“Over the years, retail industry and technology, both have witnessed tremendous advancements, from shopping malls to ecommerce and self checkout stores empowered by RFID, Barcode, EAS, IoT, and AI and ML, etc.”
The top 250 retailers around the world amount to nearly 5T USD in revenue (FY2016) and that might give you an idea of how the retail industry has evolved globally. From Le Bon Marché in Paris, in 1852, Piggly Wiggly in Memphis, USA, in 1916, to Walmart, Target, Amazon, eBay, Flipkart, etc. at present, retail shopping centers too have evolved and technology has a great role to play. Now you can use your smartphone, go on Amazon and order groceries, books, and all kinds of stuff, pay digitally and the items will be delivered to your place the same day, sometimes, within an hour. The retail business has changed drastically with technology and so has consumer shopping behavior. The retail industry has undergone a remarkable transformation since the 1970s largely driven by advancements in technology. From the introduction of barcodes to the implementation of real-time tracking systems, the evolution of retail technologies has revolutionized the way businesses operate and serve their customers.
Malls, Departmental Stores and Barcode
The emergence of large-scale shopping malls and small, neighborhood departmental stores in the 1950s and 60s witnessed the enormous scale of retailing that was possible and with cars becoming affordable, people were willing to travel far distances to shop. The use of barcode technology in 1972 and onwards also changed how retailers managed their inventory and ensured quick and efficient billing at billing counters. Big shopping malls that housed almost all kinds of retail shops emerged as the go-to destination across cultures in the USA and European nations. People thronged these mega malls on weekends, shopped, ate, and simply enjoyed being there. The shopping changed forever.
Barcode technology also enabled retailers to automate the process of inventory management, streamline checkouts, and gain valuable insights into consumer purchasing behaviors. This innovation laid the foundation for more advanced technologies to come.
Come 2000s, the introduction of Radio-Frequency Identification (RFID) technology brought about a paradigm shift in inventory management in retail. Unlike barcodes, RFID tags can be read remotely and do not require a direct line of sight, allowing for faster and more accurate tracking of inventory. The emergence of the Internet at the same time also made it easy for retailers to consolidate their inventory management on a computer system and have real-time visibility in the warehouses. Passive UHF RFID technology and EPC (Electronic Product Code) empowered retailers to gain real-time visibility into their stock levels, reduce instances of stockouts, and improve overall operational efficiency. With RFID tags attached to retail consignments coming from the suppliers, retailers were able to solve the ‘out of stock’ problem and gain more customers with enhanced customer experience.
Advanced software and analytics tools have enabled retailers to optimize stock levels, reduce carrying costs, and minimize inventory shrinkage. Moreover, cloud-based inventory management systems now provide real-time access to inventory data, enabling better decision-making and improved collaboration across the supply chain.
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IoT-Connecting the Retail Ecosystem
The Internet of Things (IoT) in the 2010s revolutionized the retail industry by interconnecting various devices and systems to create a seamless and intelligent retail ecosystem. IoT devices such as smart shelves, connected cameras, and BLE beacons enabled retailers to gather real-time data on customer behavior, optimize store layouts, and deliver personalized shopping experiences. Additionally, IoT has facilitated the development of smart supply chain management systems, allowing for predictive maintenance and efficient logistics.
Digital Payments: Redefining the Checkout Experience
The advent of digital payment technologies has transformed the way consumers make purchases and interact with retailers. With widespread adoption of the internet and the internet of things, retail was transformed drastically, poised to offer seamless customer experience without fail. The emergence of digital payment around the same time offered a new way to check out. Customers didn’t need to carry cash and using their smartphone to pay for groceries and other items became the norm. The use of debit cards and credit cards at POS offered a quick check-out experience to customers. From mobile wallets to QR code and NFC technology based contactless payment, digital payment solutions have not only enhanced convenience for customers but also provided retailers with valuable transaction data for targeted marketing and improved customer relationship management.
Real-Time Tracking with GPS and BLE
In the 2010s, the retail industry also witnessed the power of GPS and BLE beacons. The GPS technology is known for outdoor tracking while the BLE technology is known for indoor tracking, navigation, and its low power data transmission. Real-time tracking systems have empowered retailers to monitor the movement of goods throughout the supply chain with unprecedented accuracy. By leveraging technologies such as GPS, RFID, and IoT sensors, retailers can track shipments, monitor delivery routes, and respond swiftly to any unforeseen disruptions. This level of visibility not only enhances operational efficiency but also instills confidence in customers by providing accurate delivery estimates and order status updates.
The use of BLE beacons to offer personalized promotions on customers’ smartphones through periodic advertisement has also boosted sales and improved customer shopping experience.
The Emergence of E-commerce
Along with various kinds of automation in how retail stores are now, supply chain automation with the help of various technologies, the emergence of E-commerce changed the physical retail stores and shopping malls. With growing smartphone penetration and widespread internet coverage across the nation, e-commerce has become the new, accepted form of shopping. During covid19 pandemic in 2020-21, e-commerce got a huge boost, outperforming physical retail. Customers were able to open a mobile application, say Flipkart, Amazon, etc, and place their order directly and the orders were delivered directly to their home. It offered them the much-needed safety and social distancing during the pandemic.
E-commerce businesses have been successful with robust supply chain infrastructure that depends on technologies like RFID, IoT, GPS, warehouse management systems, AI and ML, etc. Leveraging ML algorithms to analyze tons of data to find shopping patterns, demand forecasting, real-time inventory, and order fulfillment has helped e-commerce businesses like Amazon and Flipkart to crunch numbers and offer hefty discounts while being profitable. The convenience of home delivery of their products and real-time order updates has pushed customers towards e-commerce retail (e-retail) now more than ever. To remain competitive, many retail giants like Walmart, Target, Macy’s, etc. which have thousands of physical stores are now offering e-commerce benefits as well, allowing people to shop online, on their websites.
Self-Checkout Stores, Grab and Go, Machine Vision, AI
The evolution of retail doesn’t stop at e-commerce. That was more than 10 years ago. Amazon, in 2018, opened its first cashier-free shop in downtown Seattle, USA for all and you can just walk in and grab your grocery items and simply walk out. This grab-and-go shop by Amazon utilizes the Amazon Go app that allows you to get in and after that, you can just grab any item and go. These cashier-free self-checkout stores utilize machine vision, RFID, CCTV, machine learning algorithms, and digital payment methods to offer a 100% self-checkout experience to their consumers.
Retail theft and EAS, RFID Tamperproof labels
Another thing to consider is that retail theft has become a 100B USD problem in the USA alone. Many retail stores have been subjected to Organized Retail Crimes (ORC), causing huge losses to retailers, forcing retailers and mart owners to put their stock behind locked shelves, as decades ago. Even though retail has advanced, somehow retailers are now forced to lock their items. Though technologies like Electronic Article Surveillance (EAS) and tamperproof RFID labels prevent usual shoplifting, ORC has become a law and order situation, causing retail shrinkage in many stores. EAS tags and RFID labels attached to retail stock help prevent theft by raising an alarm if someone leaves with an item without purchasing it first. To great extent retail shrinkage is addressable by leveraging RFID and EAS technologies among others.
To summarize, the evolution of retail technologies, from the introduction of barcodes to the implementation of real-time tracking systems, has reshaped the retail landscape in profound ways. The emergence of big shopping malls and complexes in the 1970s-80s and then how they faded away by the 2010s narrate the changing retail industry in the United States. In the year 1980, in Oklahoma City, there were four large shopping malls and three smaller malls that were beaming with people and by 2014 there were two large malls and one small mall in this same area. The emergence of e-commerce and changing customer expectations thus had a catastrophic impact on retail businesses. However, technology-led advancements have not only optimized operational processes and customer experiences but have also paved the way for a more connected, intelligent and efficient retail ecosystem.
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