Will the retail tech revolution continue?

Published January 31, 2023

Over the past couple of decades, the way retailers serve their customers has been revolutionized by technology. So much so that the retail outlets of today would be almost unrecognizable to the shoppers of yesteryear. They would likely be utterly bewildered, by self-service checkouts, banks of screens, scanning technology, sensors, magic mirrors, automated returns kiosks, and much more.

Retailers have transformed their supply chain

Behind the scenes, the changes have been even more radical. For example, most retailers have semi-automated their warehouses. In the past, a warehouse person would walk the aisles picking items for each store using a paper list. Those goods would be stacked into a roll pallet, loaded onto lorries, and sent to the store.

Today, the picker stands at a picking station while pallets of goods are delivered to them by a robot. With this approach, they generate several store orders at once without having to walk for miles up and down the warehouse aisles. The items are placed onto a conveyor belt, which directs the correct number of boxes to each store’s roll pallet.

Every year retailers spend billions on tech

This is just one example of how retailers have semi-automated their supply chain and back-room operations. There are many, many more. So, it is no surprise to learn that in 2019 the retail sector spent $203.6 billion on technology. This is according to ongoing research carried out by Gartner Inc, a leading information technology research and consultancy company.

Investment in retail technology is set to continue

That same report stated that demand for retail technology would continue to increase over the following two years, which it did. According to Statistica, in 2021, US retailers alone invested $100 billion into tech.

Gartner, McKinsey, and other research groups all expect to see an increase in retail tech spending over the next few years. This is backed up by what those who build and sell technology are saying. For example, Mandoe Media from Australia has seen demand for its digital signage technology grow at a phenomenal rate. In 2022, their 20,000 customers generated $18m in revenue (source GetLatka) and there is no sign of things slowing down. In fact, retailers are increasingly switching from paper-based advertising to digital as a way to save time and money. They are also finding that customers respond more to information and offers displayed on screens than they do to paper-based mediums. Plus, things have changed to the point where, for some retailers, switching from paper to digital makes environmental sense.

The replacement of legacy tech

The fact that retailers need to update and replace the technology they already own is at the top of the list of reasons tech spending is likely to increase, across the sector. In the UK, food retailers like Sainsbury´s began to automate their logistics chain 25 years ago. The processes are more or less the same, but the kit used is wearing out and needs replacing. Plus, there are bits of hardware, firmware, and software that can be upgraded to improve the overall efficiency of the system.

This pattern of wear and tear and redundancy is present in retail businesses across the world. In hundreds of logistics centers and on thousands of shop floors. This reality alone means retail tech spending is set to remain healthy for the foreseeable future.

Recruitment issues

In most markets, retailers are struggling to recruit and retain staff. For example, according to the Office for National Statistics (ONS), 15% of UK retail vacancies are going unfilled . In the USA, recruitment is also an issue, prompting retailers like Walmart to raise their starting pay by double percentage points. Despite retailers offering great packages, people are still resisting working in the retail sector. As a result of this retailers will have no choice but to invest in more self-serve checkouts, switch customer service personnel for electronic help kiosks and explore staff-free outlets.

But this is only a small part of the picture. Retailers are facing other challenges which are pushing them to turn to and lean on technology more.

The drive for efficiency in the face of stiff competition

They will also have to invest in technology to help the workers they have to work more efficiently. Achieving these efficiencies is also vital for managing prices. In a market where the price is increasingly important because of inflation this is critical. Those retailers that do not work smart will go out of business as customers turn to other better-value providers.

The above are just a handful of examples of why, for retailers, investing in technology is not only desirable but essential. There are many more, so we can safely say that the retail tech sector is set to boom over the next few years.

Press Release Distributed by The Express Wire

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