Study: Two tech trends ready to disrupt retail

There is no shortage of emerging technologies with the potential to transform how retailers operate, but some are closer to realizing that potential than others.



Virtual and augmented reality and Internet of Things (IoT) are most likely to disrupt retail, at least in the short term. That’s according tothe first quarter 2016 Retail Innovation Report from the Center for Advancing Retail & Technology (CART).



The report, based on analysis of visits to the CART website and ongoing conversations with executives across the retail supply chain, indicates that while the virtual reality market is currently driven mostly by gaming, shopping applications are being developed. High-end headset systems that connect to computers will not be common in retail for some time. However, lower-end headsets that connect to smartphones, such as Google Cardboard, already are being piloted by several major retailers.



Augmented reality, which differs from virtual reality in that it adds virtual elements to a user’s surroundings rather than creating a new virtual environment, also is being driven in retail by less expensive systems, which connect to smartphones. One example that is currently available at some retailers is the ability for a shopper to hold their smartphone camera in front of a product and see additional information on the screen.



As for IoT’s disruptive potential, the report divides IoT into two primary use cases — in-store and at home. In the store, CART sees IoT allowing retailers to automatically monitor customer traffic in and around the store, as well as recognize customers when they enter for instant triggering of targeted messages. In-store IoT also encompasses “smart” shelves that monitor stock levels and send automatic alerts when products run low, as well as automated tracking of mechanical and electrical systems.



At home, IoT-enabled shopping devices such as the Amazon Dash button, which allows consumers to order specified CPG products at the click of a button, are having a current impact on omnichannel commerce. There also are “smart” appliances that will automatically reorder parts or supplies as needed, such as dishwashers that track detergent use.[pb]



CART says brick-and-mortar retailers have been slow to recognize the threat posed by in-home, IoT-based automatic ordering and replenishment. This threat is expected to grow as rules-based IoT systems, which place orders based on specific events, are introduced into consumer homes.



The report also analyzes developments in e-commerce, marketing/merchandising and mobile, which are briefly summarized below:



E-commerce: Retailers realize they must offer online shopping to stay competitive. However, CART advises retailers that are implementing or upgrading e-commerce capabilities to focus on solutions that integrate with the POS, support back-end operations such as order management, incorporate PCI-compliant payment support, offer advanced security and are integrated with a native mobile app.



Marketing & merchandising: The application of customer intelligence to marketing and merchandising activities is spreading from Tier 1 retailers to Tier 2 and even Tier 3 organizations. CART recommends that retailers of all sizes focus on “hyper-personalization,” or loyalty and marketing programs that target consumers on a one-to-one basis, rather than focus on larger demographic segments.



Mobile: There is fast-growing interest in allowing shoppers to self-scan and self-purchase items in the store with their smartphones. While this can provide significant savings in labor and POS implementations, CART advises that retailers must provide an app-based experience. This will require a choice between using a third-party app or a branded app. Neither choice is “right” for everyone, but retailers using third-party apps generally have higher mobile customer retention rates.