New research from retail and hospitality analysts IHL Group reveals that retailers who make strategic investments in technology are best positioned to gain a clear edge over their rivals.
Greg Buzek, President of IHL Group, points out that government stimulus helped boost sales for almost all retailers in the past two years. But he notes that heading into 2023, retailers will win by executing better and realizing improved margins from ecommerce transactions, which are then fulfilled through local stores. As he explains, this success requires a commitment to investments in technology.
Volumental fully embodies some of the key findings that emerged from the IHL Group study, in particular the importance of investing strategically in technology to boost retail sales. As a leading footwear technology company, Volumental uses AI, digital imaging and machine learning to redefine the footwear industry and create the world’s most accurate footwear fitting experience for consumers.
Key Trends Driving Technology Purchases
IHL Group’s research found that there are three key factors driving technology purchases for 2023:
Reducing margin loss from ecommerce with store fulfillment – This phenomenon has seen up to 800 percent growth as a percentage of revenue since 2019 for certain segments, much greater than retailers could realize on their own
Reducing store labor – With current challenges to attract staffing, retailers seek to do more with fewer workers. This can include labor-replacing technologies such as self-checkout, electronic shelf labels or automated fulfillment centers; and technologies to make associates more efficient such as mobile devices and better site communications
Security technologies to reduce theft – These tools can include security personnel, analytics capabilities, threat identification technologies and other loss prevention tools
IT Spending on the Rise
IHL Group reports that the growth of ecommerce enticed retailers to spend 25 percent more in the 2020-2022 period to keep pace. Spending on technology is already up more than 4 percent in the first few weeks of 2023. But not all retailers are in increased spending mode.
The best-performing retailers -- those with 2022 sales growth of more than 15 percent -- are investing in IT at a pace that’s more than twice as much as average performing retailers and more than five times that of retailers performing below average. The best performers are truly creating vast separation from the poorest performers by investing in store IT infrastructure at a stunning 43X multiple versus their poor-performing peers.
Technologies Attracting Most Investment
IHL Group’s research found that retail leaders are spending most heavily on the following technologies in 2023:
Enabling geolocation for marketing and inventory availability: 13 times higher than their competitors
Electronic shelf labels: 12 times more than the competition
Updated POS software with microservices: 7 times more than their counterparts
Top Technology Priorities
The latest study also found that the top technology priorities among all retailers for this year encompass the following:
Personalizing the customer experience (cited by 54 percent of respondents)
Inventory visibility (52 percent)
Empowering store associates with better tools (47 percent)
Refreshing the POS infrastructure (42 percent)
Tracks with FitTech® Platform
The key findings from the IHL Group research align closely with the benefits that Volumental provides retailers, their associates and customers. This is most notable in terms of personalizing the shopper experience and empowering store associates with enhanced capabilities, although Volumental’s technology also checks the other two boxes above.
At Volumental, we offer a unique fit-sizing technology called FitTech® that blends 3D foot scanning with purchasing data from millions of footwear shoppers and AI capabilities. The entire scanning and sizing process takes as little as five seconds.
Volumental’s algorithms mine more than 36 million feet scans to match a customer’s feet to other customers with the same foot shape. The Fit Engine delivers highly personalized shoe style and size recommendations to help ensure a perfect fit. Retail purchase data combined with an AI-driven Fit Engine delivers the world's most accurate footwear recommendations.