If you want to invest in retail, now is the time to hop on the smart retail solutions bandwagon. Why? Because the global retail market has been growing at an increasing rate. In 2020, it was evaluated at a staggering $20.3 trillion, and projections indicate it will soar to $29.4 trillion by 2025.
At the same time, an ever-increasing number of retailers are blending traditional brick-and-mortar stores with the capabilities of online marketplaces. The global smart retail market has been rapidly growing at a CAGR of 23.6%, from $21.6 billion in 2020 to a projected value of $62.5 billion by 2025.
This exponential growth is fueled by the innovative adoption of robotics and automation and evolving customer expectations.
So, this post will provide you with the viewpoint of smart retail technologies, explore successful implementation cases, and suggest ways to digitize your retail store for optimal profitability.
What is smart retail?
Smart retail refers to integrating advanced technologies and data-driven solutions in a traditional retail store. It helps to enhance the overall shopping experience for customers, optimize operations, and improve business outcomes.
The key elements and technologies commonly associated with smart retail include:
- Internet of Things (IoT): IoT devices and sensors can be integrated into shelves, products, shopping carts, and even the store itself to gather real-time data from the physical store environment. The collected data may be used for monitoring inventory levels, customer movement tracking, and shopping patterns analysis.
- Mobile apps allow customers to access personalized offers, promotions, and recommendations while they shop. Mobile payment options and contactless technology are also standard in smart retail environments.
- Beacon technology: beacons are small Bluetooth devices that send signals to nearby smartphones. They can be placed around the store to push location-based notifications, offers, and information to customers’ mobile devices.
- Artificial Intelligence (AI) and Machine Learning (ML) algorithms can help analyze the collected data and gain insights into customer behavior and preferences. This information can be used to personalize marketing efforts, improve inventory management, and optimize pricing strategies.
- Augmented Reality (AR) and Virtual Reality (VR) can offer immersive and interactive shopping experiences. For example, customers can virtually try on clothes, visualize furniture in their homes, or see how makeup products look on their faces.
- Big Data Analytics tools help process and analyze the vast amount of data collected from various sources, optimize inventory management, and make data-driven decisions.
- Robotics and automation can help with various tasks such as restocking shelves, handling warehouse inventory, and assisting customers with basic inquiries.
Benefits of smart retail technology
Smart store solutions enable businesses to improve retail operations and enhance customer shopping experience. It is possible due to the advantages the smart retail technology has over traditional tools, the key ones being:
- Precise customer data collection. Intelligent tools operate in real-time, capturing customer data as it happens and logging it in automatically. This results in more comprehensive data collection and minimizes inaccuracies that tend to happen when using paper surveys or manual data entry.
- Simplified decision-making. Smart retail systems can automate data analysis, identify patterns in consumer behavior, and make predictions. This decreases the workload on an employee and leaves them more time for strategizing and planning.
- Increased traffic and income. Marketers can create more relevant campaigns by better understanding customer preferences, leading to higher conversion rates and customer loyalty. Besides, heat mapping and footfall tracking tools can provide insights into customer behavior within the store and help optimize layouts, product placements, and visual merchandising to increase sales.
- Optimized inventory management. Real-time inventory tracking and data analytics help retailers avoid stockouts by replenishing products at the right time, reducing overstocking, improving inventory turnover, and reducing holding costs.
- Streamlined supply chain management. Smart retail technologies enable better communication and collaboration between suppliers, manufacturers, and retailers. This results in faster order fulfillment, reduced lead times, and, ultimately, enhanced customer satisfaction.
- Efficient checkout process. Self-checkout options and contactless payment methods speed up the checkout process, reducing customer wait times and improving overall store efficiency.
- Enhanced security and loss prevention. AI-powered surveillance cameras and RFID tags help prevent theft and shrinkage, helping reduce losses and ensure a safer shopping environment for customers and staff.
Use cases of smart retail tech implementations
1. Smart mirrors
H&M implemented smart mirrors in its fitting rooms as a part of its tech-enabled shopping strategy. This AI-powered technology recognizes products in the room and offers personalized styling recommendations. Customers can also review the item in other available sizes and colors, request additional items without leaving the fitting room, and purchase directly from the mirror.
The expected benefits include an enhanced customer experience through frictionless checkout, more sustainable delivery and return options, and improved business efficiency by better understanding the demand for specific products.
Amazon is another well-known retailer planning to introduce smart mirrors within its Amazon Style framework, allowing customers to review and shop across environments and devices.
2. Virtual fitting rooms
Walmart’s Choose My Model feature uses AI and computer vision to allow online shoppers to estimate how a specific item will look on them. Customers can select the most suitable fit by reviewing different models with similar body types. The retailer reports a strong positive response from customers regarding this feature.
Other famous brands, including Amazon, with its Virtual Try-On for Shoes feature, Nike, Adidas, and Zalando, also use virtual fitting technology. However, these companies (except Zalando) overlay digital images of items on the user’s body parts instead of using a model. This is made possible by leveraging the capabilities of augmented reality and mobile devices.
3. Smart shelves
Also known as digital shelves, these AI-powered display stripes replace traditional paper price tags. They can dynamically display prices, promotions, advertisements, and more.
Kroger Co., one of the largest supermarket chains in the US, installed smart shelves with NFC tags, allowing users of the Kroger mobile app to identify items from their grocery list on the shelves quickly.
This solution gained much traction and substantially improved the organization’s efficiency and effectiveness.
4. Retail robots
In brick-and-mortar stores, robots are handy for performing monotonous tasks like cleaning and inventory management. Walmart introduced automated floor scrubbers and shelf scanners in its stores to save employees time and improve efficiency.
But robots can also perform social tasks, such as providing information or entertaining customers. Softbank’s humanoid robot Pepper has been successfully working in stores across the USA and Japan, providing directions, answering questions, and taking selfies with people. The company claims its clients saw a substantial increase in visitors and revenue shortly after “hiring” the robot.
5. Mobile POS
Mobile point-of-sale solutions enable merchants to process payments using a mobile device instead of a POS terminal or a cash register. This technology helps increase the payment speed and adds flexibility to the checkout process.
6. Visitor tracking
Customer tracking technology allows retailers to collect data on customer movement within the store using WiFi hotspots and IoT systems. This data helps business owners identify areas of the shop that aren’t working as expected and tailor their layout, products, and advertisements accordingly.
When combined with CCTV imagery, visitor tracking tools provide insights into specific demographics and their behavior under various conditions—for example, understanding whether women tend to visit the seasonal aisle more often with children or without.
Walmart, a pioneer in adopting new technologies, has adopted visitor tracking systems to boost sales.
Syndicode: your partner in implementing smart retail solutions
At Syndicode, our development team is experienced in optimizing workflows and improving processes through custom solutions. One such project involved streamlining order processing for the large retail platform, thredUp. The system’s core was to offer users the ability to generate a unique barcode for their package, eliminating the need to order a physical bag. The barcodes are then scanned at thredUp’s premises, effortlessly associating each package with the respective customer.
This simple solution yet effective solution has provided thredUp with several benefits. Firstly, it significantly reduced manual labor, freeing up valuable employee time. The order processing speed has also increased, ensuring that orders reach their rightful owners quickly and securely. With no need for manual data entry, the number of errors has decreased, leading to a more seamless and error-free process overall.
Factors to consider before investing in smart retail
Smart store technologies have revolutionized the retail sector, bridging the gap between physical stores and online shopping. Embracing these technologies presents businesses an opportunity to thrive by providing customers with precisely what they need right where they are.
However, implementing smart cameras, IoT devices, machine learning and AI, VR and AR, and other solutions involves a substantial investment. To help you make informed decisions and prioritize solutions that align with your business goals, we have prepared the following checklist:
- Business goals and objectives: Identify how the new technology aligns with your overall business strategy and what specific outcomes you expect to achieve.
- Market research: Understand customer preferences and technological trends, and identify potential competitors already using smart technologies. This will help you gauge the demand for such technology in your niche.
- Cost-benefit analysis: Determine the smart retail technology’s potential return on investment (ROI). Consider short-term and long-term financial implications, including initial costs, operational expenses, and potential revenue increases.
- Customer insights and feedback: Understand your customers’ needs, pain points, and expectations. Identify how the chosen smart retail technology can enhance the customer experience and meet their evolving demands.
- Scalability and flexibility: check if the chosen technology is scalable and flexible enough to accommodate your business’s growth strategy and adapt to changing market conditions.
- Security and data privacy: Assess the security measures of smart retail technology to safeguard customer data and business information. This is crucial to avoid potential legal issues and reputational damage.
- Integration with existing systems: Check whether the smart retail technology can integrate smoothly with your IT infrastructure and point-of-sale (POS) systems to avoid disruptions and costly IT overhauls.
- Vendor selection and reputation: Whether you choose a ready-made solution or custom development, choose reputable and established vendors with a track record of successful smart retail implementations.
- Proof of Concept (PoC): Consider conducting a small-scale pilot or PoC before fully committing to the technology. This allows you to test the solution’s effectiveness in a controlled environment and make adjustments if needed.
- Employee training and adoption: Plan comprehensive training programs to ensure the smooth adoption and utilization of smart retail technology.
- Risk management and contingency planning: create contingency plans to mitigate unforeseen challenges during the implementation and adoption process.
- Regulatory compliance: Ensure the smart retail technology complies with industry-specific regulations and standards to avoid regulatory fines and penalties.
- Long-Term Support and Maintenance: Assess the availability of ongoing support, maintenance, and updates for the chosen technology to prevent disruptions and ensure optimal performance over time.
Start transforming your retail business
The interest in smart retail solutions has surged rapidly in recent years. Both customers and businesses are excited about the benefits they offer. The latter includes delivering immersive, interactive, and seamless experiences to shoppers while providing highly personalized offers. Moreover, they enhance business sustainability and effectively bridge the gap between online and offline retail to leverage the best of both worlds.
If you want to build the store of the future, Syndicode professionals are ready to help you identify and adopt the latest trends in smart retail software. Begin your journey by requesting a short free consultation with our experts.
Smart retail implies using advanced technologies and data-driven solutions, including AI, IoT, big data analytics, computer vision, AR, and other tools, to improve the shopping experience for both customers and retailers. The core components of smart retail revolve around personalization, driven by data insights, fostering interactive in-store experiences that blur the lines between online and offline shopping, enabling real-time inventory management and cashless payment options, and embracing sustainability practices.
One of the key benefits of smart store solutions is real-time customer behavior tracking, enabling businesses to gauge store performance promptly and make necessary adjustments. With this valuable data, retailers can provide personalized offers and product recommendations based on the customer’s past purchases and browsing history, fostering customer loyalty. Furthermore, smart retail solutions allow retailers to improve inventory management through IoT sensors and real-time data tracking. By optimizing inventory levels, retailers can minimize out-of-stock situations and overstocking, ultimately leading to cost savings and increased revenue. Moreover, these solutions contribute to increased operational efficiency through automation and technology-driven processes like self-checkout kiosks. This streamlines operations and reduces overall energy consumption compared to traditional methods, resulting in additional cost savings.