TECHNOLOGY

Retail 2025: The Next Great Innovations & Disruptions

BY Peter Sheldon

Breakthroughs in using mobile technology to transform retail experiences were commonplace up until a few years ago.

Then, things slowed dramatically. Commerce platforms today are largely commoditized and ubiquitous, and new innovations tend to be incremental rather than radical. But that is all changing.

With broader adoption of artificial intelligence (AI), new applications of data to power real-time personalization, augmented reality (AR) and virtual reality (VR), and other exciting technologies, the way we shop across all channels will look dramatically different.

Three areas of retail are particularly ripe for disruption:

Merchandizing optimization
AI’s ability to analyze data quickly and accurately means that repetitive, time-consuming tasks related to promotions, offers, and pricing will be automated, allowing merchants to overcome staffing shortages while increasing revenues and reducing costs.

In turn, merchandizing teams will have more time and creative freedom to refine one-to-one customer experiences using AI-driven insights. Customers enjoy more personalized, reliable services, and retailers greatly improve their success at efficiently matching the right customers with the right products.

Buyer Experience
Customers already interact with AI bots for standard service requests regarding shipment status and returns. Eliminating a seemingly simple task, such as dialing into a contact center, creates a frictionless experience that speaks volumes about the potential for AI in retail segments such as consumables and groceries. Think about how much time you spend on meal planning and grocery shopping every week.

Now, imagine your favorite grocery store knowing that you’re running low on eggs and milk, thanks to your connected fridge or a grocer’s familiarity with how often you buy certain items. Suddenly, a store can anticipate what you need and deliver it even before you’ve had a chance to think about it. This takes personalized experiences to a whole new level.

AR and VR tools also empower retailers to give shoppers more hands-on experiences with big-ticket items. These products can range from furniture to boats, and often require more careful consideration and configuration. AR and VR are now proving to be critical in the decision-making process, leading directly to a purchase or a visit to a showroom.

Distribution efficiency
Retailers are under constant pressure to reduce fulfillment costs and get items to consumers quickly. AI will play a pivotal role in improving efficiencies in this area by enabling retailers to look closely at in-stock inventory, where it’s located, weather patterns, carrier costs, and other factors that directly impact how and when goods can be shipped.

AI-informed strategies can involve anything from deciding to split items into separate shipments or sending them together, or selecting the best warehouse to ship goods from or the most cost-effective distributor to use. The goal is to continually optimize service delivery and margins in an industry that gets more competitive every day.

When long-standing retail giants opened their first stores decades or more ago, they couldn’t imagine just how much commerce would change, and how fast the pace of change would be. Amazon and other industry disruptors set new standards for innovation that have transformed the industry—and they show no signs of slowing.

Traditional furniture retail is a case in point. Wayfair has upended the industry using a mix of technology and new approaches to service that reinvent how people find, experience, and receive products. For instance, using 3D AR tools, shoppers can see what a new side table or sofa might look like in their living rooms and then easily move through an ordering process that results in free delivery on items large and small.

Retail innovations aren’t just happening online. Brick-and-mortar stores are evolving too. Many brands are investing in flagship showrooms that provide shoppers with the chance to experience products in sleek, highly interactive environments. In many of these stores, customer experience is paramount and people might not even be able to walk out with a product in hand; instead leaving only with an experience and having desired purchases sent directly to their homes.

With wider adoption of progressive web apps (PWAs), the gap between big brands with big budgets and their smaller competitors is shrinking. Mobile app-like experiences help boost online sales and can enhance in-store experiences—whether it’s through the ability to scan a barcode or to pull up a store map to find toothpaste in aisle 12. Technology advances such as PWAs enable retailers of all sizes to deliver seamless, customer-centric experiences in stores and online, without requiring a lot of money to create and maintain those experiences.

The next great retail innovations are already underway, with AI, PWAs, AR/VR, and other technologies offering tremendous disruption and opportunities. All retailers now have to learn how to navigate constantly changing business models and heightened consumer expectations that put a premium on experience.

Peter Sheldon is senior director of strategy for Magento at Adobe.

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