Global spending on technology in the retail sector is set to grow by 3.6% in 2019, according to predictions by Gartner analysts
Retailers’ investment in technology will grow by 3.6% globally next year as customer expectations put pressure on them to perform.
Gartner analysts predict that retail spending will hit approximately $203.6bn in 2019, and expect this growth to continue for the next two years.
Though the retail sector has been slow to adopt digital technologies, there is set to be an increase in technology investment to better respond to changing customer habits, according to Gartner.
“Retail CIOs used to be tasked with minimising risk and cost,” said Molly Beams, senior director, analyst at Gartner. “Now they are held accountable for business results. They are prioritising return on investment and other measurable business impacts. Retail CIOs are investing in analytics for both near-term benefits like decision-making and to prepare for innovations such as smart machines, AI [artificial intelligence] and augmented reality – all of which will require robust datasets.”
Gartner named software as one of the fastest growing technology expenditures in the retail industry, with platforms for analytics, digital marketing, mobile applications, e-commerce and AI increasingly becoming a priority for retail CIOs.
Many retailers are adopting pay-in-aisle technology, data analytics software to make more sense of customer data, and voice-shopping capabilities – all in the name of offering an improved customer experience.
Online and mobile shopping have acted as disruptive forces in the retail sector, and Gartner’s predictions state that by 2021, Alibaba and Amazon will own 40% of online global market share – an increase from 33% in 2017.
Bricks and mortar back in business
But physical retail is also on the rise, according to Gartner, with global retail sales up by 4.8% in 2018 and more stores are opening than are being forced to close.
Increasingly, online retailers are moving towards the physical retail space, for example Amazon’s Go stores, which give bricks-and-mortar retail a technology twist to cater to customers shopping for convenience.
“In retail, there is only one battle that matters — the fight for the customer,” Gartner analyst Thomas O’Connor told the Gartner Symposium in Australia.
“There are many ways for retailers to differentiate from e-commerce giants, and therefore profitably co-exist. We think that yes, there will be a robust retail industry, but the rules of the game are changing rapidly. Different kinds of retail business will continue to arrive and challenge the status quo.”
Physical stores are increasingly becoming places for experiences rather than purchases as digital adoption has pushed consumers towards “showrooming” behaviour when visiting retail stores – trying items and clothing in stores while comparing prices and making purchases online.
O’Connor said that to stay ahead of the curve, retailers needed to use AI to better understand their customers, only scaling technology once there is a consumer need for it and using established indicators to measure the success of digital transformation.