By now, many people have heard of the so-called retail apocalypse underway in the U.S. and other developed economies, but much less talked about is the retail renaissance. This is how a recent report from Deloitte Digital and Salesforce explains the current retail landscape, and the phrase is surprisingly apt.
The European Renaissance gave rise to the Scientific Revolution by bringing about a mode of thinking that challenged contemporary scientific doctrine. This led to a surge in scientific discoveries and innovation. It’s not entirely baseless to compare the current state of the retail industry to that period of history.
While modern technology is disrupting many different industries, retailers seem to have seen the light and are pumping a lot of money into new technology. The biggest attraction is artificial intelligence, and the retail industry is now the biggest spender on AI.
According to IDC, retail will spend $3.4 billion on AI technology this year, overtaking the banking industry. Popular use cases include “automated customer service agents, expert shopping advisors and product recommendations, and merchandising for omni channel operations.” In total, IDC projects global spending on AI will reach $19.1 billion this year.
So retailers are sinking a bunch of money into AI. Is that enough to call it a renaissance? Of course not. There are many things going on in retail right now, and the industry is growing in many areas of the world. The Deloitte report points out that retail growth has been greater than GDP growth since 2009 and nearly half of consumers spent more on retail in 2017 than the year before.
Brick-and-mortar stores are also here to stay. While e-commerce is projected to grow by $50 billion through 2022, physical retail will still grow by $36 billion. That’s not bad for an industry in the midst of an “apocalypse.”
Technology is still playing its part, though. More than a third of consumers said they researched a product online while in a physical store. Retailers are also using AI to create more personalized experiences for shoppers.
Experience is the real key in this retail renaissance. Most brands say their unique value proposition is mostly about product quality and, in a distant second place, uniqueness. Yet competition is harsh in the retail space these days. New technologies like AI can better help expose consumers to specific products and more easily guide them towards making a purchase.
This is why so much emphasis is being put on accumulating consumer data today. In spite of the uproar over privacy in recent months, data is still seen as the key to unlocking greater value for and from consumers. More than half of C-level executives surveyed said they are moving towards a single platform in place of existing systems that are too fragmented to provide a good overall profile of consumers.
The retail renaissance could be reduced to yet another story of how big data is upending a traditional industry. It can also be looked at more broadly. Competing in new retail means investing the right technologies that will keep a brand strong and competitive for the foreseeable future. This is why there’s a surge of investment and innovation in this space. That’s why it’s a renaissance.
Featured image from Brother UK.
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