Tech Trends in Retail: Revolutionizing the Customer Experience

The digital age hasn’t only changed how we communicate; it’s also changed how we shop. The result? Retailers are increasing technology investments to meet – and ideally, stay ahead – of evolving customer demands. That’s something Eric Fisch, National Sector Head of Retail and Apparel for HSBC, says will only continue picking up speed. Industry stats support this outlook, which estimates the global smart retail market size will grow at a CAGR of 29.1% by 2030.

Still, the end game remains the same. Even though the industry is moving toward more digital services, increased automation and tech-driven tools and processes – the strategy for retailers has not changed. Their goal is to keep customers coming back. However, the rise in online shopping is also reshaping customer expectations, says Eric. “They expect seamless checkout, fast delivery and better, more personalized customer experiences – and technology will play a big role going forward.”

The pandemic changed how people want to interact – and retailers have continued innovating to meet customers where they are.

• In-store experiences: Making the purchase process more organic.
  • Streamlined options
    • Self-checkout kiosks and buy-online-pickup-in-store gained in popularity with social distancing protocols.
    • Contactless payments using mobile phones, wearable devices and tap-to-pay cards add convenience and speed the process.
  • Instant checkout
    • Apple eliminated traditional checkout counters years ago, and other retailers are jumping on board.
    • That means customers don’t have to wait in long lines to complete purchases – any specialist on the floor can ring up goods on the spot.
• Online experiences: One-click checkout.
  • Speed is the name of the game
    • More online retailers offer one-step checkout processes, whether it’s their own, like Amazon, or a third party, such as Apple Pay, Visa Checkout or PayPal.
    • Orders are placed with one click using stored details and a verification step such as fingerprint or facial recognition.
• The objective? Removing any barriers to purchase.
  • According to Eric, retailers have been paying closer attention to abandoned checkout, online or in-store. “What they’re seeing is the more complicated the purchasing process – or the more ‘friction’ – the higher the risk of losing a sale.”

With the increase in online shopping, retailers are adding a direct-to-consumer component to their business models.

• What changed? Retailers are using warehouses differently.
  • Historically, warehouses were primarily for storage and bulk shipments to wholesalers and individual stores.
  • Now, they’re also moving thousands of individual direct-to-consumer packages every day.
• What’s the challenge? Consumers expect delivery within as little as two days.
  • “Retailers are faced with pulling, packaging and shipping products as quickly as possible,” explains Eric. “They traditionally haven’t been set up to operate this way.”
  • From a technology standpoint, the answer is two-fold, he says.
    • Robotics and automation: The more automation, the more efficient retailers become at running products through the warehouse.
    • Internet of Things (IoT): Smart technology can further help with inventory management, tracking which products are on the shelves and automatically placing orders when stock gets low.

Although there’s been a lot of apprehension about the potential downsides of artificial intelligence (AI) – it is here to stay, and retailers can use it to their advantage.

• Realistic chat capabilities. AI can create a more natural interaction.
  • Old chatbot models were frustrating and impersonal, and escalating issues typically required the consumer to re-enter relevant details.
  • AI-driven chatbots can absorb questions, access all necessary information and respond in plain English.
  • The ability to interact in a natural, human and more personalized way leads to higher conversion rates.
• Product descriptions. Using AI to generate marketing copy can get products on the website faster.
  • This is especially useful for online resale retailers.
    • As Eric describes it, you might have thousands of one pair of jeans available in traditional retail– that’s one description.
    • “In resale, you may have two or three of the same pair – same brand, style and size – but each has to have its own SKU and description because each has a different wear pattern and lifecycle.”

Longer-term, we’ll see the industry continue using technology to build on sustainable practices and experiment with augmented reality.

• Sustainability remains a key consideration: A lot of time and energy is being spent on technology to improve processes and underlying materials.
  • Making fabric and garments takes an enormous amount of water – and manufacturers are exploring waterless washing processes, such as using sand to process denim and more eco-friendly dyes.
  • What will really make a difference, says Eric, is when the ability to recycle clothing at end-of-life becomes cost-effective.
  • “Right now, we’re seeing innovations recycling plastics to make shoes and bags,” he explains. “But when we can commercialize the collection and recycling of cotton, wool and synthetics – that will be a big step forward for the industry.”
• Augmented reality is back in the conversation: There was a lot of buzz around the technology a few years ago, and it’s heating up with the release of Apple’s Vision Pro.
  • Augmented reality tech essentially overlays an image – or series of images – onto the real world.
  • Here’s an example:
    • Using a wearable device, a consumer could be in the kitchen with a recipe displayed in front of them.
    • To the left, they could add any missing items to a virtual shopping list.
    • To the right, perhaps in the living room, their favorite show could be playing on a ‘screen’ the size of the wall.
  • “The application for this type of technology for the retail market is significant,” says Eric. “With it, retailers can potentially create virtual storefronts that allow consumers to personalize their shopping experience in an entirely new way.”

Want to learn more about how HSBC supports the retail and apparel industry? Check out our most recent article – Resale, Refurbish and Rental – on sustainability and circular fashion.