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The Top Trends in Retail Digital Transformation

The world of commerce is taking on new forms, and one thing is clear: Digital transformation in retail is necessary for businesses to meet new industry demands.

Alexander Levi Daniels

By Alexander Levi Daniels

Director of Engineering Alexander Levi Daniels helps coordinate engineering efforts relying on his background in business management and development

10 min read

In 2021, 56% of global companies named digital transformation their top IT technology priority.

Of course, revolutionizing technology is not equally important across industries. Digital transformation in retail is especially critical. The pandemic brought about a seismic shift in the way consumers buy goods, and digitalization in the retail industry quickly surged. 

It’s not just about purchasing habits. Transactions, sales platforms, consumption habits, and other aspects of retail have taken on new forms, entirely overhauling and disrupting the industry—so much so that no business can dismiss digitization as a passing phase.

What Are the Digital Transformation Trends in Retail Industries?

The impact of digitalization on the retail industry cannot be overstated. There are hundreds of small and large ways the industry has changed and evolved thanks to technology. Here are just a few digital transformations in retail examples.

Touchless Interactions

Gartner calls touchless interactions one of the top trends in retail’s digital transformation. This phenomenon, which involves safe, contact-free consumer experiences, has wide-reaching applications. 

For example, many of us now have tap credit cards, which means zero physical contact between the clerk and consumer. Mobile wallets like Apple Pay, which enables consumers to pay for products via their mobile devices, have a similar effect. Another form is self-directed checkout options, where customers handle their items themselves thanks to self-checkout counters, with zero contact between the employee and consumer.

Touchless interactions are becoming increasingly popular as the pandemic rages on, in large part due to their ability to reduce instances of physical contact, thereby curbing the spread of contagion. 

Personalized Support

Personalization is considered an important tool to facilitate a better customer experience. Digital tools and platforms make it more possible to make interactions more targeting, thereby ensuring that consumers feel seen.

There are entire platforms dedicated to providing personalized support for customers. Customer relationship management systems, for example, allow businesses to strengthen their relationships by collecting and organizing user data. Other ways businesses are making consumer journeys more personal via technology include:

  • Segmenting consumer data and tagging marketing emails and other content
  • Answering queries directly through chatbots
  • Targeting digital content on websites based on demographics, location, and other factors
  • Recommending items and services for purchase based on buying habits, browsing history, and interests

Omnichannel Approaches

Digital transformation in retail doesn’t depend on one particular platform, tool, or approach. Nor can businesses offer their services via a single channel anymore, be it a storefront or a website. Businesses must take an omnichannel approach to delivering their services, providing several vehicles consumers can leverage. And all the channels should offer a seamless, straightforward, consistent experience.

This requires integrating your systems so that consumers have the same view, whether a user is viewing your store and stock on a desktop website or mobile app. Some retailers incentivize users to try out different channels. For example, a store might encourage customers to try out their new mobile app by offering a 20% discount for their first purchase via the app.

Automation and Algorithms

Some of the clearest digital transformation in retail examples come to us thanks to automation, largely fueled by artificial intelligence (AI) and machine learning (ML), part of AI. 

Take recommendations, for instance. Amazon has one of the most well-known algorithms for anticipating what consumers might like based on their past purchases and browsing habits, but now, many smaller retailers are following suit, building their own recommendation engines. Another example is when retailers take an algorithmic approach to anticipating demand, helping them plan their stock and organize their supply chains. 

Of course, the aforementioned chatbots are another obvious example. These tools can be “trained” to respond to customer queries of increasing complexity.

Augmented Reality (AR) and Virtual Reality (VR)

AR and VR have been used in retail for several years now, and the technologies are becoming more sophisticated. AR, in particular, gives consumers a chance to virtually experience the product before making their purchase. For example, using a 3D image of themselves, they can overlay clothing they are considering buying to see how it might look.

This helps consumer engagement, making the shopping experience more fun. It also drives sales and can help reduce instances of returns, which will ultimately boost their bottom line.

How Is Digital Transformation Driving Customer Experience?

How is customer service changing with digital transformation? How is this phenomenon affecting the overall customer experience?

Digital transformation in retail means a more engaging, personalized experience for consumers. It also means more satisfied customers and leads to better user retention.

According to a McKinsey report, “Overall, consumers are becoming more connected, less loyal, more informed, and definitively channel agnostic.”

You probably caught the “less loyal part”—indicating that the news is not all good for retailers. However, digitization can go a long way in promoting loyalty in consumers. If they have a revolutionary, highly engaging experience with a brand, they will inevitably want to shop there again. So, businesses need to test out new ways to engage users and enhance their experience.

What’s Next for the Digital Transformation of Retail?

The fact is, it’s no longer simply about digital transformation—it’s also about digital acceleration. As the world becomes increasingly digitized, customer demands and expectations are changing, too, and retailers must rise to meet them. They must incorporate technologies of all types at unprecedented rates of speed, constantly innovating and evolving to face their competition and succeed.

In the future, we will see more and more personalization and customization, digital interactions between brands and consumers, investment in digital storefronts as opposed to physical ones, and data-driven decisions. Promotions and engagements will need to be targeted.

Digitization is a journey, not a destination. And retail businesses must continue to adapt and evolve.

Alexander Levi Daniels

By Alexander Levi Daniels

As Director of Engineering, Alexander Levi Daniels uses his varied areas of expertise, including marketing, web and app development, and business management to help translate BairesDev's technical vision into reality. He does so through the high-level coordination of engineering teams and projects.

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