Technology has been fundamental to the huge progress of the retail sector over the years. While the introduction of e-commerce businesses and on-demand delivery has significantly altered consumer preferences, retailers are turning to next-generation technologies to deliver a seamless customer experience. According to Invest India, the overall Indian retail market is expected to grow from $0.79 trillion in 2018 to $1.75 trillion in 2026, growing at a compound annual growth rate (CAGR) of 9-11 per cent. Meanwhile, India’s e-commerce market is set to grow at a CAGR of 30 per cent for a gross merchandise value of $200 billion by 2026.

With the help of emerging technologies such as internet of things (IoT), augmented and virtual reality (AR and VR), artificial intelligence (AI) and big data, enterprises in the retail sector gather relevant information from the vast volumes of data available to automate various parts of the retail chain, from manufacturing to last-mile delivery.

The Covid-19 crisis has further pushed retailers to adopt technologies for accelerating growth and surviving market competition. While retail was hit hard by the pandemic, the sector’s revival process is well under way as retailers are focused on automation and technologies to forward their businesses. The pandemic has also catalysed the expanding outreach of e-commerce companies to Tier 3 and 4 cities. The factors enabling the rapid transformation include experience personalisation, supply chain integration, operations digitalisation and fintech lending.

A look at some of the recent technology trends dominating the retail sector…


IoT caters to every facet of the retail experience. It helps retailers modernise operations and supply chain management, and improves in-store marketing efforts of retailers and brands. According to industry reports, the global market for IoT hardware for retail applications is expected to be worth more than $94 billion by 2025. With IoT, retailers gather data to further analyse and make informed decisions for product placement, stock control, and increasing efficiency. IoT devices are facilitating in-store navigation by helping customers find the desired product. These devices are also being used for predictive equipment maintenance and contactless checkout/self-checkout mechanisms. For instance, Zara uses radio frequency identification (RFID) across its stores for item level tracking and replenishment, which has dramatically reduced the cost of stocktaking and reporting. Another application of IoT is the utilisation of iBeacons to send consumers notifications while they are passing by a store, in order to increase sales. Going forward, as the cost of deploying IoT solutions decreases, the technology solution is likely to gain traction in warehouse and logistics operations.


As brick-and-mortar stores are increasingly facing challenges due to the rise of e-commerce, traditional stores are moving towards transformation of their showrooms. AR and VR technologies have given a whole new definition to customer experience by increasing the interaction through smart dressing rooms, beacons or AR catalog apps. With the help of these AR/VR devices retailers are creating an immersive interface with lifelike experiences to show the utility of products. Meanwhile, the measures undertaken amid the Covid-19 crisis have played a huge role in increasing the demand for AR systems by allowing customers to adopt a try-before-you-buy approach. For instance, Ikea created the “Ikea’s Place” app, where it allows shoppers to access items from Ikea’s inventory via a live view function on their smartphone. Similarly, Oak labs uses AR/VR to create interactive changing rooms. These smart mirrors recommend other items that can be paired with the products customers are trying. Thus AR/VR technologies have given a whole new definition to customer experience by merging the physical and virtual worlds.

Voice commerce

‘Voice assistant technology has exploded in popularity, and is now making inroads into the retail sector. For instance, Walmart has created the Walmart Voice Ordering service under which customers can use any device powered by Google Assistant or Siri to add products to their cart. Meanwhile, 7-Eleven Inc.’s voice ordering enables customers to place goods into their basket purely using voice commands.

AI and chatbots

With the help of AI, retailers are gaining a thorough understanding of customer behaviour and preferences to anticipate their next buy. Furthermore, AI-enabled demand predictions help retailers in efficient store and inventory management. In fact, NASSCOM expects that the Indian retail industry is set to witness AI- and data-led disruption opportunities by 2024. Meanwhile, Servion Global Solutions has predicted that by 2025, 95 per cent of customer interactions will be powered by AI. Some other benefits of AI are scan-and-go shopping and facial recognition. One of the key applications of AI technology in the retail sector has been chatbots. AI-based chatbots are helping customers in enhancing their shopping experience by providing support and assistance throughout. This helps companies reduce the cart abandonment ratio, thereby improving the churn rate. Meanwhile, data collected from AI systems helps in deciding on the optimum pricing. This assists retailers in deciding as to when to reduce the prices and when to increase them depending upon demand and availability.

Big data

Big data helps retailers in deriving analytical benefits from customer data and predicting purchasing behaviour. It also enables them to better understand consumers in terms of branding and product management. Besides, it helps retailers in efficient operational management. With big data technologies, retailers can reduce supply chain costs by making the whole process more agile. Further, the technology is being used to formulate models for determining optimal product prices.

Upcoming technology trends

  • Autonomous delivery robots and store assistants: Retail stores can use robots in the supply chain for identification of errors in pricing, checking stock, and locating misplaced items, etc. For instance, Amazon uses robots to move stock around warehouses and group items for order fulfilment; this has led to a 20 per cent drop in the company’s operating costs. Further, Alibaba’s last-mile delivery robot called G Plus is designed to deliver parcels and groceries in residential areas.
  • Drones: These are expected to be a game changer for the retail industry in the coming years. Drones will not only offer advantages such as quick delivery and lower delivery costs but also ensure security. Of late, a few retail enterprises have started testing drones for last-mile delivery and the Covid-19 pandemic is expected to further hasten this process. In 2020, the Director General of Civil Aviation (DGCA) gave a nod to food start-ups such as Zomato, Swiggy and Dunzo to start testing beyond the visual line-of-sight (BVLOS) drones for deliveries.
  • Cashierless stores: Due to the pandemic-induced social distancing measures cashierless stores are finding preference. According to a survey on the shift in shopping habits due to the pandemic, it was found that 87 per cent of customers prefer stores with contactless or self-checkout options going forward. Several retail stores such as Decathlon, Amazon and BigBasket are taking the cashierless checkout route.
  • Conversational commerce: This is now emerging as an important trend in the sector wherein online shoppers are using over-the-top (OTT) platforms such as WhatsApp to converse with a retail brand’s customer service team directly.
  • Facial recognition: With the help of facial recognition technology retailers can identify customers at the point of sale to deliver a personalised shopping experience.

The way forward

To conclude, the retail industry is in the middle of a transition from being product-centric to becoming customer-centric. Going forward, emerging technologies facilitating digitalisation across the entire retail ecosystem will make shopping a personalised, faster and more convenient experience.

By Shikha Swaroop