5 retail tech trends to watch in 2023
Wojustin Honaman leads the worldwide Retail and Consumer Packaged Goods (CPG) Go-to-Market team at AWS highlights five key trends that are going to influence the tech spending in the retail sector this year
2023 is poised to start with a bang. The consumer is resilient. Travel is booming. Supply chains are improving. Shipping costs are moderating. The pandemic is easing. E-commerce marketplaces are accelerating. New online and in-store experiences are once again in focus. And in a recent study conducted with EnsembleIQ in partnership with AWS, 87% of retail tech leaders shared that they expect to maintain or increase tech budget spend in 2023. Here are five retail trends to consider in 2023:
1. Retail media networks
A retail media network is a form of advertising that allows retailers to monetize their first-party data to better serve consumers with more relevant offers as they shop in digital and physical stores and through email/SMS, for example.
Retail media is an attractive business opportunity for many retailers where they display brand ads in store or on apps and e-commerce sites, or shared via external channels such as social media platforms. This is an exciting space to watch and one in which there may be plenty of innovation in the coming months.
Coresight Research estimates that the global retail media industry will total $75.1 billion in 2022, up 80.1% from 2021, making it one of the fastest-growing advertising channels. According to a survey conducted by McKinsey in June 2022, 82% of advertisers plan to increase their retail media spending in the next 12 months.
In the last 12-18 months, there has been a dramatic increase in new product and service offerings enabling a differentiated in-store physical shopping experience. We are in the early days of “frictionless” in-store retail experiences.
As tech investments in infrastructure bandwidth and computer vision continue to accelerate along with cloud capabilities linked to store systems, expect frictionless capabilities to advance quickly. New stores will be the focus where infrastructure can easily be installed prior to build-out.
In a recent study conducted with EnsembleIQ on immersive commerce, 77% of respondents indicated that they are familiar with immersive retail. In this study, immersive retail was defined as enhancement of consumer shopping experiences with technological features in-store (e.g., with apps, QR codes, augmented reality, interactive displays, etc.) and/or online (e.g., with virtual try-ons, 3D product previews, etc.).
The consumer survey by Epson revealed that experientialism is crucial to changing shoppers’ behaviour and could even see them seek out more in-store shopping if it offered an immersive experience. 92% of respondents in UAE indicated they would change their shopping behaviour if more shopping destinations had an experiential element, rising to 94% of Generation Z and 93% of Millennials. The study also revealed that such experiences in retail stores would attract increased spending.
Coresight Research estimated that the value of retail sales in the metaverse and virtual stores to reach nearly $1B in 2030, with a significant early-adopter ramp between 2024-2026. Expect retailers to investigate and test in 2023.
4. Customer 360 (and thus customer data platform)
A Customer Data Platform (CDP) is a technology platform that creates a persistent, unified customer view (aka a single view of customer activity — customer 360). Data is pulled from multiple sources, cleaned, and combined to create a single customer profile.
The customer 360 and CDP topics are front and center in retail today as retailers define strategies to manage customer data either with a centralized agency or bring back in-house to manage as part of a broader loyalty offering. CDPs are powering new loyalty strategies, solutions, and programs given the opportunity to know the customer, serve them where they stand, learn from them, and keep them engaged across channels and outlets. Expect the CDP solution focus to continue into 2023.
5. Supply chain level-up
Retailers in 2023 will have the opportunity to take advantage of cost advantages in the supply chain. Retailers will also focus on supply chain “resilience” in 2023 — resilience: the capacity to withstand or to recover quickly from difficulties. Bottom line, supply chain remains No. 1 or No. 2 on the executive priority list in 2023.
Journey to the cloud
To unlock the potential of digital commerce, retailers are seeking a fresh approach — and this will require new technologies and a new digital architecture, largely leveraging modern cloud-based solutions and services.
The goal of every retailer is to provide the best possible shopping experience by reducing friction throughout the customer journey and merging traditionally distinct channels so customers can move seamlessly between them. This has long been the promise of “omnichannel” and it is key to building an agile and cost-effective digital commerce solution. Adopting composable and headless apps, powered by microservices, helps retailers unify and personalize the shopper experience, reduce maintenance costs, and gain greater business agility and innovation at scale.
Wojustin Honaman leads the worldwide Retail and Consumer Packaged Goods (CPG) Go-to-Market team at Amazon Web Services (AWS). He is also the worldwide segment leader for Food & Beverage. His team’s focus within CPG and Retail is on delivering supply chain, ecommerce, data, analytics, and digital engagement business solutions for customers globally.