The future of retail: IoT, Artificial Intelligence and more

The future of retail: IoT, Artificial Intelligence and more

Technology enables consumers to make better informed decisions about which products or services to consume.

In a world where consumers can purchase anything from shoes to stereos online, have packages drone-delivered, buy bananas at a 7-Eleven and a TV at Walmart, retailers of all stripes have to get creative to stay relevant.

Several Levi’s stores in the US are using a new inventory management system based on the Intel Retail Sensor Platform where a sales associate can not only see a pair of jeans in stock, but sensors attached to every pair of pants in the store tell them exactly where they are inside the store.

“Worldwide retail is about a US$4.4 trillion industry, but inventory overstock and out-of-stock costs the industry about US$1.1 trillion annually,” said Rachel Mushahwar, general manager of Intel’s sales for retail, hospitality and consumer packaged goods in the Americas.


In the rapidly evolving retail landscape, consumers’ needs still drive their purchase decisions. Shoppers make most consumption decisions, yet newer technologies (Internet of Things, robots), newer business models (subscription models), and Big Data/predictive analytics suggest that the shopping process is on the verge of a quantum leap into an unknown realm. The result is a powerful need to understand critical retailing areas in which innovations are changing the game, so that we can better understand where the retailing field will be evolving in the future.

In modern, multifaceted, omni-channel environments, consumers are bombarded with information about goods and services. Retailers that can connect with their customers by providing targeted information and offering value stand apart and have the potential to create deep customer engagement. Technology can help retailers target appropriate consumers; technology also enables consumers to make better informed decisions about which products or services to consume.

Yet not all consumer decisions rely on extensive information searches and detailed decision processes. Some decisions are spontaneous, produced quickly while shopping online or in stores, often prompted by strategic visual presentations and merchandise assortments crafted by the retailer.

A purchase provides the retailer with a multitude of disparate information, including transactional data (for example, price paid, quantity purchased, shopping basket composition), consumer data (gender, age, family composition), and environmental data (weather). Retailers that can draw effective insights from Big Data can make better predictions about consumer behavior, design more appealing offers, better target their customers and develop tools that encourage consumers to make purchase decisions that favor their products.

Thus, Big Data can initiate beneficial, cyclical processes of consumer consumption and engagement that in turn lead to enhanced profitability.

The Journal of Retailing, written by researchers as Dhruv Grewal, Anne Roggeveen and Jens Nordfält, (January 2017) explores five key topic areas: (1) technology and tools to facilitate decision making, (2) visual displays and merchandise offers decisions, (3) consumption and engagement, (4) Big Data collection and usage, and (5) analytics and profitability. The paper concludes with a discussion of newer emerging forces: Internet of Things (IoT), virtual or augmented reality, artificial intelligence, and robots/drones/driverless vehicles.


Retail is evolving at an accelerated rate due to changes made possible by technologies and evolving consumer behaviors. Integrating channels and the power of Big Data are not distinctive factors anymore but rather are prerequisites of competiveness. Where the field goes will depend on even newer emerging forces: The IoT, virtual or augmented reality, artificial intelligence, and robots/ drones/driverless vehicles, mentioned the Deloitte study Retail Trends (Deloitte, 2016).

Research into the IoT should clarify how it may influence shopping behavior, as well as the role of frontline employees. Smart homes are being designed with a host of smart appliances (such as refrigerators) that can reorder products as stocks get low. Similarly, smart cars convey relevant information to service departments and may schedule future service appointments.

Thus, research needs to explore whether the IoT will increase consumers’ engagement with retailers, service providers, and brands or if it will reduce consumer engagement, as machines take over all the “talking” to other machines (the start of machine-to-machine commerce).

Virtual and augmented reality has offered vast promise for a long time; those promises are just beginning to be realized. The new forms of technology-based reality and applications enhance sensory perceptions. For example, fashion retailers use new technology to help customers engage in virtual fashion shows, as the Deloitte 2016 study showed. Apps using augmented reality also are advancing such as apps for car dealers that allow consumers to view how different components look on a car, or games such as Pokémon GO that combine a hunt for virtual creatures (Pokémon) with the real-world locations of the players. A mobile device’s GPS capability makes this possible.

Apps that rely on artificial intelligence (AI) also are on the rise in a variety of contexts, from Siri on the Apple iPhone, to Cortana on Microsoft, to Alexa on Amazon’s Echo, to query-based response AI systems for retailers (Macy’s On Call). These AI-based responses can have tremendous positive impact on customers as they shop physically or online. They can gather information about where products are physically located within a store, answer questions about the functionalities of a product and make suggestions about what other products might work well in combination with the purchased item. The answers also may be tailored, according to the consumer’s knowledge (accessing historical customer data sets and using predictive analytics to recommend relevant information or products).

The consequences could include more informed and engaged customers, but they also might mean that service employees’ jobs would need to be retooled to enable them to provide information at an even higher level than available in an AI application. Building on AI-based technology, many companies are testing driverless vehicles and various manufacturers and retailers are taking advantage of advances in the technology for robotics and drones. Major manufacturers and retailers already use robots extensively in their distribution centers.

Amazon also has publicly discussed its plans for drone delivery to augment its existing delivery options. Such applications suggest a host of research possibilities, such that studies should pursue a better understanding of the short and long-term benefits and consequences of different delivery methods.

In conclusion, newer forces will influence how shoppers select channels, choose products and services and make purchases. The worlds of online and offline are converging. Knowing what is different and what is similar in these two worlds, as well as how new technologies are going to impact both, is key for the future of retailing. Innovations are likely to help customers make good decisions, feel less time pressure or even increase their confidence and satisfaction with their decisions.

Retailers in turn need to embrace these new and emerging technologies to make their customers even more engaged, while also making their lives simpler. Finding ways to do so remains an important area of inquiry, worthy of continued exploration.

Retailers are on the cusp of a transformation, one that hasn’t been seen since the advent of the modern suburban mall. Retail, Mushahwar said, is not dying; in fact, it is being reborn to solidify brick-and mortar longevity while meeting the needs of a digital-first population.


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