Jan 24 2018
Digital Workspace

5 Retail Tech Trends to Watch in 2018

Personalization, artificial intelligence, voice assistants, IoT and enhanced security measures will help retailers get ahead this year.

More than 35,000 retail industry experts and technologists gathered last week at NRF 2018: Retail's Big Show in New York City to chart the path ahead for the retail industry.

There were a lot of buzzwords coming out of the conference: machine learning, computer vision, seamless experience, the notion that the term "omnichannel" is passé.

NRF 2018 also previewed the technology trends that will dominate the retail landscape in 2018. Wider adoption of artificial intelligence, technologies that deliver a more personalized customer experience, Internet of Things deployments and enhanced security technologies will likely be the trends to watch, according to retailers and industry analysts.

Here is a look at the key retail IT trends to stay on top of in 2018:

SIGN UP: Get more news from the BizTech newsletter in your inbox every two weeks!

1. Personalization Will Prove Key to Digital Transformation in Retail

One of the words that NRF 2018 panelists and attendees repeated over and over at the conference was personalization. How can retailers make their digital solutions personalized and deliver customized user experiences to shoppers?

Terry Lundgren, executive chairman at Macy's, tells Forbes, "The whole concept of personalization is simply on steroids right now."

"It's all about the consumer in that one moment in time," he adds. "We're doing anything we can do to connect directly with consumers and make shopping convenient for them."

Nicole Leinbach Reyhle, founder of the retail industry website Retail Minded (one of BizTech's 25 Must-Read Retail IT Blogs of 2017), says more retailers are empowering their sales associates to develop digital presences or landing pages online that allow them to connect directly with customers.

Customers who meet associates in physical stores may want to stay in touch with an associate after they leave to check in on products or find out about deals. Mobile apps, chat tools and personalized pages allow associates to more deeply engage with customers in personalized ways. "That relationship between shoppers and sales associates is evolving rapidly," Leinbach Reyhle says. "Now, you are able to expand that relationship beyond that store visit."

A December 2017 study from Salesfloor found that 84 percent of shoppers preferred using email and text messaging over other forms of communication to engage with store associates. "Despite these preferences, many retailers still have not provided sales associates with the necessary tools and training needed to meet shoppers' expectations outside of the store, leading to missed sales," Retail Supply Chain Insights reports.

Technologies such as Salesfloor's platform allow sales associates to create their own personalized version of the retailer's e-commerce site featuring personalized products, trusted advice and live shopping services.

Katrina Gosek, senior director of digital customer product strategy at Oracle, tells BizTech that a "constant holy grail" that retailers are seeking is to personalize and optimize products, inventory, content and offers, and that artificial intelligence will be a major part of that.

Neiman Marcus Group CEO Karen Katz tells Forbes that in 2018, great customer experiences "will come from blending technology with a more personalized touch. I think the people that can combine technology-powered personalization with a human will be the winners."

2. AI Applications Will Gain More Clout

Retail experts at NRF 2018 said that retailers should use artificial intelligence to solve problems, and not just deploy it for its own sake. In 2018, retailers will start to discover the power of AI.

Gosek says that AI will be "finally something that helps retailers reach that holy grail" of personalization this year. She also notes that AI-based chatbots "serve an interesting purpose" because they can answer frequently asked questions that might otherwise be done at greater expense by store associates or call center agents.

Charlie Cole, global chief e-commerce officer at Samsonite, tells Forbes that 2018 is the year that "artificial intelligence will have its breakthrough moment. More and more retailers will start using it to power various parts of the retail and e-commerce experience."

Retailers should integrate AI with an agenda, Leinbach Reyhle says. "How will this help me?" she asks. "You don't want to do it blindly."

It's critical that retailers put in place IT systems to capture and analyze the data their AI applications generate. That can lead to smarter and more intuitive experiences via machine learning. For example, AI systems can trigger automatic inventory replenishment.

AI cannot replace human decision-making though, Leinbach Reyhle cautions. "The data is only as strong as the people who review it," she says. "Ultimately, as business leaders, we have to be proactive enough to make decisions based on the data that is received."

3. Voice Assistants Will Start to Crop Up in Physical Stores

Digital assistants such as Amazon's Alexa and Google Assistant will become more visible on store shelves — at least, in certain types of stores.

"For example, categories like consumables will start to take off in voice, but categories like fashion may have a harder time," Cole tells Forbes. On the other hand, Cole notes, "No one is going to say, 'Hey Google/Alexa, order me a $1,200 cashmere sweater.'"

1-800-Flowers CEO Chris McCann tells Forbes that voice assistants will allow the company to deliver a more personalized customer experience. "With voice as the main interface emerging, I think it will bring us back to the retail experience of our first flower shop where we delivered a true one-to-one relationship," he says. "Voice enables us to have a one-to-one relationship with customers on a massive scale."

Brick-and-mortar stores may start to incorporate such assistants in dressing rooms or retail displays on store floors, Leinbach Reyhle says. Customers may be able to have apparel in a different size dropped off at the dressing room thanks to commands associates receive, or a voice interaction may allow a customer to get more information about a product and its availability.

4. The Internet of Things Will Streamline Checkout

Lost amid the hubbub over AI is the Internet of Things. But Leslie Hand, vice president for IDC Retail Insights, thinks IoT has a lot of room to grow in retail. Based on IDC's surveys, retailers still plan to spend the next 24 months investing in IoT solutions for inventory management, she says.

They also want to achieve the goal of "one-click checkout," which means integrating connected sensors and radio-frequency identification tags with payment and point-of-sale systems, as Amazon aims to do with its Amazon Go store.

Such solutions can also incorporate IP-connected digital video cameras, facial recognition technology and computer vision. RFID tags are still widely used, Hand said. Companies that put such tags on all of their goods "could easily start looking at" cashierless checkout.

However, in most cases, RFID tags are still going to be used for inventory management and loss prevention, she says.

5. Security Will Remain a Top Retail Concern

Retailers feel like they have made significant investments in security technology in the last few years, Hand says, especially to implement EMV security technologies to authenticate new credit cards with embedded chips.

That has involved investments in point-of-sale security, data management and encryption, and general network and web security tools.

That will continue in 2018, as retailers still feel under threat, Hand says. "I think they continue to feel like vulnerability management is a No. 1 place to invest," she says. That includes encryption, email security, identity access management and multifactor authentication.

PhotoBylove/Getty Images

Learn from Your Peers

What can you glean about security from other IT pros? Check out new CDW research and insight from our experts.