Original article was published by David H. Deans on Artificial Intelligence on Medium
COVID-19 is Accelerating Retailer Digital Transformation
The application of new technology is an opportunity for traditional retailers to enhance customer engagement via digital transformation. Many of these established retailers are confronted by disruptive competition from eCommerce.
Savvy retailers are evolving their business model into an omnichannel offering, where they combine the best of their offline experience and supplement it with an online shopping experience. Therefore, retailers that intend to maintain a physical in-store presence must operate more effectively.
There are several technologies being combined to enhance the way retail store operations function — including self-checkout apps, beacons, RFID tags, robotics, and artificial intelligence (AI). That said, the current global economic environment requires retailers to become more agile and decisive.
Retailer Technology Market Development
According to the latest worldwide market study by Juniper Research, the value of transactions processed by smart checkout technologies, where the fixed checkout process is replaced by a frictionless model, will reach $387 billion in 2025 — that’s up from just $2 billion in 2020.
Smart checkout technologies provide much simpler user experiences by removing traditional checkouts; embracing a ‘just walk out’ approach. The rapid growth will be driven by retailers seeking sustainable business models in the wake of the COVID-19 pandemic.
However, the pandemic’s impact has accelerated the ongoing decline of more traditional retail models. And, it’s enabled some retailer executive teams to make swift and bold moves while their peers stumble.
Juniper analysts found that while the growth in adoption is dramatic, innovation will likely be limited to the convenience segment, where product lines are simpler and implementation costs are lower. These deployments will also be enacted by financially stable retail chains that can still make a significant investment.
The new research discovered that the use of AI, including smart checkout systems and chatbots, will be critical in ensuring that retailers can deliver a compelling omnichannel experience to consumers.
The drive for supply chain and operational efficiency will lead to new technology investments of over $23 billion by retailers in AI-related solutions by 2025 — that’s up from just over $5 billion in 2020.
“To compete with eCommerce disruptors who heavily rely on AI, traditional retailers must adopt AI rapidly to boost efficiency. If they fail to do so, they will face a highly commoditized retail market with an outmoded, uncompetitive business model,” said Nick Maynard, lead analyst at Juniper Research.
Outlook for Retail Technology Application Growth
The research found that the use of RFID for tracking is essential to enabling analytics used within the retail supply chain. As retailers need ever greater efficiency, analytics is crucial, but it is only as good as the data it is based on.
According to the Juniper assessment, this need for standardized data for analysis will propel RFID’s deployment; driving RFID shipments for retail to over 32 billion in 2025, from 9 billion in 2020.
Furthermore, I believe that traditional retailers will re-evaluate their current telecommunication network Opex spend and seek ways to extract savings by applying SD-WAN and other technologies that are proven to lower costs and improve network performance or enhance IT security at their stores.