth and a huge and potentially changing market. Overall, offline retail is expected to be significantly disrupted in the next few years, driven by the widespread adoption of technology with the objective of driving efficiency to keep costs under control and not lose more market share to e-commerce.


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