Contributed by Susan Reda | VP of Education Strategy, NRF Foundation
Access the full article here.
Artificial intelligence’s influence continues to grow, consumers demand sustainable actions and the customer experience remains more important than ever.
Here are some predictions about what could be in store for retailers over the next 12 months:
AI is blowing the lid off constraints businesses once had and making faster and more precise decision-making a reality.
Using AI, retailers can swiftly analyze huge and disparate amounts of data in real time, enabling faster decision-making, a reduction in human errors, increased efficiency and the automation of routine monotonous tasks.
Indeed, the benefits of AI are far-flung — from product designs influenced by AI-enabled trendspotting and relying on AI to optimize product sourcing, to tapping into the technology for inventory forecasting and personalization along the shopper journey. Physical retailers can use AI to analyze data collected by stores cameras and make appropriate changes to store size and layout. Among supply chain executives, AI is reshaping inventory management and demand planning.
The merits of artificial intelligence are real, but misgivings remain: AI is capable of learning over time with pre-fed data and past experiences, but — as retailers have been saying for decades — if the data is not “good,” the outputs are not going to be accurate.
The most critical concern with AI is the potential for ethical and privacy concerns. It is imperative for retailers to be proactive in their internal governance of AI and ensure they are using these technologies in ways that support their core values, mission statements and business objectives.
Retailers need to be transparent about how they’re using artificial intelligence to be certain that safeguards are established and to prevent unlawful discriminations. Additionally, it’s imperative that companies align their governance of consumer-facing AI applications with existing internal privacy, cybersecurity and other data governance policies.
Deepfakes could mean deep trouble for retailers and brands.
There has been a massive rise in the use of deepfake fraud over the last year and the next 12 months are shaping up to be even more alarming. Look for this technology to cause both societal and security issues — everything from fake TikTok content encouraging teens to experiment with dangerous fads to deepfakes used to mimic members of the C-suite to authorize a transfer of funds.
Much of what we’ve seen thus far is tied to celebrities (Tom Cruise is definitely not that ubiquitous), but when a CEO’s image and voice can be manipulated, and/or a brand logo appears in a deepfake video, the damage can be crippling.
Customer interaction in physical stores is as imperative as the transaction. For retailers planning to open new stores or make renovations to existing units, designers beware: Shopper expectations are elevated and moving toward lofty.
Reformation’s newest store features a tech-driven experience: Shoppers use a tablet to select items they’d like to try on and the garments are sent to a personalized “magic wardrobe” fitting room. Adding to the magic is the option to request an alternative size from the fitting room and just wait for it to arrive in the two-way closet.
Other retailers are blurring physical and digital to up the ante on shopping experiences. Zara shoppers using the Store Mode feature in the app can digitally tweak their experience to display only products and sizes immediately available at the local store. Target’s app now delivers an experience that is personalized, dynamic and filled with customized inspiration, to sync with the feeling of being in the store.
Keep an eye on convenience stores for design innovation and merchandise reengineering. As electronic vehicles gain popularity and drivers need to spend around 30 minutes charging their vehicles, convenience stores have an opportunity to rethink their role from delivering a pit stop-type of experience to one that makes it appealing to linger.
Generation Alpha is taking hold of the retail reins, and they are poised to rewrite rulebooks and upend long-standing precepts.
While Gen A doesn’t have disposable income yet, they do have plenty of influence on shopping decisions and loads of opinions about shopping. While it’s easy to assume their comfort with technology would make them partial to online shopping, research finds they like the experience of going to a retail store.
Members of this generation lean hard into experiences, preferring to frequent shops where they can tinker with tech or be hands-on with a new gadget. But they’re less inclined to crave physical ownership; downloading something digitally — a book, a game, a movie — meshes with both their digital proficiency and proclivity for a more sustainable culture.
For retailers, this translates into a rally cry for innovation. The future of shopping will transcend physical and move into virtual in ways that push the boundaries of anything we’re seeing today.
Companies that revolve their efforts around circularity have the best chance at evolving their business in 2024.
Phrases like “gently used” and “previously loved” have been adopted by shoppers, and more and more consumers are choosing to buy used or refurbished electronics, previously worn apparel and used furniture. Alongside the stalwarts like Patagonia, we’re seeing retailers such as Amazon and Best Buy selling used tablets and cellphones, Anthropology selling gently worn fashion items and IKEA promoting previously used furniture.
The point is that shoppers are buying in. That means 2024 is a pivotal period for retailers to ramp up their efforts. Improve the in-store experience through better signage to both identify items and tell the circularity story. Don’t assume you know your shopper’s appetite for gently used or refurbished products unless you ask them. Maybe seeing new and used products side-by-side on store shelves will move the needle?
And consider investing some sustainable capital in marketing. The more companies invest in educating shoppers about circularity, the likelihood of them embracing it will increase exponentially.
The future is hyper-personalized; it has been for some time now. The challenge for 2024 is delivering hyper-personalization while respecting customer privacy, protecting data and serving up just what they had in mind — in real time.
The ability to use AI-driven personalization across all platforms, including social media, to deliver more relevant content is the gold standard.
What does that look like? It’s about a brand that I love and have purchased from for many years recognizing me the minute I click on their site and the second I cross the threshold of a physical store.
Shoppers often start their journey online and then visit a bricks-and-mortar store to check it out in person. A hyper-personalized experience is one in which the preferences and products explored in one channel influence their experience in another. Imagine spending an hour researching products on Apple and then receiving a personalized recommendation in the store based on that browsing history.
The conversation around augmented reality is poised to reach a fever pitch, particularly as Apple debuts Vision Pro. With CEO Tim Cook promising “blow-away” experiences, look for retailers to be in the mix.
With a price tag of $3,500, Apple’s Vision Pro will not be widely accessible, but given the “game-changer” hype preceding the launch, AR experiences will gain new relevance, renewed traction and — as more companies follow suit — more shoppers looking to try and adopt the technology.
Dive deeper
Vision Pro is essentially an augmented and virtual reality headset, but Apple prefers to bill it as a special computer because it has the power to blend digital content with the physical world. Apple says the Vision Pro has “more pixels than a 4K TV” and navigation is done through eye movements, hand gestures and voice-based commands.
Samsung appears to be making a big bet on augmented and virtual reality technologies. The company recently secured a trademark in the UK for “Samsung Glasses” and is reported to be working on an AR headset. And, at a more easily accessible price, Meta recently debuted first-generation Ray-Ban smart glasses. Using Ray-Ban Meta smart glasses, a user can snap a photo or video clip in the moment — allowing them to not only relive the moment, but to truly live in the moment. The Meta smart glasses can also look at images and interpret them with generative AI.
Metaverse is not dead; metaverse hype is. There could be a resurgence of interest in the year ahead.
Headlines can control the narrative, but that does not mean they’re irrefutably accurate. The metaverse remains a vast, interconnected virtual universe. It transcends physical boundaries and provides a space where users can interact, socialize, work and play.
The biggest tech providers, including Microsoft, AWS and Meta, continue to innovate in this enterprise setting, offering new methods of mixed reality digital experiences. Roblox and Minecraft remain powerhouses in this arena, and while they are considered gaming platforms, practically speaking they’re also incredible conduits for retailers to connect with future generations of consumers.
Ultimately, it’s about meeting customers where they are spending more of their time. And, as the lines between physical and virtual continue to blur, that includes virtual worlds.
