Which technology trends should retailers be considering in the new year and why is it worth investing time and money in them? We asked a panel of industry experts to talk us through the frontrunners
1. Gen-AI projects gathering pace
Artificial intelligence – or, more specifically, AI – was the Collins Dictionary word of the year in 2023, but the coming 12 months look set to be when retail begins to find real user cases for it, in particular the generative AI (Gen-AI) strand of the technology.
Natalie Berg, founder of consultancy NBK Retail, says: “Last year was all about AI bursting into the mainstream, and the mind-boggling pace at which consumers have adopted the tech means retailers just cannot ignore it – so 2024 will be all about deployment.”
But what practical uses of Gen-AI might we see? Carrefour in France is using ChatGPT to fuel its website chatbot while THG chief executive Matt Moulding says his group, which owns brands including Lookfantastic and Cult Beauty, will use AI for “all forms of forecasting”.
“It’s a lot more complex than just stock – it’s the whole supply chain – but AI can chew through that data faster than humans can, so we will be using it,” explained Moulding when he was interviewed for Retail Week’s Retail 2024 report, published in September.
For retail technology consultant Miya Knights, Gen-AI will influence many fundamental parts of an organisation.
“Supply chain, merchandising, marketing and customer service – I think we’re going to see Gen-AI applied in all of these areas,” she argues.
Knights predicts the tech will enable commercial teams, for example, to push data through a Gen-AI algorithm and produce a PowerPoint presentation, “making trading meetings a lot less daunting”.
When it comes to merchandising, the onboarding of new products and product images online can be managed much more quickly and dynamically, she adds.
“Gen-AI is helping marketers to generate promotional copy more quickly and, on the customer service side, it is being used to help contact centres aggregate customer information to ensure relevant data is surfaced at the point of shopper interaction,” she says.
Anna Barsby, a former Halfords and Morrisons chief information officer turned founder and managing partner of consultancy Tessiant, notes: “Gen-AI is great for structured data – for example, the names and addresses retailers hold in their systems.
“So it allows you to put your data resources into unstructured data or areas that are going to be a differentiator. Gen-AI is not going to solve every data problem you ever have, but there will be a place for it and it will allow a lot of great efficiencies, although we’ve all still got to truly learn what its place is in the months ahead.
Berg adds: “I’m excited about AI-powered shopping assistants, which have the potential to be a game-changer for online shopping in terms of creating a more relevant, curated, filtered and seamless experience.”
2. Green agenda influencing IT strategy
From Amazon deploying warehouse automation to minimise packaging production to Iceland using telematics to reward delivery drivers for more efficient driving, there is a plethora of tech aimed at reducing retail’s carbon footprint.
But significantly, more retailers are investing in supply chain mapping software as part of their environmental, social and corporate governance (ESG) strategies.
Sara Brennan, positive business director at Pentland Brands, another company using Segura’s software, says: “Our supply chain is complex and data holds the key to unlocking progress towards our sustainability goals, which will likely be a trend for all retail businesses in 2024.”
She cites two reasons for this, firstly “to address the increasing consumer demand for transparency around where their products are made”.
“Having the right traceability data enables businesses to join certified sustainability schemes, which consumers trust,” Brennan adds. “In the future, we also plan to share traceability data directly with consumers to support their purchasing decisions.”
Secondly, she continues: “Upcoming legislation and the need for increased due diligence from businesses around human rights are both reasons that investments in technology will only continue.
“These issues are complex and ever-changing, so they can only be addressed with actions supported by reliable data.”
3. Continued adventures in cloud
Tech powerhouses such as Amazon, Google, Microsoft and Salesforce are prominent players in supporting this ongoing move away from an on-premise IT environment. This trend is expected to continue at pace in 2024, according to the analysts Retail Week spoke to.
Currys chief data officer Susie Moan says work over the last two years to migrate company data to Microsoft’s Azure cloud platform is setting the business up for the future and putting it in a better position to embrace the power of Gen-AI.
Meanwhile, John Lewis Partnership has extended its cloud partnership with Google in a move it expects will provide the building blocks for various future customer-facing innovations.
Announced in September, the JLP-Google deal is worth £100m over the next five years and will involve the retail group tapping into the cloud provider’s advanced AI and machine-learning capabilities.
Zaka Mian, chief transformation and technology officer at JLP, said at the time that the deal was “a significant step in transforming our technology”.
He added it “ensures that our partners have the best tools to provide our customers with even more personalised experiences, across all our channels”.
According to Knights, cloud technology is supporting retail operations from front to back.
“We’re seeing all the major supply chain suppliers migrate to cloud-based software-as-a-service systems,” she explains.
“Cloud migration isn’t just a fad; it’s become a trend because it’s a better way of consuming software, as a service. It should mean paying only for what’s used and it can scale up and down with requirements.”
Following this route, Knights adds, also means the software should always be up-to-date, running the latest version and require less end-user maintenance, such as user-acceptance testing, release processes and all of the associated overheads.
“Cloud systems can enable IT to lower costs and shift some capex resources to the opex balance sheet,” she continues.
4. Improvements in supply chain tech
For Knights, there is an expectation that if retailers are to start making ecommerce truly profitable, systems investment is required.
Having a single stock pool serving all channels and having one view of the customer, no matter where they transact with a retailer, in order to recognise and reward one’s best shoppers is crucial, she says. There is likely to be improvements in this area in 2024.
“Retailers need to stop using sticking plasters in the back end so they can create a seamless front-end experience for the customer,” Knights argues.
“Supply chain is not sexy but it will be the differentiator going forward – it will separate the winners from the losers and will be where retailers start affecting margin, increasing efficiency and productivity.”
With tight balance sheets, retailers might be best advised to prioritise supply chain investment, according to Knights.
“Retailers are really cash-poor right now and in-store enhancements, particularly digitisation of stores, which is still required, is really capex-intensive,” she says.
“It’s easier to prove the return on investment on an order management system because retailers can see the impact it has online and in stores.”
Despite much talk of cloud investment and digitisation of the supply chain over the last decade, there is still “lots of catch-up required” in retail in this space, Barsby argues.
“We’re still seeing a lot of connected end-to-end supply chain work needed as retailers move away from spreadsheets onto enterprise solutions,” she explains.
“You’d think everyone would have that by now, but they really don’t.”
5. Leveraging first-party data to drive revenue
December 2023 gave an indication of what is to come in the year ahead for several retailers when Currys and B&Q announced the launch of new retail media propositions within a week of each other.
A data-led strategy for each of these businesses, retail media is the catch-all term for retailers monetising their assets to help brands reach consumers with more targeted messaging and marketing campaigns.
With so many opted-in customer records, or first-party data as it is known, retailers building these propositions correctly will connect brands with the relevant consumers at the most appropriate times to drive conversions.
The largest supermarket chains have established themselves as retail media platforms online, but in 2024 retailers in other sectors look set to step up their participation here.
There is a whole growing ecosystem of tech companies helping retailers as they launch into media, too.
From vendors supporting online ads, such as Criteo, to data platform providers such as Epsilon and CitrusAd, as well as core ad management system businesses such as ADvendio, this is a fertile sub-sector of the retail tech industry.
Moan explains the trend, saying chief data officers increasingly need to prove data can be a business driver, not just an information source.
“We’re using data in a way that is more than just a reporting enabler – it’s really getting into business strategy,” she explains.
Media agency conglomerate GroupM predicts brands will spend £6.5bn on retail media in the UK by 2027, which would equate to 16% of digital ad spend.
With such revenue projections, more retailers are set to spend time in 2024 exploring the tech investments needed to help take a share of this burgeoning market.