Special Feature
Part of a ZDNet Special Feature: Data, AI, IoT: The Future of Retail

10 technologies leading digital transformation in retail

With brick-and-mortar stores closing down left and right, here are the top 10 digital tools giving brands a fighting chance.

The rise of online shopping induced a plague upon brick-and-mortar stores. E-commerce capitalized on consumer's desire for convenience: Why get in your car and drive to a store -- where you may or may not find what you're looking for -- when you can just order it online? This culture shift led some 9,000 stores to close down in 2017 -- a number expected to increase to 12,000 in 2018, according to real estate firm Cushman and Wakefield.

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If brick-and-mortar stores want to stay open and stay competitive with digital natives, they must revolutionize the way they reach customers. However, implementing technology for the sake of doing so isn't productive. Instead, retailers must turn their attention to the customer, and how they have changed in recent years.

"So many retailers are failing because there's still a disconnect with who the consumer is, and what they shop, and why they shop, and how they shop," said Brian Solis, a principal analyst at Altimeter Group.

SEE: Digital transformation: A guide for CXOs (Tech Pro Research)

A good customer experience is vital to the success of any retailer. Yet, only 35 percent of companies undergoing digital transformations have studied customer evolution as a result of technology's impact on their shopping behaviors -- down from 56 percent the year before, according to Solis's research. Companies seem to be implementing technology without really considering why, he said.

However, if companies remember their customers, then technology will help keep the doors open. "It's really about, in many cases, overlaying the digital over the physical -- trying to digitize more of the physical experience to connect with the customer more effectively," said Robert Hetu, research director of Gartner's Retail Industry Services team.

The changing nature of retail means tech leaders have a unique opportunity to architect a new tech-fueled, customer-centered shopping experience, Solis said. "The role of the CIO or the technology architect today is actually one of innovation," he added. "And it's both innovation in terms of technology deployment but also innovation in what that role is in defining the future of retail, or anything for that matter."

Here are 10 technologies that can keep brick and mortars alive and well, if they remember to keep customer a top priority:

1. Digital marketing

With customers glued to internet-enabled devices, digital marketing becomes more important than ever for retailers connecting with shoppers. Whether it's digital coupons, virtual storytelling, emails, or increased ads, companies are upping their digital marketing game. In fact, the top area for new spending in business is digital marketing, according to Gartner's 2018 CIO Agenda: Retail Industry Insights.

2. Analytics

Studying analytics is vital to understanding your customer. Information, like demographics and customer traffic, allows businesses to make smarter decisions based on customer details, as well as to personalize the customer experience. One example of this comes from Samsung, which created a pop-up shop that can share data with SMBs in real time, TechRepublic's Olivia Krauth reported.

3. Omnichannel retail

Omnichannel commerce is a multichannel approach to shopping that aims to make the customer experience more seamless across in-person and online channels. Walmart is jumping on the omnichannel train with it's order-by-text service, TechRepublic contributing writer Jonathan Greig reported. This delivery service allows customers to order goods via text message to increase convenience. Another example is Neiman Marcus' Snap Find Shop app, in which customers can take a picture of an item in the store and look for it or similar items online, TechRepublic's Dan Patterson explained.

4. Artificial intelligence (AI)

AI is automating and customizing the retail experience, aiming to make shopping easier for the consumer. According Deloitte, over a third of major brand leaders are using AI to improve business. One major AI movement is the development of cashier-less stores. Amazon Go, a fully-automated grocery store in Seattle, eliminates checkout lines and cashiers. Amazon is set to open two more stores in San Francisco and Chicago, Techrepublic's Alison DeNisco Rayome reported.

5. Voice

Voice activation AI is so popular it deserves a separate bullet. Whether it's instructing your Google Home to buy you things or asking Siri to search for an item online, voice control has gained popularity in the retail space. Voice activation is now even helpful for retail employees: For example, with 'Theatro,' employees can communicate throughout a store via voice-controlled wearables.

6. Augmented reality (AR)

Augmented reality is completely changing shopping experiences. Consumers can now virtually try on clothes or test products via AR. For example, within Sephora's mobile application, users can virtually sample makeup in real time. By placing filters over their live selfies, users can see what makeup products would look like on their faces, explained Solis in his Leading Trends in Retail Innovation report.

7. Virtual reality (VR)

While AR is transforming the consumer retail experience, VR is changing the business side, according to Forbes. VR is helpful for visualizing and redesigning stores, and testing different layouts without having to physically rebuild the store. Retailer Rebecca Minkoff is using VR to plan store organization that is most convenient and logical for the consumer's preferences, Solis said.

8. Sensor data

Sensor data is revolutionizing brick and mortar retailers. The most popular vessel of sensor data is beacons. Major brands strategically place small beacon sensors around their stores, which connect to customer's phones if bluetooth is enabled and the retail app is installed. With this connectivity, retailers can see how long users are in their stores and what they pick up, as well as offer personalized discounts based on that information. Sephora uses beacons to offer users a map of the store and offer promotions, said Solis in his report.

9. Facial recognition

Facial recognition technology can help retailers better understand customer preferences. According to Forbes, facial recognition can track where customers gravitate within stores, determine customer demographics, and even prevent theft. By tracking where most customers first go in shops, business leaders can develop a store layout that is most productive for its clientele.

10. Cloud services

Inventory tracking, stock availability, shipping details, and orders are all moving to the cloud. With cloud computing, retailers can cut the cost of software development and process data at a much faster rate. For example, Hallmark Cards uses the cloud-based Retail as a Service solution that allows employees check real-time stock availability, inventory, shipping details, and store orders.

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