Retail Technology: All Talk, No Implementation?

 
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Prognosticators have long predicted technological advancements that will drastically change the retail industry.  Retail-oriented technological innovations are “hitting the shelves” as quickly as the advent of new products, prompting retailers to continually reevaluate their technology.  In the face of mounting pressure to be at the forefront of these advancements, Total Retail surveyed retailers on their technology spending earlier this year and issued its 2019 Retail Technology Report in July.[1]  The Report reveals retailers’ strong inclination to invest in more mainstream technologies (primarily those supporting omnichannel operations) but also retailers’ general hesitation to blaze a path forward on other newly emerging and experimental technologies. 

Technology Trends and Challenges

Retailers are currently using inventory management software and order management systems in large numbers - 69% according to Total Retail’s report.  This trend is unsurprising, because such software is necessary to help retailers track inventory and fulfill orders across multiple channels.  Indeed, this software has become increasingly important (and arguably necessary to survive as a retailer in 2019) due to the rising popularity of programs such as buy online, pick up in store (BOPIS), buy online, return in store (BORIS), and ship from store.

A surprising trend identified by Total Retail’s Report, however, is how few retailers are moving to adopt certain emerging technologies.  Less than 10% of respondents reported that their company is currently investing in facial recognition, robots, beacons, and drones—trends identified by many as necessary adoptions for retailers in the modern economy.  This non-adoption is significant, because these technologies offer meaningful ways for retailers to better connect with customers, and offer more efficient service.  For example, facial recognition can alert sales associates when VIP customers walk into the store.[2]  And robots can interface with customers, answering questions that busy sales associates may be unable to immediately answer, and enable retailers to more efficiently utilize warehouse space, and more accurately track inventory.[3]  Retailers who adopt these innovative technologies now will likely edge out their non-adopting competitors.

While the number of cutting-edge retailers may currently fall short of expectation, nearly 3/4 of retailers surveyed by Total Retail anticipate increasing spending on technology in the next twelve months.  Unsurprisingly, more than half plan to increase spending on inventory and order management software.  The focus of future technology investments again evidences a reticence to invest in facial recognition, robots, beacons and drones - less than 20% of those surveyed plan to increase spending on these technologies. 

40% of retailers did indicate that they anticipated increased spending on artificial intelligence, a fairly new innovation for the retail sector.  However, this seemingly marks yet another example of retailers following the pack, versus chartering their own path - 30% of surveyed retailers believe that artificial intelligence is the emerging technology that will have the biggest impact within the next twelve months.                

There is no one size fits all approach to technology for retailers.  Retailers should think beyond the technological investments of their peers, and seek to become technological innovators, and possibly early adopters of new technology.  Encouraging technological innovation from within the company may prove to be the most effective way for retail employers to identify a unique technological strategy tailored to the company, and keep them competitive with their peers.  In particular, employers should encourage employees to leverage existing technology and incentivize employees to create technology to make the business more efficient and competitive.

Retailers in the throes of technological innovation will experience growing pains.  Those surveyed by Total Retail identified the integration of new technology with existing technology (70%) and training staff (49%) as the top challenges when implementing new technology into the business.  Employers may need to technologically upskill their entire workforce, both the back and front office staff, in order to effectively integrate new technology into their business.  Such training is likely to be costly and time-consuming, and employers may face resistance from employees who feel that such training is not necessary for their job.  Employers also need to employ technologists and will likely face significant competition in recruiting and retaining high-performing tech talent.  Such roles are also likely to be costly - salaries will need to be competitive to attract and retain talent, and, due to the evolving nature of technology, these roles will almost certainly involve a sizeable and expensive continuing-education component.

Retailers’ reluctance to embrace certain emerging technologies is understandable, given the unproven results, and the cost of implementation and employee training, to name a few reasons.  However, given the relentless pace of technological innovation and the steep industry competition, retailers who expand their technology investment strategies to focus on emerging and business-specific technologies will be best positioned to adapt as more disruptive technologies change the nature of the retail industry.


[1] 2019 Retail Technology Report: An Analysis of Trends, Buying Behaviors, and Future Opportunities, available at https://mytotalretail.tradepub.com/free/w_totb14/ (last visited August 26, 2019).

[2] 3 Ways that Face Recognition Will Impact Future Retail Stores in 2019, available at https://www.facefirst.com/blog/face-recognition-will-impact-future-retail-stores/ (last visited August 28, 2019).

[3] Robots in Retail - Examples of Real Industry Applications, available at https://emerj.com/ai-sector-overviews/robots-in-retail-examples/ (last visited August 28, 2019). 

 
Kelli Pacha