Peter Ward, Country Manager for UK and Irelands at Pricer has identified three in-store trends for 2024 that retailers should know about as they plan their IT budgets and allocations.
While retail has always been about constant change and innovation, the Gartner 2023 CIO and Technology Executive Survey shows that many retail CIOs have never faced the level of disruption in macroeconomic conditions that we are experiencing now.
Retailers are clearly up to the challenge of adapting to keep pace because at the same time, IT budgets on average are expected to increase by 7.4% this year. Here are three trends that will influence retailers in their tech spending in the coming period.
New era of in-store digital retail media
The need for retailers to improve the in-store customer experience combined with new innovations in digital signage has led to the beginning of a new era in in-store digital retail media.
In the past in-store retail media has often been fairly unintelligent in function and as a result, perceived as irrelevant by many customers. But advances in smart shelves and interactive displays have created the conditions for a better experience, where retailers can track and tailor the messaging across the store and show customers relevant information and inspiration when they need it.
This provides new ways for brands to connect with customers at the point of purchase and for retailers to further monetise in-store signage. In fact, in-store retail media spend is predicted to grow from $8.4 billion in 2018 to $19 billion this year. And according to Gartner, 27% of retail CIOs will also increase their investments in digital media this year. By offering brands opportunities to promote products and inspire customers, retailers can not only enhance the shopping experience and increase sales, but they can also make extra revenue from the brand they feature.
Digitisation for greater efficiency
The rising cost of everything from petrol and utilities to food and TVs puts pressure on consumers to spend wisely and also on retailers to protect margins by optimizing store operations. At the same time, labour costs rise as it become harder to recruit new people.
In the last year, when inflation has peaked in many countries across the world, retailers have tried to adjust their prices to the new situation. But increased prices in stores have also increased scrutiny from media and decision-makers, calling out players in the retail industry and questioning their price hikes.
As a result, retailers have tried to find other ways to save their margins, and digitisation has emerged as a key enabler. We predict that retailers across the globe will digitise further this year by increasing automation of inventory and replenishment management as well as more effective click & collect operations.
AI starts to deliver value
The AI hype curve is still in full flight and actual implementations in stores have been hard to find but this is about to change. While AI and machine learning plays an increasingly important role in estate-wide forecasting and inventory management systems, it will also be more noticeable in the store, for instance using a new generation of camera and sensor to gather data, detect empty shelves and predict consumer behaviour.
There is also a chance retailers could offer AI-powered recommendations in stores, offering guidance to customers when they need it. Numbers from BlueWeave Consulting estimate that AI in retail will grow from $6.21 billion in 2022 to $39.55 billion by 2029 and 31% of retail CIOs in Gartner’s survey will increase their investments in AI/Machine learning this year.
Retailers are in the unenviable position of having to deliver more and better than at any time in their history, but trying to do so in a market that has been dampened by rising costs and political uncertainty which lead to low consumer confidence. There are fewer levers to pull in these circumstances but tech continues to be one of those levers. Given the rise in spend on IT, retailers obviously agree. The challenge will be where to invest; these three trends provide the first clues.
