What to Watch for in Tech for Retail in 2023
After a difficult year with major challenges, technology platforms change hands, revenues fall and online ads fail to keep share prices from tanking, it finally looks like tech is back — kind of.
After years of problems caused by COVID-19, the CES electronics show was back in Las Vegas this week. However, it is now smaller. The Consumer Technology Association, the organization behind CES, estimated 100,000 attendees for this year’s installment, which is somewhat impressive considering the pandemic is far from over. However, the attendance is not as high as its pre-coronavirus numbers. It was just half the usual draw.
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The appeal of seeing the future innovations was appealing to consumers, even though it was hard to resist the rare desert rains or tightened security. The industry executives were also motivated. In private meetings held in convention center suites and at hotels along the Vegas Strip, they were busy writing about the future for business. technology With their wheeling, dealing. Analysts, analysts, and other experts can see the trends that will impact all sectors, automotive to personal care, to name a few. fashionBeauty, commerce and the environment.
WWD caught up with a number of experts at the show and elsewhere, and dug into plenty of research to learn what’s on the tech radar for the year ahead in retail. Here’s what brands and stores should be clocking in 2023.
Technology: The Sweet Smell
In 2019, Procter & Gamble introduced a novel device at CES called the Airia, a connected “smart scent device.” It seemed a bit gimmicky back then. It seems like it was an early sign that was to come.
According to CB Insights, tech’s effort to digitize smells will make its mark in 2023. The firm laid out the scenario in a recent report covering upcoming tech trends: “Bringing smell into the digital world is a huge challenge. While light and sound can easily be measured with sensors and mechanically replicated to create a predictable sensory experience, odors are much harder to decode as they’re based on a complex interaction between molecules and smell receptors.”
Despite the difficulties, there are obvious marketing benefits. “Food and beauty companies could use smell prediction to experiment faster and more cheaply by identifying potential products that consumers would actually enjoy,” CB Insights wrote, noting that digital scents would also offer a new dimension to immersive experiences like the metaverse.
Case in point: At CES, OVR Technology showcased its new ION 3, a “scentware” wearable for VR, AR, mobile and desktop gaming. According to the company, the universal cartridge for it can create thousands of different aromas, significantly upping the limited options for Procter & Gamble’s legacy Airia. “Up until now, no one has been able to successfully harness that power to enhance our digital experiences, but OVR has effectively digitized our sense of smell so we can get the most out of the digital experiences now and in the future,” claimed Aaron Wisniewski, chief executive officer and cofounder.
CB Insights has noticed this increase in start-up activity around digital scent. CB Insights notes that Google and other tech giants have been working to improve their understanding of the olfactory arts. This includes how to encode scent using artificial Intelligence. “Google’s AI team recently announced that it used machine learning to map molecules to perceived smells,” CB Insights added. “Crunching through massive data sets, the team was able to successfully (though not perfectly) predict the resulting smell from the structure of a molecule.”
“Internet of Perfume,” anyone?
Sustainability graduates
Green initiatives have been increasing for years. But at CES this week it was a main theme across keynotes as well as exhibitors. It was also an inspiration. fashion Technology and technology join forces in a novel way: Patagonia and Samsung teamed up on a project to reduce the environmental impact from microplastics that are used during laundry.
They codeveloped a new washing machine filter to mitigate microplastics emissions at the end of wash cycles, in an effort to stop them from leaking out into the Earth’s oceans and other aquatic ecosystems.
“Samsung’s new Less Microfiber Cycle and Filter are the products of that collaboration,” according to the announcement. “A breakthrough in the fight against microplastics, the Less Microfiber Cycle cuts microplastic emissions by up to 54 percent. The cycle is now available in Europe and will be compatible with washers. [South] Korea from February this year and in the U.S. soon.”
Patagonia has been an advocate for the environment since its inception. However, this business and others know that it is time to take things to the next level as consumers increasingly opt for cause-based brands.
“I’m really excited about the number of folks creating textiles and fashion products who are being more environmentally conscious, and I think technology is allowing that a lot more — from the way we use machines, to the way we sew, to the way we take blue jeans, for example,” Elizabeth Gore, president and cofounder of fintech firm Hello Alice, told WWD.
“Jeans used to be one of the worst things on the planet, and now they’ve gotten them down to simpler cycles, less water flow,” she said.
Data Democracy
WWD caught up with Hello Alice at CES to learn more about the trends it’s seeing. The platform has more than 1.1 Million small businesses. Of the 100,000 owners in a random study, 94,000 came from the fashion industry. retail ranks. Their biggest challenge used to be marketing and customer acquisition, but now as many as one-third stated that it’s now raising capital to deal with pressures like supply chain disruptions and macroeconomic uncertainty.
Gore pointed out one important area when it comes down to what these merchants will do with the money.
“The thing I’m most excited by is data analytics in fashion,” she said. “If you look at in-store consumer behavior, I think we’re just reaching the peak of tracking clothes via your phone or in-store [scenarios] It will impact how we shop, what we buy, and how we make decisions. That is going to strengthen and make a better buying experience for the customer, and it’s going to give great analytics to the seller.”
Data intelligence, tools and strategies aren’t new, but they may hit a peak in 2023, especially among Gore’s clients of small or indie merchants, because the technology has become more accessible.
“Data analytics is getting so much cheaper, it’s clearly going to give new people who are selling fashion a big leg up on some of the bigger brands, because it’s bringing a lot of equity,” she said.
5G Connectivity for Stores
“The expansion and availability of 5G is a hot topic broadly, but also in the retail industry — and not just for the connectivity of the consumer,” said Kasey Lobaugh, chief retail innovation officer at Deloitte. “If you look at stores and store systems at the major apparel retailers, they still operate on somewhat antiquated systems in an untethered mode. It is because of a network-based model that allows a system or point to-of-sale to go down. [would] shut down the store.”
But that’s clearly changing, he explained, with a dramatic push into upgrading and renewing store systems and hardening the connectivity, so that a simple internet outage doesn’t take down the whole business.
That surely includes the point-of-sale, but it’s not limited to the cash-wrap alone. It will also extend to the store’s broader set of systems, so “that will take advantage of the network connectivity, cloud computing and the centralized model,” he explained. Imagine real-time inventory monitoring on the shelves or back and AI insights into traffic flows.
“We’ll know more about the consumer, so we’re able to personalize the experience,” added Lobaugh. That would benefit stores of all sizes, but for large retail chains, there’s an obvious benefit: They’ll be able to hyper-localize experiences for each door more easily. “We’ll be able to more fully personalize individual stores, because we get a lot more signals.”
Personalization, “Micro” Retail Will Become Essential
More signals — read: data — means a greater capacity for things like automation and predictive analytics. According to Lobaugh, that will no longer be “nice to have,” and more like “must have.”
This will result in more personal experiences such as styling advice, product recommendations and other similar features. All of that has been in the works for years now, but with more tools and resources such as Google Cloud, Amazon Web Services and other providers, plus better connectivity and ability to capture data, they’re set to become even more ubiquitous and sophisticated, all the way down to a granular level.
“Our clients are shifting from mass to micro, because the market is shifting and getting hyper relevant, especially in apparel, certainly in the number of options that you have, the number of variations, the number of companies that are targeting — very specifically — what your needs are,” he said. “Low cost, or gender-neutral clothing, or needs for x, y or z as an individual. There’s dramatically more optionality, and that means that the market is hyper-targeting those needs, wants and desires.”
It is possible to see this granularity in other areas of a larger retail company.
“[If you] Recognize that the market is changing in that direction. That means you must be extremely relevant at a granular degree. Every decision you make will drive relevancy. Where should I place a store. What should you sell? How much should I be selling? How do I manage inventory and pricing? All of these things are under the same pressure.
“With humans trying to manage that level of granularity,” Lobaugh added, “you can’t do it.” He calls it a matter of “decision orchestration,” and retail has been heading toward that for years.
Finally, it seems like the right time. If that’s true, then this may be a pivotal, perhaps even transformative, year that could change the retail business for many more to come.
A final note: Although social media didn’t make this list, its influence can’t be denied.
“Tiktok has eclipsed every other social media channel for small businesses selling products,” noted Hello Alice’s Gore.
Despite the backlash in Washington, D.C., fueled by fears over U.S. national security, as TikTok is owned by China’s ByteDance, those concerns apparently aren’t keeping retailers up at night, she said. That could change if decisive action is taken against the social video app, however, but it’s not at all clear that would take place in 2023.