2023 is Retail’s Pivot Point for Digital Innovation
Retailers are two years away from the most pivotal acceleration of digital innovation they’ve ever seen. Some realize it; many do not. A rare confluence of groundbreaking technologies — 5G, artificial intelligence (AI), Internet of Things (IoT), augmented reality (AR) and virtual reality (VR), voice, low-code, and blockchain — continue to advance at an incredible pace. They’re all coming faster, cheaper, and sprinting from novelty to status quo. 2023 is the inflection point when these technologies are lining to converge in maturity. This will trigger an innovation explosion. Retailers need to understand that, and they need to put plans in motion now if they haven’t already.
The digital, data-driven world of 2023 will transform what retailers are able to achieve — and how they must compete. Ubiquitous smart technologies will unlock seemingly endless potential for how retail interactions and processes can be optimized. Morphing data into insights will be a strategic imperative, as customers hone their expectations around engagement, personalization and simplicity. Retailers will face an absolute need to learn and adapt to market shifts and customer needs in real time — and they’ll have the tools to do so.
In 2023, global analyst firm IDC predicts that digital-first businesses will begin comprising the majority of the economy. In this digital economy takeover, new retail brands facing historically low barriers to entry will tap into available platforms to bring innovative solutions to market faster than ever. Low-code software development platforms will usher new developers onto the scene: employees with no requisite code skills who are nevertheless as effective as professionals are today in building and refining applications. As a pace of iteration that was once conceptual or aspirational becomes operational, the agility with which retailers can harness advanced technologies to transform their businesses will be synonymous with success.
The digital economy, our newfound business majority in 2023, will place these matured technologies at the disposal of retail innovators:
5G connectivity will be pumping through 1 billion devices in 2023. That will overtake 4G, and pave not so much a new digital lane, but an entirely new digital superhighway. 5G enables networks up to 100 times faster than 4G networks. Latency is reduced to one millisecond (the length of a camera flash). And whereas 4G supports 1,000 connections per access point, 5G handles a million. These capabilities will usher in an era defined by unprecedented connectivity, empowering innovative solutions across every technology category on this list.
For retailers, devices and data collection mechanisms positioned throughout their supply chains, stores and apps will enable far more granular insights and opportunities for real-time intervention. As connected devices permeate daily life, retailers’ understanding of customer journeys will go beyond purchase and product touchpoints to include a vivid understanding of consumers’ day-to-day behaviors, preferences and tendencies. Merging data streams, in real time, to assemble holistic knowledge will evolve customer journeys, incorporating product context with the context of each customer’s life to understand how products fit within it.
In 2023, AI will be a mature $98 billion market. Tiny powerful AI chips — 50 fitting on the head of a penny — will add localized intelligence to every kind of product, along with the ability to process data locally and in real time. AI training will advance: training that took 10 days in 2017 and just three minutes in 2019 will be seconds in 2023. IDC predicts that once AI hits scale, AI-powered businesses will respond to customers and competitors 50 percent faster than peers. Those retailers proficient with AI going into 2023 will wield a decisive advantage.
IoT
Powerful AI edge processors will drive global IoT-product spend over $1 trillion by 2023, enabling greater digital reach and countless opportunities for innovation. The storage and processing capabilities of those tiny chips will imbue individual connected devices with their own brains and memories. Every product will at least have the capability to be a smart product, empowered with edge computing (processing information immediately on-site rather than in the cloud). IDC predicts that by 2023, 25 percent of endpoint devices and systems will execute AI algorithms. Products will do their own thinking.
This technology will enable transformative retail experiences, such as frictionless checkout and cashier-less stores, as well as smart supply chains and enhanced back-end capabilities. Countless device interactions will contribute data that enables marketing efforts and contributes to customer journeys. Thanks to 5G, the interactions can happen in real time.
AR/VR
Backed by the proliferation of 5G, now-matured AR/VR will enable new experiences, from digital training to telepresence to new retail interactions. In 2023, Amazon.com, Google, Apple, and Facebook are each launching eyeglasses with AR capabilities. Amazon in particular is likely to introduce the equivalent of Amazon Echo for customers’ faces, enabling customers to shop and communicate with products from an unprecedented perspective. Patent activity suggests that these devices may utilize bone conduction technology, allowing wearers to interact without even needing to speak aloud. Retailers should certainly be prepared to adapt to the new purchase paths paved by these technologies as they arrive. That’s the approach some, such as Ulta Beauty, are already taking. As Michelle Pacynski, vice president of innovation at the beauty retailer tells me, “We acquired QM Scientific for its AI strength and GlamST for its AR capabilities. Strategic and forward-looking technology expansion like this enables us to create even more personalized and differentiated guest experiences that capture attention and drive greater engagement.”
In 2023, blockchain will enable consumers to take direct control of their personal data. As products and personal devices capable of edge computing and real-time processing seek more private data, blockchain capabilities will give users full control over how that data is processed and stored, including whether it gets stored at all. Blockchain will be the cornerstone of online trust, enabling secure digital identities and Digital Me technology. As customers protect their privacy, Gartner predicts that brand access to consumer data will decrease by 30 percent. Consumers in full command of their digital identities will parcel out data depending on their relationship with each brand, transforming loyalty programs. Gartner also foresees that blockchain will support the global movement and tracking of $2 trillion in goods and services annually by 2023, making the technology foundational to retail commerce.
Low-Code
By 2023, low-code drag-and-drop software development platforms will enable a 10x acceleration of software and application development for retailers. Competition will speed up as well, as retailers of all sizes leverage available platforms and launch new products and features far faster than ever. The simplicity of low-code development will also create a new class of citizen developers, able to achieve as much as developers today but with far less technical training. IDC believes the emergence of citizen developers will also increase the number of developers by 30 percent. This simplicity will vastly expand the development talent pool, again enabling faster and more ambitious innovations.
As Shiv Dutt, vice president of digital experience and innovation at Berkshire Hathaway-owned Pampered Chef, tells me: “Low-code provides the crucial abilities to experiment rapidly, make precise adjustments to fine-tune variables, and improve our personalization and engagement quickly and iteratively. The traditional risks associated with committing budget and resources to software changes are almost entirely mitigated by the speed that low-code enables.”
2 Years to Get a Head Start — and Counting
The true potential of digital innovation in 2023 is in the synergy among these new technologies. Not only will these maturing markets be big, they will be working together — and that’s the most important ingredient here. The technologies in 2023’s digital ecosystem will feed off each other to accelerate innovation. For retailers that need to roll out more digital services to overlay on top of yesterday’s transaction- and product-based business models, realizing this tremendous potential will require an agility revolution based on microservices architectures, APIs, and an improved ability for quickly iterating highly modular applications.
Jon Nordmark is the CEO at Iterate.ai, whose platform facilitates the fast prototyping of new digital solutions for retailers and other organizations. Previously, Jon was the co-founder and CEO at eBags.com, which was acquired by Samsonite in 2017.