From avatars and non-fungible tokens to “no checkout” stores and in-store robots, Jean-Baptiste Branquart explores disruptive innovations in retail and shares recommendations for harnessing and monetizing the great ideas within your organization.
Technology innovations in retail continue to push the envelope as retailers look to drive customer experience innovation and keep their brand promise. According to the 2021 CGI Voice of Our Clients (VOC), digital leaders across industries collaborate better, innovate more and are better aligned. They also have mechanisms in place to deploy applicable innovations. In this blog, I share some standout innovation trends revealed at NRF 2022 that are disrupting the retail landscape and how to take advantage of them.
Customer experience is becoming more social, live and gamified
Leading retailers and brands leverage immersive environments using augmented reality (AR), virtual reality (VR), and social interactions to boost customer engagement and build digital communities. AR/VR is becoming an e-commerce standard for fashion, furnishing, jewelry and do-it-yourself (DIY) retailers. For instance, customers can create bespoke products in 3D, while interactive mirrors at stores allow their avatars to try on creations and even share them on social media.
At the same time, the metaverse and non-fungible tokens (NFTs) are ushering in new types of business models, goods and services in retail, particularly among fashion and luxury brands. The global metaverse opportunity could potentially be $800 billion in 2024. Most retailers, however, are still finding their way around this new virtual world. Many are experimenting with different business and revenue models from buying, renting and selling virtual plots of land to purchasing NFT artworks and advertising. It’s unclear yet what the most successful models will be, making it imperative to test and learn these innovative opportunities.
Artificial intelligence (AI) offers value across the end-to-end value chain
Artificial intelligence in retail is not new, with AI adoption accelerating in the last two years. Globally, AI spending in retail is expected to hit double-digit growth annually until 2025. AI solutions across the retail value chain—from planning and procurement to distribution and logistics to sales and marketing—are maturing and beginning to show tangible benefits. At NRF 2022, retailers reported benefits across the entire retail value chain that positively impacted their top and bottom lines.
AI usage focuses on creating a stronger connection with customers and improving operational efficiency. Moreover, AI-driven technology could reduce labor spend and improve inventory management and in-store operations. There’s also a new generation of connected machines (refrigerators, vending machines, etc.) that uses AI recognition for authentication and replenishment. As with other virtual opportunities, the promise of AI must include embedding cybersecurity and data privacy best practices at the onset to protect the customer and the brand.
Frictionless and autonomous future
Long checkout lines and labor shortages are ushering a new wave of frictionless commerce that aims to reduce cashier costs, increase checkout capacity during peak shopping hours (without extra cashiers) and save time for customers. NRF22 revealed incredibly diverse offerings that have the potential to be used in several different ways. For instance, autonomous self-service and check-out options like “Just Walk Out” shopping offer contactless payment options so customers can skip the register for a faster, more convenient shopping experience. In addition, machine vision innovations in self-checkout systems and autonomous cars and delivery drones are tech trends to watch out for.
The 2021 VOC insights reveal that digital leaders in retail, consumer goods and wholesale also are making significant progress in all areas of automation compared to those building or launching digital strategies. With workforce shortages showing little sign of alleviating, retailers are increasingly looking for ways to automate manual, mundane tasks. Innovation around in-store multipurpose autonomous robots is growing with modular robots programmed to perform various functions such as inventory management, cleaning and planogram compliance.
Sustainability innovations are nascent
During my conversations at NRF22, it was clear that sustainability is top of mind for the C-suite. This is echoed in our 2021 VOC findings, where 57% of retail executives we spoke with view environmental sustainability as highly core to their organization’s ability to continue creating future value for customers. However, despite several sustainability-focused innovations on display at the event, it’s apparent that innovation is still in its infancy in this area.
As a starting point, innovations will be focused on streamlining operations to reduce costs, lowering food waste, reducing returns in fashion, and implementing circular business processes. New business models are emerging and retailers must act now and move beyond objective setting to taking meaningful and accountable action to activate their climate change pledges. Moreover, in some segments like apparel, the end-to-end value chain needs to be redesigned, requiring bold moves that will have real impact.
Pitfalls to avoid to maximize your innovation capabilities
Innovation is a continuous process and not a one-off exercise. Here are some pitfalls to avoid when harnessing and monetizing creative ideas from within your organization:
Don’t restrict innovation to one person, one team or one department. Innovation often comes from your employees on the front lines who deal directly with customers. Building an innovation mindset and culture that encourages and rewards ideas will lead to the most applicable innovations.
Avoid “centralizing” innovation, especially if your organization spans multiple geographies and locations. Localizing innovation can help retailers address their markets’ and customers’ unique needs to boost growth and relevance.
Be picky about the ideas you choose to scale. Put an evaluation method in place to identify the best ideas that are scalable and can have a real impact on the customer experience and the top and bottom line.
Move from a project to a product-driven approach to foster innovation.
- Don’t fall into the “technology for technology’s sake” trap. Make informed decisions by exploring the “why” of using a particular technology and identifying the clear link to business benefits.
Innovation will help retailers respond to the new realities of the markets and customers they serve. However, it’s important to remember that building strong innovation capabilities and getting proofs of concept out of the lab and into the business requires partnering with an organization with the scale and capabilities to manage innovation in a structured way to gain maximum value. Contact me to learn how our technology and business consulting experts can help you innovate at pace and scale.