Is Your Organization Prepared to Tackle These Retail Industry Trends?

Amid the sea of disruption swirling around us each day, the waves of change are moving most quickly and dramatically in the world of retail. Retailers must rapidly adapt to a world where experiences are becoming more valued than things. Consumers expect shopping to be convenient and memorable. And with the pandemic, they are more aware of safety as a main pillar of their experiences. But how are current and emerging technologies going to address these retail industry trends and complex expectations?

The pandemic altered numerous aspects of our lives. In retail technology, the pace of digital transformation accelerated at a breakneck pace we couldn’t have imagined but that will continue for years to come. “We experienced the equivalent of five years of digital growth in eight weeks of time. In that sense, we jumped from 2020 to 2025,” said Neira Hajro, who led a study conducted by McKinsey & Company.

The research shows that digital converts became tech-savvy very quickly as they shifted to online buying for all types of purchases — from food and medication to furniture and tools. As consumers tried new brands and encountered new digital experiences, they also began to have higher expectations for their retail interactions. Our own Future of Retail Technology survey research with more than 300 retail sector decision-makers responsible for their organization’s operational technology backs that up.

Trend #1: Accelerated shift to omnichannel models

E-commerce is growing rapidly with global sales topping $3.5 trillion in 2019, and forecasts estimate the industry will be at $6.5 trillion by 2023. Also by 2023, e-commerce is expected to account for 22% of all global retail sales. This growth in e-commerce and m-commerce is being driven by a variety of emerging trends including improved mobile shopping experiences, increase in BOPIS (buy online, pick up in store), easy access to curbside pickup and expanded rapid delivery by retailers and third-party providers.

This shift to a multichannel strategy provides consumers with a choice in how they shop. Yet even a high-quality multichannel program misses out on the rich rewards of a well-crafted and integrated omnichannel model. Fortunately, retailers that currently have a robust multichannel approach to customer acquisition and retention are well-positioned to make an accelerated shift to an omnichannel strategy. Even retailers with legacy systems can make the leap if decision-makers are willing to invest in the technology and culture shift needed to create and implement an omnichannel platform.

Omnichannel unleashes the power of a seamless customer experience in which all browsing and transactions feel as if they’re truly provided from within the same ecosystem. Today’s customers crave a personalized, information-rich approach to retail that allows them to get what they need with minimal hurdles, effort or human interaction.

On average, companies with strong omnichannel customer engagement retain almost 90% of their customers, compared to a third for companies with weak omnichannel engagement. Furthermore, 90% of customers expect consistent interactions across channels. Omnichannel is not becoming standard; it is the standard.

of consumers expect consistent interactions across channels

Taking a closer look at the Jabil survey results, we found that companies with international operations are the most likely to deploy online and in-store technology equally. Strategically, this integration allows them to increase brand recognition and customer loyalty by expanding their reach, while also optimizing the tangible experience and traditional services.

We can already see this concept being utilized in many chain stores in the U.S., such as BestBuy, Lowe’s and Target, which offer collection points for online sales at the front of the retail store, thereby augmenting the brick and mortar to support the online channel. Similarly, restaurants that offered curbside service during the pandemic lockdown are now adding inside collection points as options for retrieving carry-out without waiting in line. The bottom line is that a convenient, customized experience for the shopper translates into loyalty and profits for the retailer.

Trend #2: Artificial intelligence & data personalizes the customer experience

As retailers transform their operations to embrace an omnichannel strategy, inventory becomes increasingly difficult to forecast and track. Retailers must juggle managing inventory in the store while also predicting who will buy online. Ensuring that their online presence accurately reflects the in-store inventory may also be a problem.

A customer that shows up at the store expecting to pick up an e-commerce order or shop from the shelves will not be happy to discover that the item is unavailable. Yet this remains a problem for some retailers. And a previous positive experience can quickly be forgotten by a customer that feels inconvenienced or believes that the retailer’s systems are unreliable.

The average U.S. store operation has an inventory accuracy of only 63%. In a manufacturing setting, this would be catastrophic to order fulfillment and revenue; in a retail setting, this is detrimental to customer experience, basket size and loyalty. Inventory distortion (including shrinkage, stockouts and overstock) is also estimated to cost retailers $800 billion a year globally.

the average U.S. retail store operation inventory accuracy

Artificial intelligence (AI) and analytics can be used to monitor (or predict) inventory more accurately; but they aren’t just about inventory. They are an integral part of delivering the rich customer experience that consumers demand. For retailers that have a skill gap in these areas and disparate systems, the challenges of optimizing data can seem overwhelming. But if retail is to deliver a seamless experience through a next-level digital transformation, data is going to be an important piece to that success.

However, data for data’s sake can be a waste of time and resources. Retailers must determine what data they deem most valuable to their business, find a way to efficiently collect that data and then determine how to best use it to deliver a unique and brag-worthy customer experience. That’s why 94% of retail decision-makers from Jabil’s survey affirm they are implementing or considering technology to improve retail store analytics.

of retailers are implementing or considering technology to improve analytics

E-commerce retailers can record what a consumer purchased and when, as well as track where the user is shopping in terms of both physical location and device used. Online retailers can also determine the path the customer took to reach their site, serve up enticing ads and send targeted emails to the user. They have a much better understanding of consumer preferences.

Brick and mortar stores may be at a disadvantage for this level of customer insight. It’s possible to track some consumer behavior through loyalty programs, which can link purchases to specific individuals — but it doesn’t include the physical path through the store, the buyer’s browsing patterns and what ultimately moved them to fill their basket.

Many companies are working to develop machine or computer vision in stores to address this challenge. This technology — already used in the Amazon Go stores — can record how customers interact with a product, such as picking it up and putting it in a basket, or putting it back down and then moving it to another shelf. It helps retailers handle business operations like shelf management, inventory data collection and compliance, as well as spot suspicious behavior and monitor theft.

The November 2020 Mobilization of Grocery Shopping report revealed that 89% of U.S. grocery shoppers use a smartphone at the store, according to CPG sales and marketing firm Acosta. This statistic — among many others — demonstrates the opportunity to utilize geofencing and connected packaging to gather increasingly detailed data for the purpose of more sophisticated AI.

of U.S. grocery shoppers use a smartphone at the store

As the consumers’ in-store and mobile shopping experiences further converge, it will be more important than ever to ensure that the omnichannel retailer is digging deep into the data to understand how to use this information to grow profits and increase customer loyalty. This loyalty can partially hinge on how the data is used and secured. As our world experiences broader-based and more sophisticated cyberattacks, protecting customers’ data is of paramount importance and must be a part of any analytics and AI initiative.

Trend #3: Packaging connects with consumers beyond the shelf

Before websites, much of the product learning and selection process took place at a retail shelf with Point of Sale (POS) messaging. That’s why Consumer Packaged Goods (CPGs) companies have traditionally made major investments in R&D and marketing to win in-store consumers. But in an omnichannel world where consumer goods are purchased in every way imaginable, the market dynamics have changed for CPGs and retailers to connect with consumers and track their product path.

“Smart packaging is becoming the new standard in the manufacturing space,” David Roberge writes for Industrial Packaging. “The possibilities for utilizing printed electronics in packaging are almost endless, from labels that offer exclusive content and information for customers to bags that assess produce freshness.”

Connected packaging is just one part of the ecosystem known as the Internet of Things (IoT). The “things” in the IoT ecosystem can be any object that includes sensors designed to send and receive data via the Internet. In addition to improving inventory management with connected packaging solutions, IoT can also contribute to other physical store needs such as contactless payment or self-checkout, social distancing, BOPIS and curbside pickup.

Three in 10 retail decision-makers said they are implementing or considering connected packaging to improve the customer experience, according to the Jabil survey. Half of the respondents say they are considering home integration such as auto replenishment and usage tracking as part of their future — using smart packaging in this way can extend the retail ecosystem to the home by providing product usage tracking data and opening new doors into auto replenishment for brands and retailers.

Imagine a shipment leaving the production facility with an embedded sensor inside the packaging that monitors its location, temperature, any incidents of damage and even evidence of tampering. In these ways and more, connected packaging and the untapped power of IoT have the potential to transform the retail supply chain, ensure product integrity and heighten the overall customer experience.

Trend #4: Retail robotics & warehouse automation help retailers meet consumer demand

The talent shortage and consumer demand for both lightning-quick service and accurately stocked shelves continue to escalate the need for automation. Data from December 2020 backs up that trend, with warehousing and storage jobs growing by 8% during the last 10 months of that year. Courier and messenger jobs — workers who deliver for retailers — also expanded by 22%, according to the Wall Street Journal.

Retail robotics can take on a wide range of in-store activities — all of which are designed to increase safety, improve day-to-day operational efficiency and deliver a superior customer experience. Some of these tedious tasks include looking for spills or tripping hazards, assessing inventory levels, updating shelf pricing, checking planograms, and handling other time-consuming responsibilities.

In 2019, we saw the rollout of nearly 500 multi-purpose robots from Badger Technologies in a grocery retail setting, automating hazard detection and improving in-store operations. This year, look out for additional deployments in other retail settings, shifting the conversation from, “Why is there a robot in this store?” to, “Of course there is a robot in my store.”

Nearly one-third of participants in Jabil’s omnichannel retail strategies survey said they were implementing or considering robotics and automation to improve the customer experience in their stores. Almost another 20% said they were looking at autonomous robots to improve retail store operations and efficiencies.

of retailers say they are looking at autonomous robots to improve operations and efficiencies

In addition to retail robots, key trends are showing an increase in the use of automated services such as smart lockers, self-checkout, intelligent vending and self-service kiosks.

Freestanding and in-store fulfillment warehouses are extending the omnichannel, relying heavily on automation in order to reduce costs, improve accuracy and expedite putting product in the consumer’s hands. And this market growth is just getting started. It’s projected that the warehouse automation market is expected to reach $27 billion by 2025. Emerging e-commerce fulfillment center technologies include:

  • Autonomous Mobile Robot (AMR)
  • Pick Assistant with Autonomous Mobile Robot (PA-AMR)
  • Automated Storage and Retrieval System (ASRS)

Although robots and automated warehousing systems will dominate many aspects of retail, it won’t eliminate the need for skilled employees. “In an industry always on the knife-edge of thin margins, the promise [of automation] is hard to ignore,” Nikki Baird writes for Forbes. “Keep in mind, though, that technology alone is not enough; retailers must prepare their people. It is essential to have team members who can program, repair and work with these tools.”

Picking the Right Partner for Retail Technology Success

Realizing the need to develop and implement technology in order to improve their operations, service and shopping experience, 88% of retail decision-makers indicated they were undergoing a digital transformation initiative in 2020, according to a Jabil survey.

of retailers are undergoing a digital transformation initiative

And when survey participants were asked what area has benefitted the most from their technology investments, we saw a clear winner — the customer. In fact, 95% of decision-makers have seen positive impacts on the customer experience due to overall retail technology investments and implementations.

have seen positive impact on customer experience due to retail technology investments and implementations

To build a successful retail ecosystem, the importance of superior partners and collaborative efforts to implement these retail changes cannot be overstated. According to the Jabil survey, retailers are approaching partnerships and collaboration in different ways now.

Just over 30% said the best approach is to work with a manufacturing solutions provider; 23% said it is to buy existing solutions from an electronics company; 10% say it is to build in-house expertise to do it themselves; and 36% say a mix of these practices are necessary to leverage the entire ecosystem’s expertise. However, when asked to rate their organization’s in-house capabilities to innovate and implement technology, only 16% said they had everything they needed.

Retail innovators that are focused on investing in technology through incremental changes can transform both the customer experience and their own operations when they approach it with a “why first” mindset. As retail leaders discover their “why” and form strategic partnerships with technology experts, they are well-positioned to develop a strategy that delivers the sustainable results they’re looking for in this new retail landscape.

Jabil's Retail Technology Solutions

Retail Innovators that are focused on investing in technology through incremental changes can transform both the customer experience and their own operations. Clients leverage Jabil Retail Technology Solutions “why first” approach to gain insights, drive efficiencies, create new business models and transform customer experiences.


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