For retailers COVID-19 has ramped up the pressure on their digital transformations as store closures increase the importance of ecommerce revenue relative to offline sales.

While some retailers are rushing to get online for the first time, even those with a strong digital presence and logistic infrastructure now need to revisit their strategic assumptions and investments to cope with the surge in ecommerce sales. 

Industry experts believe the ecommerce market has matured more than five years in just a few months. 

According to Gartner’s 2020 hype cycle for retail technologies, retailers are predicted to fast-track their adoption and use of innovative technologies to improve customer experience while also optimising costs. 

Four new technologies appear on the hype cycle for the first time this year: micro fulfillment centres, employee experience tech, live commerce and retail assortment management applications.

Microfulfillment centres

As stores are increasingly used to manage inventory for online orders and returns, new warehouse technologies will find their way into bricks and mortar locations. 

Microfulfillment centers (MFCs) are modular warehouse facilities leveraging automation, AI, real-time data and robotics; typically located within the physical store. MFCs can store a lot of stock in a small space and retrieve products at high speed.

According to Gartner, COVID-19 has accelerated the urgent need for automation to fulfil online orders, reducing the reliance on current in-store picking processes, which are labor-intensive and costly.

“MFCs have the potential to deliver a cost-optimised fulfillment model to accommodate unpredictable demand. They can be implemented very quickly and cost-effectively with higher throughputs than more traditional in-store picking processes,” the analysts write.   

Employee experience tech (EXTech)

Technology that improves the work lives of employees is gaining new importance in 2020, as workforces adapt to socially distant or remote work. 

EXTech is a diverse collection of employee-facing solutions designed to influence and improve the employee experience and organisational culture. 

The technologies can be used for feedback, coaching, encouragement, learning, competition, participation in team or social activities, personalisation, rewards, badging, and social recognition.

Gartner expects adoption will accelerate as retailers ramp up efforts to attract, retain and quickly train associates. These factors, alongside significant operational and cultural redesign initiatives, will drive this technology toward the peak. 

“The need to attract and retain retail workers in challenging labor markets — now further intensified by COVID-19 — is driving a renewed focus on optimising the overall employee experience (EX) and enabling a digital workplace environment,” the analyst write.  

Live commerce

Live commerce uses live video streaming to demonstrate products and interact with shoppers in real time to encourage purchases. Chinese platforms such as Alibaba have pioneered shoppable video, but the market is maturing as Instagram, Facebook and Amazon ramp up their social commerce features. 

According to Gartner, live streaming can increase brand awareness and generate a large amount of traffic in a short time. However, brands face the challenge of having to cut through in a noisy marketplace full of discounters. 

Gartner advises, “Retailers must have a strategy to upsell from a few loss-leading products so they can justify the investment in the service. Quality show experience requires detailed planning and professional setup to ensure the scene can support the brand positioning. They also need to design mechanisms to retain customers so they will come back for repeat purchases.” 

Retail assortment management applications (RAMA)  

The humble spreadsheet has proven surprisingly resilient in retail. Gartner estimates that basic Excel is still the most common assortment management tool, used by over 30 per cent of Tier 1 retailers, and likely boasting an even larger penetration in Tier 2 grocery and specialty retailers. 

Retail assortment management applications (RAMA) threaten to replace the spreadsheet. However, RAMA implementations have been slow and difficult so far, as retailers grapple with competing technology investment priorities, strategic shifts, senior executive turnover and historical business process resistance. 

Gartner argues that retailers that don’t embrace RAMA may be significantly disadvantaged as they try to deliver a unified commerce experience. 

“As retailers navigate in the new post-COVID-19 marketplace, even a slight improvement obtained from the merchandising processes of selection, distribution and pricing can have a positive impact on sales, margin, inventory availability and turnover, and the resulting customer satisfaction,” the analysts write.  

“The key to retail differentiation is the expansion of assortment planning across channels and touchpoints, no longer limited to preperiod or preseason planning, also serving as an informational hub to support ongoing analysis and execution.”

 

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