In 1955, the US Chamber of Commerce released a short film, titled People, Products and Progress: 1975, which talked about what 1975 might look like. There is a line in the movie - "When milady goes food shopping in 1975, there’ll be no lengthy waiting at a check-out counter." The narrator of the film imagines: there will be an automatic computer that will price all the items as they pass under an electronic eye. Although we are unsure about the reception of the film, seven decades down the line, it looks like the fantasy world of the 1950s is a reality today.
In 2025, the retail industry is being driven by the increasing adoption of disruptive digital technologies, like Artificial Intelligence (AI), Hyperconnectivity, Internet of Things (IoT), and Data Sharing. This blog discusses six domains of change within the retail industry, each enabled by such digital technologies.
If you want to read in more detail about these domains of change, please read our report Digital Transformation in the Retail Industry, in which the domains have been studied in detail and the business impacts of deploying such solutions have also been discussed. Each section also covers the key technologies that support these domains, relevant Case Studies, and key vendors that deliver the corresponding applications.
The six domains of change in the retail industry are illustrated below and discussed in more detail in the following sections.
This domain refers to the use of sophisticated robotic solutions to enhance the services offered in physical retail stores to improve shopper experience and increase operational efficiency. There are four aspects of robotic assistance: Shopping assistants, Robotic product advertising, Smart shopping carts, and Shelf scanning robots.
For Shopping assistants, retailers are deploying robots (like Wi-Z by Robinsons Retail Holdings Incorporated) which answer customer enquiries, perform various manual tasks, and gather customer insights. In Robotic product advertising, retailers integrate IoT and robotics to engage customers in interactive in-store advertising. For instance, Tokinomo’s Shelfobot offers in-store product marketing.
Smart shopping carts allow customers hands-free shopping experiences and eliminate the need for traditional checkout lines. Here, shoppers can type products on the touchscreen, and carts (like Caper Cart by Instacart) navigate them to the exact aisle and shelf, boosting store revenue. Lastly, retailers can use autonomous shelf scanning robots equipped with LiDAR and computer vision to scan shelves for correct pricing and to track inventory.
Retailers (especially in the fashion and cosmetics industries) are experimenting with a range of digital solutions including smart mirrors. Many retailers use AR-enabled smart mirrors with sensors, cameras, computer vision, and 3D tracking to let shoppers virtually try products and receive personalised recommendations. For example, L’Oréal’s AR-enabled smart mirrors allow customers to quickly explore its entire beauty range virtually.
Smart mirrors are also deployed in storefronts to advertise products to passersby in real-time, to entice customers to purchase products. For example, Coach used Zero10’s AR-enabled smart mirrors at its New York store and increased the store’s foot traffic by 50%. Besides, retailers like Sephora use AR-enabled apps to boost engagement, letting customers virtually try products and visualise makeup on their skin for a personalised, interactive shopping experience.
Products, for instance clothing, often appear different on-screen in an e-commerce context than they do in person, leading to higher product returns and consumer dissatisfaction. This can be a significant drag on profitability and a National Retail Federation report claims that approximately 14.5% of total U.S. retail sales, corresponding to USD743 billion of spend, were returned in 2023. Therefore, e-commerce platforms are increasingly adopting digital solutions to provide a more convenient and seamless experience, including remote virtual try-on solutions and chatbots.
Remote virtual solutions allow shoppers to visualise how products (like clothing) will look on them or how furniture and other products will fit in their surroundings in near real-time. On-model product imagery is also being increasingly adopted, where AI-enabled solutions are used to generate on-model product images, streamlining the process and saving costs.
Retailers are also adopting generative AI-powered chatbots to provide real-time, conversational shopping experiences. For example, Amazon launched Rufus in February 2024 for tailored product discovery.
Waiting in a queue for checkouts may soon be a thing of bygone days. An Avery Dennison survey (based on 4,000 consumers in the US and the UK) found that 37% of consumers would switch to retailers with checkout-free stores. Therefore, autonomous retail solutions are being increasingly deployed, resulting in fully automated, scan-less, and cashier-less retail stores.
Shortages of labour and increasing labour rates are also increasing the adoption of these kinds of solution. Shoppers can enter autonomous stores and after authentication using the store’s mobile app can select items and leave without waiting at a checkout. Autonomous stores use sensors, cameras, smart shelves, and AI technologies like computer vision and deep learning to track shoppers and accurately identify products by shape, size, and packaging, based on which payments are debited from customer accounts. Heatmaps based on shoppers’ activity help retailers optimise product placement and density for better impact.
A June 2024 Deloitte survey found that 67% of respondents spent more when personalisation matched their needs, and 69% did so when personalisation introduced new products or services. While this confirms the importance of personalisation in today’s retail environments, retailers are finding it increasingly difficult to compete with e-commerce. Therefore, they are using digital technologies like artificial intelligence to analyse shopper’s data, enabling faster checkouts. For example, a European grocery retailer used AI to determine and analyse customer segments based on multiple factors such as the time of day and weather and location, to tailor promotions and offers for people who pass by the store and who are not regular customers.
Offline retailers also use camera-based visual search capabilities to help shoppers navigate through physical stores to locate relevant products. Sophisticated electronic shelf labels (ESLs) and AI-enabled digital kiosks are also being deployed within physical stores to build personalised profiles of shoppers.
Retail Asset Tracking & Monitoring solutions are deployed to track retail fixtures such as refrigeration units and shopping carts and also goods location monitoring within stores for loss prevention.
According to the National Retail Federation, retail theft cost the U.S. economy USD112.1 billion in 2022. Target alone lost USD800 million due to inventory shrinkage. Such theft often includes retail inventory, shopping carts, and fixtures. Therefore, retailers use hard tags and labels to manage retail inventory, with affordable Ambient IoT tags gaining traction. To better monitor shopping carts and retrieve them, retailers have started using connected solutions or locking mechanisms. They are also adopting smart refrigeration monitoring solutions to ensure real-time temperature monitoring, enhance data accuracy, prioritise food safety, and help prevent breakdowns.
As evident from this blog, digital transformation, enabled by emerging digital technologies, is helping to reshape the retail industry, enhance customer experiences, streamline operations, and drive innovation. As technology evolves, retailers must further embrace data-driven strategies, automation, and other digital solutions to stay competitive.
