Blog | August 31, 2017
The Future of Retail - How Technology is Changing The Industry
Retail growth is a key indicator of economic health in America. Technology enables the industry to continue to thrive by allowing consumers to spend more easily and business to manage their processes more efficiently. From back to school surges to Black Friday and Cyber Monday blowouts, fourth quarter makes or breaks the industry.
This year, the National Retail Federation estimates that the retail sector will grow 10 percent over 2016 to $83.6 billion. That adds up to the second-largest annual profit since the organization started taking statistics (just behind 2012's record-high $83.8 billion).
There are many factors underlying that massive growth and profit, but one of the most important is how technology is transforming the retail industry. CEOs have historically underestimated the impact of tech on retail and are working hard to stay abreast of new developments. Here's some of what retail CEOs can expect to see in the next several years.
Fighting Fraud With AI
Payment companies have made huge strides in training artificial intelligence to detect fraudulent account activity. Expect this to continue, along with movements toward tokenizing payment information so credit card information isn't unnecessarily exposed.
But as e-commerce continues to grow, hackers will step up their game. Retailers will have to pick up some of the slack to protect customer information. It's likely many online retailers will develop their own methods to protect their sites from hackers, or they'll partner with other companies to get there.
Optimizing Supply Chains With Robotics
Amazon has taken the lead with applying robotics to the world of retail. It now has an estimated 45,000 robots working in warehouses and other crucial supply and logistics points, and it's likely this number will grow over time.
At the same time, retailers are examining the possibility of harnessing the Internet of Things for things like adjusting temperature and lighting to protect delicate cargo, tracking inventory, or changing practices. As big retailers like Amazon display that robotics and IoT can be profitable for optimizing the supply chain, it's likely other retailers will get in on the act.
Improved Customization and Inventory Management
The last 10 years have seen a dramatic change in retailing. Technologies like 3D printing and print on demand have allowed retailers to fulfill customers' desires for customized or niche products while reducing overhead. Meanwhile, improved automation lets retailers ramp up production of popular items. Many brick-and-mortar stores have moved to a showroom model to take advantage of rapid production technologies.
Cutting-Edge Data Analytics
Finally, improved data analytics have allowed companies to make recommendations more reliably than any human stylist can. While humans generally guide this process, companies can expect to move toward more AI-driven decisions powered by big data over time.
Retail companies have seen dramatic changes due to automation, improved production, AI and data analytics. As technology improves and becomes less expensive, it's certain these trends will continue.
Photo by Clark Street Mercantile on Unsplash