The future of retail - applying consumer tech

Investment in consumer tech is a needed boost in the retail industry

Consumer tech in retail refers to the use of technology by retailers to enhance the shopping experience for customers. This can include everything from online shopping platforms to virtual reality experiences. Technology has revolutionized the way retailers operate and has become an essential aspect of the retail industry.

According to the General Statistics Office, in the first quarter of 2024, total retail sales of goods and consumer service revenue show signs of slow growth, only increasing by about 8.2% compared to the same period in 2023 (the same period increased by 13.2% compared to the same period in 2023). 9%). Assessment of the Ministry of Industry and Trade shows that, after the Lunar New Year, people's consumer demand returned to normal, but total retail sales of goods and consumer service revenue in March only increased by 0.5%, compared to the previous month, leading to a slowdown in retail sales in the first quarter. Mr. Nguyen Anh Duc, Chairman of the Vietnam Retailers Association, commented on the retail market, in 2024, the world economy is expected to not be able to recover fully, the world economy and Vietnam still face many difficulties, retail is no exception to that general development. Retail businesses need to find solutions to stimulate domestic consumption.

With the increasing development of consumer technology, customers' shopping habits are also gradually changing. Customers have the habit of reviewing and choosing goods online before ordering or buying in stores. Also, there are many products from global retailers for them to choose from. These factors require retailers to always optimize their resources and put customers at the center in order to survive and develop sustainably.

• Consumer technology adoption is changing the way retailers do business in many positive ways:

• Improved customer experience: Digital technologies like mobile apps, self-checkout kiosks, and virtual reality are making it easier for customers to shop and interact with brands. 

• Increased efficiency: Automation technologies like robotics and artificial intelligence (AI) are helping retailers streamline their operations and reduce costs. 

• Better personalization: Data analytics and AI are enabling retailers to develop personalized marketing campaigns and offer personalized product recommendations to customers. Advanced inventory management: Retailers are using RFID technology and other inventory tracking systems to improve their supply chain management and reduce waste. 

• New payment options: Digital payment methods, such as mobile wallets and contactless payments, are becoming increasingly popular with consumers.

However, retail businesses also need to pay attention to the following points before implementing consumer tech for their retail system. First, the cost of implementing technology projects for retail is quite expensive. The system needs to be thoroughly invested in human resources when encountering technical problems and system errors. With today's rapidly changing technology, retail technologies will always have to be updated. In addition, user privacy and data security are also extremely important factors that need to be strictly implemented.

Consumer tech trends in the global retail industry

1. AI, machine learning (ML), and generative AI

All industries, including retail, have been impacted by AI and ML technology. As a matter of fact, the retail sector has long served as an artificial intelligence test bed. The recommendation engine that Amazon unveiled more than 20 years ago is the most widely used application of AI by a store. Customers are given recommendations for relevant items by the ML algorithm based on their location, past purchasing behavior, and similar customers' buying patterns. Retailers must invest more in AI and similar consumer technologies in the future.

2. Automation

Retailers also need to invest more in automation in 2024. Automation is the act of employing technology to carry out repetitive processes with the least amount of human intervention. The persistent shortage of workers has made automation necessary in every aspect of the retail industry, including order fulfillment, inventory control, warehousing, and customer-facing services like contactless payments.

McKinsey estimates that current technology can automate 52% of all retail tasks. It lowers the possibility of human mistake, enhances service quality and speed, increases worker productivity, and saves money. For shops who are struggling with margin pressure, automation can provide an extra 300–500 basis points of profit. Because of this, automation is now necessary in the fiercely competitive retail sector rather than an option.

3. Augmented reality (AR)

AR is going to be major for retailers. It has been a fixture in the retail industry for a while now. However, as consumers attempt to close the gap between in-person and virtual buying following the epidemic, augmented reality technology has grown in significance.

Through the addition of digital material created by computers to actual items, augmented reality offers interactive experiences. Consider using your smartphone to shop for sneakers. You locate your favorite. With augmented reality, all you have to do is aim the camera at your feet to see how the shoes appear on them.

Using AR to digitally try on things has proven to be one of the most effective use cases. The biggest consumers of augmented reality (AR) technology with virtual try-on applications and virtual fitting software have been fashion and beauty businesses.

L’Oreal, for instance, has AR apps that allow shoppers to try on different makeup products without touching their faces. H&M is testing smart mirrors on its store floors for virtual try-on and styling.

4. RFID, QR codes and other smart store technologies 

Brick and mortar stores that want to improve their omnichannel experience must implement smart store solutions. Radio-frequency identification (RFID) and QR code technologies for inventory management should be a key focus for any company, according to Hoobil8's chief strategy officer, DeAnn Campbell.

Technologies like RFID and QR codes make it easier to monitor and identify an object via tags and codes. It facilitates in-the-moment inventory checking.

For example, the fashion brand River Island applies RFID tags on their merchandise. In fitting rooms, customers can use smart screens to scan product tags for information about available colors and sizes. From the fitting room, clients may click to explore and request comparable or similar clothing from the service personnel.

Retailers need to use self-checkout solutions like mobile point of sale (mPOS) as over 70% of Gen Z and millennials are likely to pay more or shop at stores that provide contactless checkout. These provide a consistent experience for customers across all platforms, including social media, mobile, in-store, and online.

Other future innovations in smart store technology, such as automated billing smart carts and inventory tracking smart shelves, also depend on cameras and sensors.

For example, Amazon offers "just walk out" consumer technology that uses AI, cameras, and sensors. Consumers only need to pick up the item they require, walk out, and cameras and sensors will take care of the tracking, billing, and automated payment detection from the customer's digital wallet.

5. Mobile technologies

Due to the widespread use of smartphones, mobile technologies such as personalised marketing through phones, mobile payment systems, and shopping applications are becoming a necessary part of retail. When they are in-store, according to Bazaarvoice 2022 survey, two-thirds of customers use their phones to search for more product information. Furthermore, by 2025, mobile commerce, or m-commerce—that is, purchasing done just on mobile devices—is expected to account for more than 10% of all retail transactions in the United States.

6. Datafication

Finally, retailers need to make use of strong retail data analytics and insights platforms if they want to fully realize the potential of consumer technology. Retailers are frequently prevented from taking full use of analytics today by issues including data silos, outdated technology, and the incapacity to exchange and receive data from many sources.

Potential for applying consumer tech in the Vietnamese retail industry

Vietnamese consumers are becoming more tech-savvy, with the proportion of internet users increasing to 75% of the population and the proportion of online shoppers reaching 60% (Vietnam Retailers Association, 2023). According to Sapo (2022), the consumer tech trend of retailers is to expand sales channels, put products on many different business platforms, and take advantage of the power of online sales channels. Next is Shoppertainment - Shopping entertainment, digital content creation combined with product marketing.

In particular, online shopping also creates attractive new opportunities for traditional retail channels. In fact, in some markets and grocery stores, many stores have invested to equip modern payment means such as POS machines and barcode cash registers to make it easy for shoppers to pay quickly and accurately. At market food stalls, many stall owners have posted their products on online delivery applications and home delivery to reach more customers. At cosmetics and clothing counters, putting goods on online markets through social networks and e-commerce platforms is also actively deployed.

Masan leverages consumer tech in its logistics and retail network

Masan operates the biggest retail chain in Vietnam, a network of over 3,600 outlets spanning 62 out of 64 provinces. The retail business is always adding new, appropriate store formats to enhance the shopping experience for its customers. In addition, it has integrated cutting-edge consumer technology into its membership program and logistical infrastructure.

Supra, Masan's quickly growing logistics startup, uses AI and ML algorithms to schedule orders for certain products. In an attempt to minimize shipping costs, machine learning technology scans the database to identify the stores with the largest product consumption. From there, it orders shipments and chooses the best delivery route.

Delivering 45% of WinCommerce's dry products is Supra's responsibility, which in the first year of operation helped WCM reduce supply costs per product by 13% and lower retail pricing for clients. Artificial intelligence is being used by Supra to effectively plan the supply, preventing shortages and having excess inventory.

Masan has also introduced the WIN Membership program, a consumer technology tool that enables a higher degree of customer comprehension for the company while providing customers with individualized services via artificial intelligence and machine learning-powered eKYC technology. When used effectively, this platform will provide a profit-making marketing platform and increase the profit margins from sales and marketing activities.