How Retailers Are Using Tech for Competitive Advantage

Retail is a highly competitive business that increasingly uses technology to improve customer satisfaction and efficiency of internal processes. Robots, AI, data analytics, and more are enabling retailers to work smarter and faster, but their efforts aren’t perfect yet as evidenced by the amount of clearance and destroyed inventory that previous solutions were supposed to help avoid.  

“Emerging technologies like AI-powered customer support, automation, and real-time data analytics have become game changers for retailers,” says Tim Peters, CMO at omnichannel customer experience solutions provider Enghouse Systems.  

There’s also a positive impact on customer experience and loyalty when tech makes things run smoother and faster. 

“As customers increasingly expect personalized experiences, emerging technologies like AI and machine learning allow retailers to predict customer preferences and deliver personalized recommendations,” Peters says. “A study by Salesforce found that 60% of consumers expect personalized experiences based on their past behavior. These technologies help retailers anticipate customer needs and improve loyalty by making the shopping experience more engaging and intuitive.” 

But, of course, there are challenges. One of the main ones is integrating new technologies with existing systems.  

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“While emerging tech offers significant advantages, the costs of integration and ensuring compatibility with legacy systems can be complex,” Peters says. “Additionally, scalability remains a challenge as the needs of retailers evolve with customer expectations.” 

Another challenge arises when tech adds friction to customer experiences. 

“While technology can streamline operations, an overreliance on automation without human touch can sometimes backfire,” Peters says. “Consumers still value human interaction, especially in complex support scenarios. It’s crucial for retailers to balance automation with human agents, particularly in areas that require empathy and nuanced decision-making.” 

Competitive Advantages for All 

Companies of all sizes benefit from greater organizational efficiency, and tech has been the fuel powering digital transformation. For example, Lowes uses AR for home improvement shopping while Sephora uses it for virtual make up try-ons. Walmart is stepping up automation in its battle against Amazon. 

But smaller retailers are benefiting, too. For example, western footwear, apparel, and accessories brand Tecovas uses AI to improve their SMS targeting strategy and drive more revenue. Using AI tools from AI-powered SMS and email marketing platform Attentive, the company has been able to convert more site visitors, improving incremental revenue and realizing a 14X ROI improvement for the brand. 

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“I am a one-person CRM team, so anytime I can shift some of my resources to AI and ML, it is a win for me. For instance, building the correct segments is time-consuming and [prone] to error. Audience AI, a feature of AI Pro, takes the guesswork out of identifying and communicating with our customers how they want to receive messages and delivers the results we are looking for,” says Megan Edwards, senior manager, CRM at Tecovas, in an email interview. “We expect this to be a key success driver with the upcoming holiday season to cut through the noise by creating messages based on [the] individual rather than batch and blast tactics. We will be weaving AI into our holiday marketing strategy heavily this year, and we are looking forward to the results on the SMS channel.” 

As with many small retail businesses, marketing tends to involve a lot of trial and error which translates to time and costs.  

“We’ve been extremely pleased with the uptick in our site visits and incremental revenue since activating AI, and we didn’t have to spend a lengthy amount of time determining what raised our numbers,” Edwards says. 

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KPMG considers GenAI a “game changer” in the consumer and retail sector. According to the company’s recent report, GenAI can drive commercial effectiveness, operational efficiency and cost optimization. It can also be used for price optimization, better ad targeting, more engaging product descriptions and a more personalized customer experience. 

Accelerating Fulfillment and Delivery With AI 

When Matt Naslund, vice president and head of solutions at Mytra worked for personal styling service provider Stitch Fix, one of the things they were able to deploy fastest were autonomous mobile robots (AMRs), though design time to deployment took two years and the robots could only operate on the ground floor. At large-scale automation solution provider Mytra, he and others at the company are accelerating deployment in distribution centers and warehouses with modular “cells” the size of pallets that can be automatically configured and moved. This accelerates fulfillment and delivery and addresses the problem of demand peaks and valleys. 

“One of our customer’s last large-scale automation took them five years from the time they started the concept to deployment,” Naslund says. “For context, the pandemic, was four and a half years, and the amount of volatility that the supply chain saw over the four years was insane. We saw inventory gluts, inventory shortages, and panic buying. Then you saw a warehouse shortage capacity, everybody's panicking to get warehouses. Then, they suddenly have too much space.” 

The pandemic years were arguably the worst time for a long-term rollout, given the constant and dramatic changes happening at the time, from lockdowns to supply chain chaos.  

Stitch Fix’s use of AMRs allowed the company to improve operational efficiency and expand into new markets with clothes for men and children, in addition to its traditional audience -- women. Stitch Fix also launched in the UK. 

“All of a sudden, our footprint, our landscape, our ordering, our inventory, everything looked completely different,” Naslund says.  

The biggest benefits of automation are the ability to get products out the door faster, labor savings, real estate savings and higher accuracy levels.  

Inventory management is still an issue, and there’s a demand for real-time visibility to minimize overstocking and understocking. A similar concept could be applied for workers so when there’s a spike in orders, workers can be dispatched quickly, such as to pick items to be shipped. 

“If we start to have advanced learning and understanding, and then we start to develop our predictability of the inventory that is going to both come into our system and come out of our system, and [as] we start to optimize that, we hopefully can then start to apply that to the rest of the four walls of the warehouse,” Naslund says. “Then you start to expand it to the greater supply chain, and our hope is that we then can start to reduce inventory and be smarter or more intelligent about inventory management of our networks.”