(Finance) – Technological innovation regains an important position in the development plans of companies: digital investments by the main Italian retailers grow from 2.5% of turnover in 2022 to 3.1% in 2023. The shop regains a central role in retailers’ investment plans. Among the main lines of work is the desire to make the customer experience as autonomous as possible. These are some of the findings that emerged from the tenth edition of theDigital Innovation Observatory in Retail, promoted by the School of Management of the Polytechnic of Milan presented at the conference “Digital innovation in retail: back to the future!”.
“In a historical period characterized by high uncertainty, retailers, while continuing to implement plans and solutions to combat the crisis, find the courage to dare again. On the one hand, they concentrate their efforts on the store, which after years of stasis returns to being the driving force of innovation in Retail, while on the other they look enthusiastically to the future, trying to intercept new technological trends in advance and experiment with innovative business models – he declares Valentina Pontiggia, director of the Digital Innovation Observatory in Retail –. The store, therefore, continues on the path of integration with digital channels with a dual purpose: to enable a fluid and friction-free user experience and to optimize back-end activities”.
Retail in Italy
In 2023, the value of total product retail sales (online + offline) recorded a growth of +4% in Italy compared to 2022. The online channel is going through an adjustment phase: it is growing, but at a more moderate pace compared to pandemic period. In 2023 the value of online purchases in Italy, in the product component alone, reached 35 billion euros, with an increase of +8% compared to the previous year. In Italy the shop is experiencing a moment of rebirth: the impact of online on the total retail remains stable compared to 2022 and equal to 11%. In continuity with the past, the dynamics of the number of sales points is negative, but the rate of decrease in the number of shops is the highest ever recorded in the last five years. At the end of 2022 in Italy there were 568,933 product commercial establishments: the decline is equal to -2.2% compared to 2021 (the average annual growth rate 2017-2021 is equal to -1.4%). Of greater concern is the trend in the number of restaurants which, for the first time in recent years, is experiencing a decline. At the end of 2022 there are 380,328 restaurants in Italy: this is a decrease of -0.8% compared to the previous year (average rate 2017-2021 equal to +1.1%).
Digital and omnichannel innovation
In 2023, digital has regained an important position in companies’ development plans. In fact, the impact of digital investments on retailers’ turnover is growing and is equal to 3.1% (it was 2.5% in 2022). The store is the protagonist of innovation strategies in retail: retailers work to simplify and make the customer experience autonomous. Digital signage systems (implemented and/or enhanced in 2023 by 44% of top retailers) capture the customer’s attention from the moment they enter the store, offering communications linked to products and promotions and guiding consumers along the in-store journey. Digital kiosks (35%) encourage exploration of the assortment and deepening product knowledge. Self scanning solutions (24%) make the customer autonomous in selecting products and, thanks to the connection with self check-out (21%) and innovative payment systems (18%), help to streamline the payment phase. Retailers also continue on the path of online-offline integration, working on the adoption of solutions (in store and in the back-end) capable of activating and/or strengthening omnichannel sales models.
“Among the most adopted omnichannel solutions are the infinite shelf (24%), to integrate the physical and digital assortment and online selling systems (21%), to offer the possibility of purchasing online directly from the store – he explains Elisabetta Puglielli, director of the Digital Innovation Observatory in Retail –. The omnichannel data strategy path also continues, with a focus on customer data platforms (53%) and CRM systems (53%), to integrate online and offline data, uniquely profile the customer and activate personalized marketing and sales initiatives . Much attention is also paid to the centralized management of operations, through inventory integration systems (26%), to monitor inventory and centralized order management solutions in real time (24%) and to optimize cross-order fulfillment. channel”.
The experimental construction sites
In 2023, retailers sought to understand the main application areas of Generative Artificial Intelligence, for example through personal assistants capable of supporting customers in real time (from product research to post-sales) and lightening the load on contact centers. Another crucial area of experimentation derives from new “platform-based” business models which, through already existing assets, allow companies to generate value thanks to the interconnection between two or more market players. Among the most widespread examples emerge marketplaces, the provision of new services and Retail Media, thanks to which more and more retailers are exploring the advertising sector, thanks to making their spaces (offline and online) and products available to other brands. data (sales and consumer), with the aim of generating a new profit stream. Finally, the future of Retail cannot ignore the development of environmental and social sustainability initiatives. Retailers work on implementing projects capable of reducing the environmental impact of their activities: some examples are the transformation and recycling of company waste, the use of recycled packaging and the adoption of electric vehicles for shipping.
International Retail
In 2023, the gap between online and offline trends has narrowed: eCommerce continues its growth path, albeit at a slower pace and closer to that of physical commerce. At a global level, the increase in product eCommerce is equal to +8.9% and exceeds the growth of total retail by only a few percentage points (+3.9%). This dynamic is evident in all the main countries: it is more marked in Europe (+3.9% total retail compared to +4% online) and in China (+8.6% compared to +9%) than in the USA ( +3% versus +9%). Consequently, the balance between channels does not undergo significant changes: in 2023 the impact of eCommerce on total retail consumption in the product sector, compared to 2022, remains constant in Europe (17%) and in China (27%), while acquires a percentage point in the USA (22%). The store is also the protagonist of innovation projects on an international level. Firstly, to automate the operations of the point of sale: the combined use of Artificial Intelligence and Internet of Things solutions make it possible to offer a convenient and autonomous shopping experience and to support the retailer’s internal operational processes. In 2023, experiments with automated stores continued especially in the food sector, but they also began to affect other sectors such as catering and IT. If in 2018 there were 350 automated stores globally, in 2024 this number is destined to exceed 10 thousand units.
“This year the research has highlighted how retailers are also facing the challenge of Artificial Intelligence. The point of sale staff – underlines Emilio Bellini, Scientific Manager of the Digital Innovation in Retail Observatory – has regained a central role in investment plans for digital innovation. There are those who are working on offering new services aimed at improving both the customer experience and the employee experience, amplifying the perception of the time the customer spends in the store. There are those who focus on increasing the frequency of visits, working on satisfying different needs and offering new motivations for experiencing the store. To date, it can therefore be said that the shop has overcome its original meaning of a transaction-oriented space and is increasingly inserted into the urban context as an experiential place, thanks to a service component more typical of the world of entertainment”.
(Photo: Alexander Kovacs on Unsplash)