NRF24 Retail’s Big Show in New York City is fast approaching, and we, IDC Retail Insights will be there. We cannot wait to talk with retailers, technology companies, and industry experts, share our views and learn more about what matters for the industry in 2024 and beyond.
As we prepare for the event, let’s summarize the critical technological imperatives that retailers must embrace to thrive in today’s ever-evolving business environment. Our insights are drawn from IDC Retail Insights’ Global Retail Survey 2023, where over 800 retailers worldwide shared their strategic priorities. Let’s dive into it!
10 Digital Transformation Imperatives for Forward-looking Retailers
Multilevel Loyalty Strategy for a Greater Retail and Customer Experience
We predict that “by 2024, 40% of Retailers Will Adopt a Multilevel Loyalty Strategy, Leveraging a Unified View of the Customer, to Increase Retention Rate by 20% and Net Promoter Score by 35%”. Retailers worldwide are on the brink of customer loyalty revolution, with a staggering 35% gearing up to unveil cutting-edge multilevel programs within just three years, as revealed by IDC’s 2023 Global Retail Survey.
The once-reliable methods like points and promotions are losing their edge, lacking the spark needed to captivate customers. Now, in an era where privacy regulations tighten and accessing third-party data becomes limited, the game-changer lies in collecting firsthand customer data—it’s the cornerstone of tomorrow’s success.
But the game is evolving, and the retail world is diving headfirst into the realm of immersive tech. By embracing this tech-savvy frontier, retailers can elevate loyalty strategies, crafting experiences finely tuned for the ever-evolving Alpha and Gen Z consumers.
Brands like Ralph Lauren and Lacoste are venturing into Web3 for exclusive immersive experiences and community building.
The real challenge is about seamlessly delivering these immersive experiences across every retail touchpoint, navigating a landscape growing more complex by the day. That’s why empowering workforce with digital tools isn’t just essential; it’s a key differentiator for maintaining contextualized customer experiences.
Meanwhile, in the hospitality sector, a digital revolution is reshaping the guest experience, demanding personalized, predictive experiences despite ongoing labour shortages. This calls for a strategic fusion of systems and capabilities, a dynamic approach to cater to the digital-driven needs of today’s guests.
Investing in Technology to Deliver Efficiencies and Effectiveness in the Omnichannel Customer Journey
Retailers are navigating challenging a business environment and are under pressure to increase revenue and reduce costs. According to our IDC Global Retail Survey, while customer experience is at the top of retailers’ concerns, increasing operational efficiency is the second most important business priority for retailers.
This is mainly due to the greater complexity of the business environment the industry faces.
Let’s consider, for example, the role of brick-and-mortar in today’s omnichannel operations. The physical store is the pillar of retail operations today, but it must be connected and fully integrated with digital operations to play its role as the centrepiece of the customer journey.
One strategic imperative for retailers is investing in in-store Technology, such as AI, Computer Vision, and IoT, to digitize, automate, and streamline the omnichannel experience in-store.
While retailers are navigating challenging territories and need to do more with less, they haven’t stopped investing in technology. Top investment areas in 2024 include physical infrastructure, cloud, and managed services.
Therefore, another digital transformation imperative is investing in IT Infrastructure, including network infrastructure to connect the physical store and rethink cloud and edge balance to provide a seamless omnichannel experience.
A transformation imperative that should not be overlooked to streamline the efficiency of retailers’ operations is linked to the importance of embracing a best-of-breed Retail Commerce Platform. Retailers are investing in modular and headless platforms, to move towards composable architectures that match the needs of modern omnichannel retail.
As we can see, retailers should be laser-focused on the technological imperatives that make omnichannel operations more efficient and in turn generate better omnichannel customer experience.
AI and Augmented Reality for Customer Experience
In today’s landscape, AI is everywhere as it’s revolutionizing how consumer brands approach customer experiences. This shift places a heightened emphasis on human-centric approaches, especially as AI and GenAI streamlines routine tasks.
In this augmented context, organizations are placing a premium on customer empathy, trust, and privacy. However, this requires a fundamental leadership’s cultural shift and a business transformation, detached from traditional hierarchies towards flatter structures, identifying shared metrics, and nurturing a collaborative culture where innovation thrives.
Retailers growing attention to and investment in advanced analytics, AI, machine learning (ML), and natural language processing (NLP) are unlocking and demonstrating the potential of generative AI (GenAI). It is a point of no return, where retailers are shifting from being merely data-rich to strategically data-driven organizations.
Omnipresence across different channels, such as social media networks, marketplaces, ecommerce, in combination with personalized engagements allow retailers to extract real-time value from every interaction. AI’s impact on CX personalization is profound, evolving from static segments to real-time, context-driven experiences.
The depth of coherent customer data leverages the integration of AI and ML analytics, notably in predictive product recommendations. Our IDC’s 2024 Retail Predictions say that “by 2028, 50% of retailers will offer AI-enabled contextualized recommendations to enhance customer engagement, increasing real-time interactions by 30% and overall conversion rate by 20%”.
These AI algorithms amplify omni-channel strategies, empowering both store associates and digital agents for seamless customer engagements as well as contextualized marketing and merchandising. AI isn’t merely a buzzword; it’s a game-changer. Particularly, it’s reshaping new revenue streams, such as Retail Media Networks, facilitating and powering orchestration across interconnected systems, aiming to seamlessly handle pricing, inventory, forecasting, planning, and maintain consistency across channels and partners.
Importance of the Supply Chain on the Customer Journey and Sustainability
Retail logistics have seen a few challenges in recent years, including disrupted sourcing streams and workforce shortages, but supply chains have started to readjust. Despite things getting better, retailers are preparing for the future by anticipating challenges like those experienced in the recent past, and now investing in making the Supply Chain even more resilient through greater automation and data insight has become a digital transformation imperative.
The primary reason for investing in the supply chain is to increase efficiency and improve product availability, resulting in a better omnichannel customer experience. Sustainability is also a big factor in retailers’ strategic imperatives related to improving the efficiency of the supply chain.
Fortunately, these two objectives—efficiency and sustainability—are not in conflict with each other. Investing in supply chain efficiency has the potential to reduce costs, improve customer experience, and make operations more sustainable.
Retailers are taking a proactive approach to address the challenges of the future. By investing in supply chain resilience, they are ensuring that they can continue to provide the best possible customer experience while also being mindful of the environment.
Let’s Meet at NRF!
As we anticipate key themes for IT vendors and retailers in 2024, we expect these 10 Imperatives for Success to be prominent topics in our conversations at NRF in January. If you’re attending NRF, reach out to us to arrange a meeting or visit our booth at number #1032.
We look forward to meeting you there!