Retail Industry Innovation

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Introduction and the Importance of Retail Technology

With COVID-19, retailers have been tested more than ever before in terms of their ability to adapt to changing conditions in the market. Leveraging technology plays a vital role in a retailer’s ability to compete and survive in changing market conditions. Retail innovation can also play a pivotal role in the ability of a company to maintain and grow its customer base, as customer experience is a key driver in success today. Included in this Wiki are six technologies that are currently being adopted in the retail industry and what retailers need to consider before adopting them.

The Evolution of Retail

Traditional Shopping Channels

Historically, shopping centres and brick and mortar stores were the primary channel for retail sales. However, as we are all familiar with, the volume of e-commerce sales has grown significantly. E-commerce sales have taken over traditional shopping centres. The US retail industry is $5.3 trillion [1] and US e-commerce sales were responsible for 12% of that volume in 2020, and this number is only expected to grow [2].

Even during the traditionally very important retail events such as Black Friday or Boxing Day in North America, sales volumes are growing significantly online, with a 20% increase in online sales in 2019 [3]. In fact, Amazon Prime Day, an event just for Prime members, resulted in a sales volume higher than Black Friday[4]. This represents a shift away from going in-store to purchase something, to the convenience of shopping any time, on any device. In North America especially, this shift from retail to e-commerce is more drastic. Since 2009, the growth of new shopping centres has been declining in the US [5], highlighting that urban centres are densely saturated with shopping centres, and that customers are not going in store to purchase as much.

Number of Shopping Centres in the USA, 1970-2017

We also found that the square-footage of retail store space in Canada and the US is much higher than that of other countries around the world. This perhaps indicates other countries have been perhaps more efficient with their retail space; selling in denser malls and shopping centres and being more quick to adapt to e-commerce and other channels. North America is finally going through this transition into optimizing stores for omnichannel retail.

Square Footage of Retail Space Worldwide

How Amazon Changed the Game

E-commerce business has pioneered in the web-based customer relationship setting an industry benchmark in market-leading technological infrastructure. Amazon was founded on July 5, 1994 by Jeff Bezos and they first entered the US e-commerce trading in 1995 [6]. Amazon first started as an online marketplace for books but within 10 years Amazon expanded at an alarming rate and penetrated the markets of several countries basing fulfillment centers in the US, Europe, and Asia with the aim of managing the distribution process from suppliers to consumers. Amazon acquired WholeFoods for $13.4 billion to give competition to departmental stores like Walmart and Target [7]. Amazon has its own brands such as Amazon basics, Amazon Essentials, fashion lines like Lark & Ro, and AI devices like Alexa. All items are sold directly by Amazon and are already sitting in Amazon warehouses waiting to be ordered and shipped. It not only focuses on connecting consumers to businesses but also focuses on cloud computing by providing services such as AWS (Amazon Web Services), digital streaming such as prime video to compete with Netflix, and AI devices such as Echo to compete with Google Home. Amazon uses Best Buy as a showroom for its products [8]. Consumers look at the product on Best Buy and order it from Amazon. We can see in the image below showing how Amazon sales have increased exponentially from 2004 to 2019.

Amazon Sales 2004-2019

Amazon Prime

Amazon Prime was launched in 2005 and 2013 in Canada [9]. Amazon Prime is basically a membership subscription for Amazon users. It is for $7.99 a month and for students first six months are free and then they get 50% off on the membership. Amazon prime is offered on more than 10 million products and it has various benefits. Benefits include free 2-day shipping, free same-day shipping, and standard shipping [10]. If you become a Prime Member you also get Prime Video, Prime Music, Prime Reading, Prime Photos, and Twitch Prime. Prime video is for streaming movies and TV episodes just like Netflix. Prime Music is like Spotify ad-free and on-demand access to a curated playlist. Prime reading is used for Amazon products such as kindle to read books. In the competition of Amazon Prime Walmart and Target also started offering next day shipping but they are not as great as Amazon Prime [11]. They offer to ship for orders of $35 or more. Amazon used to rely on third-party services for delivering the products but now Amazon is starting to manage its supply chain on its own. Amazon Flex is a program where delivery drivers can sign up to complete the last mile delivery which is where the product is delivered to the consumer [12]. Amazon owns more than 30 planes to bring goods from one state to another state and Amazon Cargo manages the shipping channel for the delivery of their products [13]. We can see below how the number of prime members increased from 2016 to 2019 onwards.

Number of Amazon Prime membersin the USA, 2013-2019

Chinese retail industries

The online marketplace is changing rapidly and Alibaba is one of the Chinese companies that has made great changes in the retail industry. Alibaba was founded in 1999 by Mr. Jack Ma and 17 other people [14]. It has more than 500 million people using it every day. Its operation is not only limited to China; Alibaba has operations in more than 200 countries [15]. On the September 18, 2014, Alibaba had its IPO (Initial Public Offering), and the IPO was praised at $60 that raised $21.8 billion for the company [16]. It was the biggest IPO in history bigger than Google, Facebook, and Twitter combined. Alibaba comprises of 3 main sites Taobao, T mall, and Alibaba. Alibaba does not only connects users to businesses, but it also helps businesses to secure finances for the company by ANT Financials which comes under Alibaba and helps users to pay for the product using Ali pay so from making the product to selling the product everything is run by Alibaba. Alibaba is not only in the retail industry but Alibaba also has a shipping company called Cainiao, a messaging app Laiwang, a movie studio Alibaba pictures, and a lot of other companies. Alibaba wants total world domination and is investing in companies all over the world such as Paytm, Magic Leap, Lumus, etc. The marketplace has now changed and companies like Alibaba are leading this change.

Alibaba Hema Store

Alibaba has a new retail concept store called Hema. It is Alibaba's strategy to expand in offline retail. The Hema store is packed with technology and is the first store with its own robot restaurant. The Hema store is growing rapidly in China and has opened 65 locations in one year [17]. The Hema store serves three purposes: firstly, a place to shop in person; secondly, a distribution center for online orders; and lastly, the restaurant. The Hema store has a unique pricing system. Every price tag has a barcode that can be scanned with the Hema app and you can see the price of the item as well as user reviews of the product. Moreover, it also tells you where and when the product arrived at the store and can also show any government certifications (such as Halal, Kosher, or Organic status) if required. The price tags used in Hema store look like they are printouts but it uses a special technology that can change the price in real-time [18].

If you live within three kilometers of a Hema store, you can have groceries delivered within 30 minutes. This maximizes the efficiency of sourcing for Alibaba. The store does not have a traditional cashier. The buyer uses the Hema app which is connected to Alipay to pay for the products. For the robot restaurant, you also need the Hema app. To book a table, simply scan the app and you can check-in [19]. It is connected to your identity, name, purchase history, and wallet. You can place your order on the Hema app and food gets delivered by the robot. Alibaba uses the same technology from the e-commerce automated warehouses to power these robots. However, robots cannot handle complicated dishes and require human interaction.

Alibaba is investing in offline stores to make users feel comfortable when ordering online and this could be a key pillar to Alibaba's strategy.

Emerging Retail Technologies


The next huge technological innovation is augmented reality. The evolution of consumer technology has gone from desktops, to computers, to mobile phones and now, Augmented Reality. It will affect all of us in different ways due to its many applications. It is different from virtual reality. Virtual reality is where you have a screen on your face and you don't see anywhere what's happening around you [20]. Augmented reality is like a better version of virtual reality. It has been around for a while and is used in the military to design helmets so pilots can view what is going on in real-time on their helmet screens[21]. Augmented reality is basically where you look at the physical world and get real-time information on your screens [22]. It is an interactive experience of a real word environment. Augmented reality has been currently implemented in one of the famous games, Pokemon Go, where you just move your phone and it shows where the Pokemon is. Google Maps is currently implementing it in its application and calls it live view where you just pick up your phone and show it different streets, the camera read the signs and then tells you to walk right or left. Before augmented reality existed, you had to move your phone around to see where you are supposed to go, but with augmented reality, the arrow shows on your screen where you have to walk. IKEA is also implementing it in their application; for example, you just pick up a sofa and then move your camera around so that it recognizes the furniture and see where it would place perfectly or how would it look in your house[23].

Smart Mirrors

Innovation in the retail industry has changed how we use our mirrors. Traditional mirrors are no longer being used and are replaced by smart mirrors. A smart mirror is a two-way mirror with an inbuilt display behind the glass [24]. It uses artificial intelligence, virtual reality, and gesture recognition technology that superimposes clothing over your on-screen image. The mirror is basically a virtual changing room where you can create complete outfits without ever getting undressed. This allows customers to see items that are not in stock and try different combination outfits and they can order any item that they want just by using the mirror. This technology is being currently implemented by Oak Labs [25]. This technology also saves customers time, allowing them more quickly make buying decisions. In COVID-19 situations, the ability to not get undressed also makes the retail experience more hygenic. The information stored in smart mirrors is being used to see what customers order and what products are in stock so that customers can be targeted with the product that they want.

Omnichannel Integration


Omnichannel retailing is where the customer is the core focus and not the product itself; it helps integrate a system whereby all sorts of boundaries are eliminated in regards to marketing and sales. A formal integration is then formed, creating a platform whereby all channels are systematic and unified, allowing for a smoother user experience which allows for better relationships across the audience's point of contact. Furthermore, the accessibility is streamlined to enhance efficiency and customer satisfaction, as the majority of the retail sector is moving towards predominantly mobile interfaces. One prime example where omnichannel integration is utilized is at Disney, where they have introduced a magic band that gives you access to numerous features on your wrist. They have linked it to their My Disney Experience app[26] and these two platforms allow you to simultaneously access features such as fast passes, hotel rooms, theme parks, and your Disney account. You are also able to customize it according to your needs, making sure that children are not able to use your credit cards and access your hotel rooms unauthorized. Furthermore, via the app, you can view ride and restaurant wait times and plan accordingly. You have full access to Disney from the palm of your hand, streamlining an efficient experience that is most convenient to park attendees. Due to the COVID-19 pandemic, the NBA has relocated to the Disney World Resort in Orlando, Florida and has secluded all its personnel within a bubble. All players and staff are given a customized Magic Band that pertains to its teams' wants and needs as well NBA regulations[27]. Players have full access to practice gyms, courts, cafeterias, and entertainment rooms. The Magic Bands allow players to also access all rooms within the bubble, as well as elevators and corridors.

Click and collect

Click & Collect

The convenience of ordering something via mobile and having it ready to be shipped or picked up is a trend that has taken a major upwards trajectory. The physical aspect of removing yourself from your comfort zone to run an errand has faded. Now, the simple steps of choosing your items and paying for it online, and then picking it up at your convenience is how the retail industry has evolved. In recent years, as well as due to the pandemic, big-box retailers are allowing customers to purchase their groceries online and pick it up within 30-45 minutes, reducing exposure but at the same time generating a platform for a future business model to allow convenience and customer satisfaction. A basic model that many retailers are following is; view, select, wait, and pick up. It follows 4 easy steps that allow your product to be available in an efficient manner. Many stores are adopting this model, even those outside of the grocery industry.

How stores have evolved

Shopping centres and retail stores have seen a decline in growth over the last few years due to the emerging e-commerce trend. However, retailers still need to stay open but are now pivoting in order to complement e-commerce trends as well as tailor to specific customer needs.

Flagship stores are slowly emerging in major cities as retailers are finding that a display of most items in an open layout, intrigues customers to still come into the store and purchase items. Also, retailers are adopting technological means and channels to help shift the focus on the experience of the product. Furthermore, the concept of a flagship store is something retailers such as Nike, Zara and adidas are all trying to implement into major cities, citing reduced overhead costs and maximization of capacity. Flagship stores are enhancing the customer experience by providing customers an interactive experience with their products.


Retailers are using beacons to enhance in-store experiences while simultaneously bridging our physical and online experience. Beacons are small wireless devices that transmit a continuous radio signal [28]. The signal ID is detected by smartphones and the signal is sent to the cloud server, which then pushes customer-targeted content to your device. It uses a technology called BLE (Bluetooth Low Energy) which is able to provide device location to a very micro-level. Micro-level means it can detect the specific aisle the customer is in within a store[29]. If you have opted in this service, retailers will be able to gather data not only on your movements but also be able to push targeted content to your device as you shop more. For example, if you are walking in your favorite departmental stores such as Macy's and you have opted in for this service, they would be able to direct you to products that are on sale or send you notifications on sale items. Big stores like Macy's and Barneys are already deploying beacons in their stores [30].

Facial Recognition

Retailers are wanting to identify its customers as soon as they enter the store, rather than at the end of the transaction when we provide our contact information or loyalty program membership. This is only possible with the help of facial recognition. The Face ID feature on the iPhone X has helped normalize facial recognition, making it a more familiar technology.

By using facial recognition, retailers aim to provide a customized experience to shoppers by identifying them sooner and therefore being able to recommend products based on their buying history. Facial recognition is a way of recognizing a human face [31]; it uses more than 16,000 different reference points on your face [32]. With the help of facial recognition, retail staff will know what type of products you buy and what your average spend is, so they can provide more assistance to higher spenders. They will be able to read our emotions, for example, if you are frustrated or need assistance, they can send a service agent right away. Facial recognition can also be used to detect shoplifters and ban them from stores. The survey below shows that most consumers would avoid going to a store that uses facial recognition [33]. This highlights that it will take some time for users to adapt to this technology, even if it is familiar.

Number of consumers that will avoid stores with facial recognition

Robot Assistance

Robot assistance in retail is currently used with the goal of assisting human workers or to replace them depending on skill level and other items. The end goal of robot assistance for many companies is to automate as many positions as possible so that they can reduce operating costs. Human payroll wages are one of the biggest expenses a company has, accounting for 40% to 80% of where gross revenues are spent depending on business type[34]. Reducing these costs to an efficient amount based on company size would drastically improve a company’s earnings. This, in turn, would lead to additional benefits such as more interested investors and the ability to spend more in other areas that may lead to greater success.

There are currently two main types of robot assistance in retail. There are robots that specialize in order fulfillment and robots that specialize in customer service. Depending on the robot and its functions, it primarily will use artificial intelligence and big data to function and other types of technology, as needed, based on the design. Currently, there are many different robots being created and tested within companies to experiment and find the best option. The best way to see the benefits of robot assistance is through applications of it in existing businesses.

Customer Service

Customer service is an integral part of retail. Good customer service is often what creates a sale and it is correlated positively with increases in a company’s bottom line[35]. Additional customer service such as repairs or assistance with purchased items is what may keep customers buying from the same company, due to the relationship building over the lifetime of the product. A survey by American Express revealed that 70% of U.S. consumers have spent extra money to do business with companies that have outstanding customer service[36].

Unfortunately for employees and customers, customer service is also a contentious area for both groups. Over 90% of customers who have a bad customer service experience at a business will not return to that business in the future[37]. Customer service sectors in companies experience some of the highest turnover. For example, the average turnover of all industries is approximately 15%[38] but call centres were found to have a turnover of 30%-45%[39]. Advances in customer service robots to automate any frustration areas possible will be beneficial for both groups of people. An example of a basic type of customer service that is currently underway of being automated are directions to different locations or items. The robots built to assist in customer service tend to be complex in nature and requirement, so the robot designs for each company could vary greatly.

Lowe’s Lowebot
The Lowebot guiding a customer[40]
The Introduction of the Lowebot and its Capabilities

Lowe’s has created a customer service robot, the Lowebot, that they tested in 11 stores in the San Francisco area in 2016[41]. The robot is able to respond to vocal and typed questions in different languages[42]. The Lowebot is also able to scan products or spare parts a customer brings with them and provide directions to the location of similar products, if not the exact product[43]. The main customer service functions that the robots assist in is in providing directions to different inventory or locations[44]. The robot will show you where the location is on its virtual map and will also walk the customer to the location of the item or service they are looking for[45]. When not assisting customers, the Lowebot also assists with logistics by scanning and monitoring inventory in store[46]. If the inventory is running low in a certain area, it will alert employees to restock that item on the shelves[47]. The overall goal of the Lowebot is to free up human associates’ time from minor tasks so that they may focus on a more advisory role of complex inquiries[48].

Origins and History of the Lowebot
The OSHbot's design [49]

This actually is Lowe’s second attempt at robot assistance as they tested out a predecessor in a subsidiary store. The first attempt was named OSHbot and was tested at Orchard Supply Hardware Store, which Lowe’s had acquired in 2013[50]. These robots were tested for two years before the Lowebot was introduced. The items learned from that pilot were put towards the development of the Lowebot by Lowe’s Innovation Labs, the team in charge of the development of the Lowebot. Fellow, an artificial intelligence platform that assists in inventory and supply change[51], were the original designers of the base model that was personalized to create the Lowebot [52].

Technologies Used to Support the Lowebot
The Lowebot performing inventory scans[53]

The Lowebot uses combinations of many technologies to function. It uses a 3D scanner to detect people and voice recognition and natural language processing technologies to interact with them [54]. The Lowebot also has touch input for customers who wish to type their inquiries[55]. A combination of artificial intelligence and big data was used to fuel its responses to customers’ inquiries[56]. To navigate the store, the Lowebot used smart laser sensors to detect objects and location within the store[57]. The type of laser it uses are LIDAR lasers, which are the same used in autonomous vehicles [58]. The Lowebot would also use location-based services to show special offers that applied to a specific store, in addition to company-wide offers, on a second screen on the back of the Lowebot [59]. The interactions between these technologies allowed for a successful pilot program that collected data which Lowes’ Innovation Labs benefited from in unexpected ways.

Additional Benefits from the Lowebot

Lowe’s Innovation Labs are also working on a customer service platform based on texting [60]. It was originally a small independent venture but became useful in adopting Apple Business Chat[61]. The query data collected from the Lowebot via both vocal queries and text inputs were used to assist the upcoming text platform and to sharpen Lowe's existing website[62]. This allows for more general broad inputs from customers such as a problem with results being specific related suggestions of products from the website rather than just an error message[63]. The team at Lowe's Innovation Labs are finding that customers are beginning to type full questions into the Lowe’s search engine as a result of receiving results that are more detailed[64]. Development like this could prove instrumental in the future as it provides customers with better, more accessible searching abilities and proper results from their queries.

Order Fulfillment

With the rise of e-commerce, many retailers are competing on a new scale with other companies. The widespread availability of different sites that sell many of the same items allows consumers to compare prices much easier than ever before. The growth of online shopping does not seem to be predicted to slow down any time soon, with 2018 worldwide online sales amounting to 2.8 trillion dollars and expected to increase to $4.8 trillion by 2021 [65]. There are many features that customers look for in a retailer when shopping on their site, one of the primary items being the shipping methods available, also known as how an order is fulfilled. Customers look for free and fast shipping on their online shopping orders [66] for quicker gratification from their purchase.

The ability of a retailer to leverage technology within their delivery system will allow for faster delivery. Robots can work around the clock and at low cost, beyond the initial investment. Examples of robots in development to help in delivery include all different types such as self-driving trucks, automated warehouse robots, and drones for delivery. Most customers think of Amazon as the gold standard for quick shipping. Amazon is able to achieve this reputation by constantly testing and investing in new robots in their facilities and leveraging technology within their company to learn what is best for them.

Amazon Robotics’ Pod Drive Unit Robot
Origins and Capabilities of the Pod Drive Unit Robot
The Pod Drive Unit[67]

Amazon purchased Kiva Systems for $775 million in 2012 to create an internal robotics team to work on automating their warehouses for faster delivery times[68]. Amazon incorporated the company and its technology into their ranks to create a division called Amazon Robotics within three years[69]. Amazon’s speedy delivery has caused disruptive change across the online shopping market as many try to offer cheaper and faster shipping. Some of Amazon’s amazing delivery times can be attributed to their pod drive unit robot. This was one of the first robots Amazon implemented widely in their facilities. This robot moves shelves of inventory across the warehouse to and from two groups of employees: the package pickers and the inventory stocking employees. This may seem like a relatively simple task, but it provides many benefits.

The Business Benefits of the Pod Drive Unit Robot
Employee interacting with the Pod robot [70]

The initial implementation allowed Amazon to drastically cut back on overhead costs, which allowed them to reduce retail prices by 15%, compared to its competitors [71]. The robot also benefits employees in warehouses by relieving some of the physical strains of their jobs. The typical Amazon warehouse package picker employee in warehouses without these robots walks 16 to 32 kilometres per work day to different shelves [72] and picks up about 100 items per hour of their shift [73]. In warehouses where the robots are used, employees stay in relatively the same area and the robots make the trips to them instead[74]. In these warehouses, the package picker productivity per hour is between 300 to 400 items per hour[75]. In this case, this robot benefits both the company’s speed of delivery and the employee’s health.

The Future of Amazon Employees

Understandably, with the rise of Amazon Robotics, many warehouse employees are afraid of losing their jobs in the future due to automation. Amazon, in an attempt to allow lower-skilled employees to be proactive in their future, has created initiatives to employ them in different ways [76]. The company offered employees within its fulfillment centres that were going to receive these robots a deal [77]. Employees could quit and receive a $10,000 bonus if they would set up a delivery business and become part of Amazon’s Delivery Service Partners program [78]. Amazon helps the small start-ups by ordering the classic white Mercedes-Benz vans for these delivery companies [79]. Since the deal was announced June 28, 2019, Amazon has had tens of thousands of applicants for the deal and has also put in an order for 20,000 of the Mercedes-Benz vans [80]. This is beneficial for employees, customers, and Amazon as it allows them to widen and increase the reach and speed of their delivery network for their products.

The Future of Amazon Warehouses

Amazon currently has 200,000 robots in use in specific fulfillment centres [81]. These robots are both robots exclusive to Amazon Robotics but also include robots from third parties [82]. In June 2019, Amazon announced two new robots to join the ranks of their existing robots. These robots - Xanthus and Pegasus - will be slowly implemented in warehouses with lots of testing [83]. Xanthus is a redesign of the original Kiva pod robot previously mentioned[84]. Xanthus is much more customizable in how it works and operates than its predecessor is [85]. Xanthus is designed to also be cheaper to produce and maintain than the original design [86]. Pegasus is a new package sorting system that drives already packaged orders around into sorting systems to optimize them into efficient groups for delivery [87]. Pegasus is Amazon's first sorting robot and the units are able to calculate the best and most efficient route to take in the warehouse by themselves[88]. Amazon reported that these new robots increased sorting accuracy by 50% in the facilities they are implemented in[89]. These new introductions are said to be a result of Amazon’s purchase of the autonomous warehouse startup company Canvas Technology[90]. It is clear that Amazon is attempting to fully automate its warehouses in the future. It will be a process to watch to see the advancements in robot assistance in order fulfillment as Amazon has always been a clear leader in this industry.

Data Analytics


Personalization is when your needs and personal interests are tailored specifically to you, allowing for a retail experience that caters to a specific trend your activty shows you are interested in. Your data is accumulated from the behaviours you displayed as well as your location, gender, browsing history, and more. For example, when visiting a website for the first time, you may have been prompted by a pop up that allows you take 10% off your first purchase. Furthermore, companies will offer you a discount on an item that you had searched for and added to your cart but never purchased. Amazon tends to follow this strategy, as whenever you visit their website, they always display your past searches and purchases, setting you up from where you left off last time.

It is very important that retailers look at how to personalize retail experiences as it makes more better customer service. This is true for both online and in-store experiences. Personalization, using data analytics, can be applied in many ways: email marketing, in-store mobile alerts, AR, personalized advertisements, loyalty programs, and more. Personalization goes hand in hand with some of the technology referenced above in order to create a memorable, seamless experience for customers. According to Deloitte’s report on the US retail industry outlook for 2020, it continues to be important for retailers to have a deep understanding of customer preferences and habits in order to suggest the products and tailor recommendations to their individual tastes [91].


Email marketing and personalization is an integral part of the retail sector. Retailers are using this platform as a way to attract customers by offering promotions, discounts, and exclusive details on products on a constant basis. Retailers are able to custom tailor to a customer's needs based on a few factors such as browsing and purchase history, and location. Furthermore, retailers are using email marketing as a way to entice customers to make quick purchases as they implement expiring dates on promotions, creating an impulse reaction.

In fact, in a study done by Statista, it was found that companies who used AI marketing for emails increased their revenues by 41% [92]. Email marketing has many forms that we are used to, and is still the most popular way that consumers want to be contacted by retailers[93].

Some examples of email marketing are:

  • Personalized coupons for us based on a store we’ve visited
  • A discount on the specific item we were browsing
  • Reminders to check out our cart we abandoned

The cart reminders are especially important, considering that 70% of shoppers abandon their shopping cart online [94]. This speaks to a bigger issue; while online shopping is easier to do, it is easier for consumers to change their minds as well. There are great impacts to abandoned shopping carts, such as unavailable inventory while it’s being held, and loss of revenue for those who do want to purchase and cannot due to the unavailable inventory.

Hyperpersonalization aims to address these issues by engaging shoppers and reminding them of their desire for the items they were looking at, and by enticing them to complete their sale.

Loyalty Programs

Loyalty programs are a marketing strategy that is offered by many retailers to all of their customers, designed to encourage their customers to keep using their products. Additionally, retailer loyalty programs offer their customers perks and discounts for their loyalty. This type of marketing is a way for retailers to expand their customer base, as customers are more than likely to share their experiences with others, generating more awareness for the brand. The cost of retaining an existing customer is less than the cost of acquiring a new customer[95] and in return, sharing your experiences with your friends, generates a free marketing avenue for the retailer. The program also increases trust between the retailer and the customer, creating a value platform that creates a win-win situation.

Some of the methods used are a[96]:

  • Point based system
  • Tier rewards system
  • Partnerships
  • Scratch and Save

Customers typically register their personal information with the retailer after a purchase or after an email reminder, with the retailer providing a unique ID number or a membership card which must be provided in future transactions. [97] Retailers use loyalty programs as a typical way of obtaining information on how certain customers are maneuvering, creating a trend that helps them with tailoring solutions for each customer and providing a unique service.

Inventory Planning

With such high volumes of sales generated for many large companies, there is lots of inventory management to be done in order to be most efficient. During COVID-19, we saw stores being shut down and e-commerce being almost the sole retail channel. As a result, retailers needed to make accurate predictions in order to properly allocate inventory among its different distribution channels. With advanced data analytics, retailers are able to accomplish this and more. While this used to be very inaccessible to smaller retailers due to the advanced technology requirements, now, Amazon Web Services is a key player in this space, with a very affordable AI that is based on a pay-per-use model with a simple interface. Retailers only need to supply their data and the easy-to-use system will do the rest[98].

These systems will help reduce shipping times by allocating inventory to the regions where demand is higher. Inventory management systems will help manage supplier relationships, as the ability to forecast demand well in advance reduces the strain on suppliers[99]. They will be able to know sooner whether or not a retailer will need to stock a certain product.

Data and Marketing Strategies

User-Generated Content
Share a Coke Campaign

User-generated content (UGC) is a data marketing strategy that is customer-oriented, where the customer promotes the brand. It is typically unpaid and done as a sign of goodwill by customers. It is usually pictures, blogs, posts and testimonials that customers post on their personal social media [100].

The “Share a Coke” campaign is widely known as one of the greatest UGC campaigns. Coca Cola asked all consumers to post a picture and hashtag them on social media, promoting a coke bottle with their name on it. This not only generated millions in free advertising for the company but also created a whole new image for the brand. This campaign created a connection among not only the brand and the consumer but also among consumers themselves through these photos[101].

Instagram Shopping

Instagram has not only created a platform where individuals can post pictures about their lifestyles but also a platform where anyone can build connections among like-minded individuals. With currently over 1 billion active monthly users, individuals have taken advantage of Instagram shopping where they are posting and sharing products, allowing for others to purchase. Influencers such as Kylie Jenner have generated millions of dollars from influencer marketing, referencing clothes from different brands and allowing for the purchase of those products with a tag on the image. Furthermore, people are able to find products and brands in the “Search & Explore” section. According to Rakuten, 87% of people said that influencers have inspired them to make a purchase after viewing their products[102]. Furthermore, a survey from Harris Interactive suggested that 68% of individuals ages 18-34, were more likely to purchase something after seeing a friend post about it on social media[103].

Retailers alongside influencers have also used the Story highlights feature on Instagram to generate not only revenue but free advertising. Typically, influencers will organize their story highlights among types of products, allowing users to navigate their page much more efficiently as well as receive more information by clicking on the shopping tags. The shopping tag generates a “see more” link that will direct them to the retailer's website. Other common story highlights include events, partnerships, promotions, and customer reviews.

Impact on Business

Pros of innovation

A key driver of success for retailers will be customized, convenient experiences for shoppers. Here are some staggering numbers that highlight the importance of retail innovation:[104]

  • “Smartphones were used in more than one-third of U.S. retail sales in 2018, including everything from initial product research to actually making a purchase. That accounts for more than $1 trillion in sales”
  • “82% of consumers consult their phones while they're in a store deciding what product to buy. One in 10 of those people end up buying a different product than they had planned.”

Innovation will be key to ensuring customers stay happy and find value in a specific retailer. Given how easy it is to switch retailers, businesses need to continually add value to the customer. According to a survey of customers worldwide, the majority of them were interested in using an app to purchase goods, and VR technology to try on items [105], pointing to the importance and value of these technologies. For example, for IKEA shoppers in more dense urban centres, where driving is not the main mode of transport, the VR showroom app can more easily help customers “try on” different home furnishings before going in-store to make the purchase [106]. This convenience factor will enable customers to make purchasing decisions more easily.

One of the biggest issues customers face is when their time is wasted, leading to a poor experience. Two of the most significant pain points are long line-ups at the checkout and arriving at the store and finding out the product is out of stock[107]. By implementing omnichannel retailing, retailers can help customers save time and make their shopping experience more predictable.

Retail technology also has great cost savings for retailers. Technologies like omnichannel retail and inventory management both save retailers 10% and 8% respectively in 2019 [108].

Cost Savings In Retail Stores Using Automation, Worldwide, 2019, Statista

In addition, retailers noted that automation technology increased the store’s foot traffic by 11% [109]. In a survey of 5000 customers, it was found that 60% would switch to a retailer that had automation technology for their returns process[110]. This highlights that the technologies discussed are bringing value and drawing customers to different retailers for the value and convenience factors.


Privacy Concerns

A lot of the technologies that are currently being adopted in retail require more information from consumers than ever before. Information being shared with retailers contains personal details such as full names, addresses, contact information, financial payment information, and more. With rising private information being shared with companies, consumer concerns about privacy are rising as well. This is with good reason as one in three Americans surveyed have had their data compromised through a breach [111]. In addition, half of those surveyed felt like they lacked control over their own personal data [112]. The retail industry has a strong barrier to overcome when it comes to collecting customer data; only five percent of those surveyed placed the retail industry at the top of their most trusted for ensuring data privacy [113]. In addition, over 60 percent of those surveyed said that retailers are responsible for data security, not third parties involved in regulating or the technology supporting the retailer [114]. Retailers need to be able to consider security costs when it comes to securing consumer information as a breach could lead to loss of trust and damage to reputation. This may very well lead to a large decrease in sales or even large financial penalties.

Privacy regulations by government authorities are rising around the world in response to the change in commerce that technology is bringing. The European Union was one of the first to launch a government privacy initiative legislation back in May 2018[115]. Other countries are following with their own versions of privacy legislation and penalties for failing to meet the standards are steep. The California Consumer Privacy Act is a good example; a breach of five percent of California Consumers could create a penalty of five to ten billion dollars[116]. Retailers will definitely have to keep active protocols in place to continually upgrade security to make sure that they do not suffer massive financial penalties for breaching new legislation in their respective countries of operation.

A visual representation on the types of data that users have control over and the types they lack control on[117].

The Loss of Human Touch

The process of automation and adopting new technologies focuses primarily on efficiency in how an organization operates and spends its money. Businesses need to keep in mind that having a human touch is an important aspect of the retail experience for many customers. A survey conducted by PricewaterhouseCoopers found that 66% of the 15,000 people surveyed felt that businesses have lost their human touch in the customer service area of their operations [118]. 75% of those surveyed said that in the future, they hope for more human elements in business [119]. This is especially true for businesses that cater to a large age range of individuals; those who are older and not as in touch with technology would more likely prefer to speak to a human than try to navigate a website. The balance between human availability and technological efficiency is important for retailers to be able to reach wider customer segments. PricewaterhouseCooper's survey also found that customers are willing to pay more if a company has a better customer service experience than others[120]. This can be achieved by having strong omnichannel strategies that are focused on integrating balance but also in anticipating a change in preferences of consumers [121].

Budget Concerns

As retail has evolved, a key theme is that the changes have revolved around convenience. Shoppers are able to purchase items from the comfort of their own home and have it be delivered to their doorstep, often within the same day. Retailers need to keep up with these trends in order to be selected, which does come at a hefty cost and a big shift to how business was traditionally done.

For example, thanks to services like Amazon Prime, free shipping is almost an expected amenity when ordering online. According to a Deloitte study, 85% of holiday shoppers picked free shipping instead of fast shipping, a cost that the retailer has to incur[122]. In fact, retailers like Target are being criticised by shareholders when they cannot keep up with Amazon’s 2-day, free shipping model[123], pointing to the extreme pressures they face in order to prevent customers from switching to Amazon. Both Target and Walmart have acquired fulfillment companies like Shipt and Flipkart to assist with fulfilling online orders, using their existing stores as fulfillment centres, spending a combined $17 billion to do so[124] [125]. These expectations on shipping come at an extremely high cost to retailers, but we can also see why retailers are cornered into paying these costs.

In the context of COVID-19, US retailers are seeing a greater uptick in e-commerce sales, but these also come with steep markups in order to cover the cost of shipping and additional safety measures. However, it is expected that demand will decrease as consumers begin to face financial hardship due to extended restrictions[126]. The challenge retailers will have to face is implementing their e-commerce or omnichannel options, while facing smaller margins and maintaining safety protocols.

Retailers also need to face the cost of processing the increased volume of returns. Customers now often have the ability to try before they buy through free returns policies. In fact, we found that customers purchase approximately five more items monthly when retailers adopt a “try before you buy” policy[127]. In the same study, it was found that they return just over three of those items[128], so retailers should weigh the costs of processing those additional returns against the benefit of the customer keeping the other two items.

Retailers do have to make investments in order to stay competitive, and they will need to decide if they can manage these costs.

Things to Look Out For

These are additional technologies found, however, they are still in the early phase of adoption. Retailers should keep these in mind in the long term.


Blockchain is a technology that passes information from “block” A to “block” B and all details of the transaction are stored publicly. It typically uses a digital signature, creating encryption and security protection. Blockchain is an up-and-coming trend that retailers are starting to implement as an efficient way to compute transactions as well as help alleviate issues within the logistics sector. Furthermore, retailers are starting to realize that transparency is applicable to all parts of the supply chain as it allows for a secure way for the goods and services to be made, shipped, and delivered. This provides an increased level of trust among everyone in the supply chain, as well as helps retailers meet the demands of the customer. However, due to the lack of authenticity in the data that is related to this technology, retailers are skeptical of investing in blockchain at this moment[129].

Voice control

Voice Control

Technologies such as Alexa and Siri are virtual AI assistant platforms that enable one to voice command queries that in return, provide information. According to OC&C Strategy consultants, voice shopping will grow to over $40 billion a year by 2022, up from about $2 billion today [130]. This forecast is spearheaded by the prediction of Amazon gaining more of a market share by its yearly increasing sales of smart speakers. Furthermore, the report also indicates that younger people are the ones who tend to purchase such items and are opting in for convenience.

With most people today still wishing to physically be at the stores to purchase their goods, [131], voice command retail is not as enticing for them as it is difficult to browse and search easily. Accuracy is also another obstacle that is causing retailers to be cautious, as interpreting a voice command is not easy, given the variety of speech patterns. Customer education and advanced analytics are some factors that are causing companies to err on the side of caution and not implement this technology yet.


Mavis Lum Aneet Malhi Muneeb Mirza Mohamed Mussa
Beedie School of Business
Simon Fraser University
Burnaby, BC, Canada
Beedie School of Business
Simon Fraser University
Burnaby, BC, Canada
Beedie School of Business
Simon Fraser University
Burnaby, BC, Canada
Beedie School of Business
Simon Fraser University
Burnaby, BC, Canada

Addendum, added by Drew Parker ( October 13, 2010: The ExpressText Blog Team asked to have a link added that I felt would make for interesting additional reading. It is entitled 'Customer Loyalty' and can be accessed at the link


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