The future of retail / Survey: Digital, hybrid and with artificial intelligence – VCommerce meets traditional brick-and-mortar store visits

🛒🤖 One in four retailers considers artificial intelligence (AI) a passing trend. However, opinions differ: 56 percent of retailers see AI as crucial for future competitiveness, even though only 4 percent currently use this technology.

The future of shopping lies in both virtual shopping tours and traditional brick-and-mortar stores. Customers can choose between personal advice in-store and AI-powered recommendations in online shops, strolling through bustling city centers, or conveniently comparing and ordering offers online. This hybrid approach is becoming increasingly prevalent: 85 percent of German retailers offer their products and services both online and in physical stores. Before the pandemic in 2019, this figure was 66 percent; by 2021, it had risen to 77 percent. Currently, only 8 percent of German retailers operate exclusively in physical stores, compared to 16 percent in 2021 and 25 percent in 2019. These figures come from a representative survey of 503 retail companies in Germany, commissioned by the digital association Bitkom.

“The coronavirus pandemic has given online retail a significant boost and permanently changed customer shopping behavior,” explains Dr. Bernhard Rohleder, CEO of Bitkom. “This trend is now continuing, with more and more retailers expanding their online activities – but also continuing to operate their brick-and-mortar stores.”

The proportion of companies that use both sales channels and generate at least half or more of their total revenue through their online business is rising to 30 percent this year. In 2018, this figure was 8 percent, and in 2020 it was 19 percent. However, pure online sales remain stable: only 5 percent of retailers sell exclusively online in 2023, comparable to 6 percent in 2021 and 2019.

29 percent of hybrid retailers can imagine selling exclusively online in the future. However, the end of brick-and-mortar retail is not in sight: only 12 percent of retail companies believe that physical stores have no future. In contrast, 71 percent believe that brick-and-mortar retail needs to reinvent itself.

🏪 Challenges and innovations in brick-and-mortar retail

Brick-and-mortar retailers face several challenges. 68 percent of retailers say they cannot compete with the low prices offered online. 54 percent see virtual shopping experiences with augmented reality (AR) and virtual reality (VR) as increasing competition.

Nevertheless, the vast majority of retailers are already relying on digital technologies: 88 percent of brick-and-mortar retailers offer cashless payment via smartphone or smartwatch as standard practice, and another 6 percent are planning to implement it. 79 percent of their customers already have access to Wi-Fi, and 7 percent are planning or discussing it.

Click & Collect is also widespread: 73 percent of brick-and-mortar retailers offer this service, while 10 percent are discussing or planning to implement it. Furthermore, 52 percent of retailers use tablet- or smartphone-based systems at the checkout, and another 23 percent are planning or discussing their use. One in three retailers uses tablet PCs and interactive displays for product information, and 34 percent are planning or discussing this.

Digital price tags are in use at 32 percent of brick-and-mortar retailers, while 37 percent are planning or discussing their implementation. Seamless checkout solutions are currently offered by only 10 percent, with another 19 percent planning or discussing them.

🤖 Artificial Intelligence: Potential and Skepticism

Although 56 percent of retailers consider AI to be a key competitive advantage, only 4 percent currently use this technology. Fifteen percent are planning or discussing its implementation, while 77 percent have not yet put the topic on their agenda.

73 percent of retailers are waiting to see what experiences others have with AI technologies like ChatGPT before investing themselves. 61 percent state that they lack the personnel to implement AI. "Wait and see is rarely a good strategy. The barriers to entry for using AI are currently lower than ever before," emphasizes Dr. Rohleder. "From customer service to advertising campaigns, from purchasing planning to product launches – AI can be used effectively almost everywhere in retail."

Nevertheless, concerns remain: 76 percent of retailers fear that the use of AI in customer service could lead to customer alienation. 72 percent are worried about potential damage from a massive number of AI-generated fake reviews.

Retailers see the greatest potential of AI in inventory management (85 percent), text generation (82 percent), and personalized recommendations (76 percent). Many retailers also see great potential in customer service and communication (69 percent), as well as price optimization and visual product search (48 percent each).

🛒 Retail 2030: Future visions and technologies

In the retail landscape of tomorrow, not only AI but also other technologies will play a central role. 77 percent of retailers believe that by 2030, physical stores will no longer use cash register systems, and payment will be automated upon leaving the store. 69 percent expect autonomous vehicles to deliver products directly to customers' doorsteps.

54 percent of retailers believe that virtual shopping worlds like the Metaverse, where one can shop and interact with others in digital environments, will become widespread. An equal number believe that retail will be open 24/7 and that AI will recognize and automatically reorder products in the home. 42 percent expect that by 2030, products will be equipped with an authentic digital twin that provides information about production conditions and authenticity. 19 percent see holographic product presentations as a future trend.

However, there are also challenges: Two-thirds of retail companies see themselves as laggards in digitalization. Three percent even say they have missed the boat. Only 23 percent consider themselves pioneers, and 4 percent are at the forefront.

📦 E-commerce: Diverse sales channels

In the e-commerce sector, 93 percent of online retailers rely on their own online shop. 87 percent offer ordering via email, and 69 percent sell their products through online marketplaces and sales platforms. Social media platforms are used by 23 percent, and 13 percent offer their own company app.

Although online retail is booming, many retailers still use traditional ordering methods: 63 percent accept orders by fax, and 57 percent by phone or mail. This shows that retail is not yet fully digitized and that traditional methods still play a role.

The future of retail is clearly digital, but also hybrid. Artificial intelligence, innovative technologies, and new sales channels will play a crucial role. Brick-and-mortar retailers will have to reinvent themselves to keep pace with digital developments. The challenges are significant, but so are the opportunities. Tomorrow's retail will take place both online and offline – supported by advanced technologies and flexible business models.

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🔍 In an era of constantly advancing technological developments, the retail sector has undergone a remarkable transformation. While online shopping dominates the market, traditional brick-and-mortar stores remain relevant and strive to keep pace with modern innovations. One such innovation is the integration of service robots and artificial intelligence (AI) to improve customer service and create new, engaging experiences for customers, particularly younger demographics.

🤖 The integration of robot technology in retail

Service robots in retail are no longer a distant vision; they are a reality. These advanced machines are not just eye-catching; they actively improve the customer experience and relieve the burden on staff. Often designed with a humanoid appearance, these robots can greet customers, guide them through the store, answer questions, and recommend products.

One example of this is the "Pepper" robot, which is used in many stores worldwide. With its ability to respond emotionally to customers and present them with products, it creates an interactive and personalized shopping experience. "The integration of robotics into retail stores not only revolutionizes customer service but also fosters an emotional connection between brand and customer."

🔍 Artificial intelligence as the core of modern customer service

Artificial intelligence plays a crucial role in the further development of customer service. AI-powered systems can analyze vast amounts of data and use it to offer personalized recommendations and services. In retail, AI can be used to address customers individually based on their purchasing habits and preferences.

By analyzing customer interactions and purchase data, AI systems can make precise predictions about which products might be of interest to a particular customer. This leads to significantly more personalized advice that goes far beyond what human salespeople alone could provide. “With the power of artificial intelligence, retailers can personalize the shopping experience and thus significantly increase customer satisfaction and loyalty.”

🎮 Gamification: A playful approach to customer loyalty

Another innovative approach in customer service is the use of gamification. This involves integrating game-like elements and techniques into the shopping process. Gamification not only makes the shopping experience more interactive and entertaining, but also increases customer motivation to stay longer in the store and return more often.

For example, customers can playfully discover and experience products through the use of AR (Augmented Reality) and VR (Virtual Reality). In a game, they can collect virtual rewards that can then be converted into real discounts and offers. This type of interaction particularly appeals to the younger target group, who are tech-savvy and have a strong interest in digital experiences.

👍 The advantages for traditional brick-and-mortar stores

The combination of service robots, AI and gamification brings a multitude of advantages to the traditional brick-and-mortar store:

1. Improved efficiency and productivity

Service robots can take over repetitive tasks, relieving staff and allowing them to focus on more complex customer requests.

2. Personalized customer experience

AI-powered analyses and recommendations make the shopping experience more personalized and tailored to the needs and desires of each individual customer.

3. Increased customer loyalty

Gamification strategies create a more entertaining and engaging shopping experience, which particularly appeals to younger customers and motivates them to visit the store more often.

4. Innovative competitive advantage

The use of state-of-the-art technologies in retail can help to stand out from the competition and be perceived as an innovative company.

🛠️ Challenges and Solutions

Despite the numerous advantages, integrating these technologies into retail also presents challenges. One of the biggest hurdles is customer and staff acceptance. Many people are initially skeptical of new technologies. To address this issue, it is crucial to clearly communicate the benefits and user-friendliness of the new systems and to train staff accordingly.

Another important point is data security. The use of AI requires handling large amounts of customer data, which raises privacy concerns. Companies must ensure that all data is stored and processed securely and complies with applicable data protection regulations.

🌐 The future of retail

The continuous development of new technologies will continue to shape the retail sector in the future. Augmented reality, virtual reality, and other advanced technologies offer enormous potential for improving customer service and creating unique shopping experiences. A store that successfully integrates these technologies can not only increase its efficiency but also build a deeper connection with its customers.

It is becoming clear that retail is evolving into a hybrid model, combining traditional and digital shopping experiences to unite the advantages of both worlds. The key to success lies in always being attentive to customer needs and being willing to explore innovative ways to meet them.

In a world where technological innovations constantly open up new possibilities, it's up to retailers to recognize and capitalize on these opportunities. With service robots, artificial intelligence, and gamification, brick-and-mortar stores can not only remain competitive but also engage their customers in entirely new and exciting ways. The future of retail is exciting and promising – a future where technological innovation and traditional values ​​go hand in hand to create an exceptional shopping experience.

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#️⃣ Hashtags: #Innovation #ServiceRobots #ArtificialIntelligence #Gamification #Retail

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