Being out-of-touch is totally in, QR codes are quickly finding a new home and robots are strolling the line between novelty and value. This is what retail innovation will look like in 2022.
Funding for retail technology reached a record $29 billion in the first quarter of 2021, as retailers and tech companies sought to blend online and in-store experiences, personalize interactions at every point and elevate their fulfillment processes to make it all possible, as fast as possible.
And boy, did the industry ever hit the skin off the ball in 2021.
Yay For These Technologies!
If we reviewed every retail innovation that changed shape in 2021, we’d be here until 2023. Not all succeeded, after all. It’s an easier task to pick the handful of technologies in which retailers will likely increase their investments this year. Here are five:
“Can’t touch this” innovation. The market for touchless technology is predicted to reach $15.3 billion in 2025, from $6.8 billion in 2020. However, this forecast could exceed expectations due to pandemic-related safety protocols. In 2020, 67% of all retailers were offering some form of no-touch payments, including tap-and-go credit cards and mobile wallets. By spring of 2021, 72% of consumers were using contactless payments some or most of the time, according to research by Raydiant, maker of in-store digital signage. Expect this highly convenient option to become more seamless, as in Amazon Go cashier-less locations. Next step: Optical gesture recognition – software that can interpret hand symbols and other gestures.
Nichey quick-response codes. For a time, QR codes appeared to be doomed to the “Island of Lost Tech”; they couldn’t find a stable home. The pandemic has changed that by creating the demand for the touchless technology QR codes that make it possible. In 2022, 5.3 billion QR-coded coupons are expected to be redeemed via mobile, according to Juniper Research. Dunkin’ Donuts and 7-Eleven have embedded QR codes into their payment apps. Several retailers, including Lacoste and Zara, use QR codes to send personalized mobile offers in-store, link to digital shopping through televised ads or to promote items in shop windows. And prestige brands have found them effective as unique identifying codes that help prevent product counterfeits – a growing issue.
Cybersecurity that’s always on duty. All of the shopper data gathered for online purchases is as valuable to cybercriminals as it is necessary for merchants. Annual incidents of corporate and governmental data breaches rose a record-making 17% through September 2021, outpacing all of 2020. The average cost of just one retail data breach in 2021 was $3.27 million, compared with $2 million in 2020. Hackers are getting smarter, so smart retailers must focus their security investments on proven, faster-detecting technologies. But they have to be smarter about how they use these services, as well – to gather only the data they require to meet specified goals, to protect it like Fort Knox and to safely dispose of it when it’s no longer needed – as if it were plutonium.
Upstream livestreaming. The phenomenon of live, interactive online sales events hosted by celebrities or influencers is expected to gain traction in 2022. However, experts caution that merchants shouldn’t expect a boom just yet – and therein exists the opportunity. The U.S. livestreaming market was projected to reach $11 billion in 2021, according to Coresight Research. By 2024, Coresight projects the market to climb to $35 billion, a significant gain, but that still represents just 3.3% of all projected U.S. ecommerce. Retailers and brands should carefully test themes, product mixes and marketing. If the branding is off, a livestream could remind viewers of a hard-sell QVC QVCA-1% pitch.
Dark stores that enlighten paths. Converting out-of-business stores into fulfillment centers requires a lot of new technology, and in the past 18 months, surging demand for fast fulfillment put that technology to the test. In 2021, online sales (and therefore fulfillment) represented nearly 21% of all retail sales. Now, with the global same-day delivery market projected to reach $10.2 billion in 2022 – from $8.4 billion in 2021 – for fulfillment centers to remain competitive will require more precise technologies. So far, so good: Many dark stores have been retrofitted to accommodate curbside pickup and in-store pickup, in addition to delivery. These consumer-focused innovations position dark stores to become leading contributors to ecommerce growth through 2022. The e-commerce consultant Vaimo forecasts global ecommerce revenue to reach $6.5 trillion by 2023.
Still On The Bubble: Two Wait-And-See Technologies
With trillions of dollars in play, retailers should be making some risky tech investments. Even those that might get tabled in 2022 are impressive for their gumption, and may simply be ahead of their time. Among the short-listers:
Virtual fitting rooms. Just as it took time for merchants to find the right fit for QR code use, it may take another year or so before virtual fitting rooms prove themselves to retailers still gauging the concept as a worthwhile investment. Forms of the concept have been tested for years: Levi’s launched its “Virtual Stylist” in 2017; more recently Gucci and Macy’sM+0.4% have been experimenting with the technology. It takes excellent product imagery to pull off a virtual fitting room, however, and augmented reality is basically essential to create a 3-D effect. Further, the customer’s own technology (the device being used, for example) will determine the quality of the experience. For these reasons, virtual fitting rooms may reflect on 2022 as the year spent on the Island of Lost Tech.
In-store robots. As an aisle-roaming assistant to customers, the in-store robot’s functionality and profitability land it, for now, in the “cute gimmick” category. An app is likely more cost-effective at locating products on the shelf or for ordering out-of-stock goods, and an app is more seamless for customers. However, robots can affordably perform tasks that free up workers, such as cleaning floors, checking stock level and carrying stock from the back of the store to the aisle. Further, even a “cute gimmick” can become annoying – and potentially unsafe – if it’s obstructing a shopper’s path. Yet speaking of paths, this may be a defining year for robot-enabled last-mile delivery, as in the cute self-driving delivery carts by Tiny Mile or those that Walmart has been testing. (Walmart WMT-0.3% in late 2021 extended to fully driverless trucks.)
That’s Just 2 Strikes. Keep The New Retail Tech Coming
Heck, a year from now we may be scratching our heads about the breathtaking evolution of in-store robots, or the unpredicted decline of livestreaming. Such events are in the hands of technology’s creators, and the retailers that are willing to give a “cute gimmick” or lost technology a home.
Consumers will decide, so all retailers and the technologies in which they invest should see the customer’s experience through their newly digitized eyes. If they don’t, they risk their ideas being abandoned in a blink.