Those retailers with 2023 sales growth greater than 10% are planning to increase their IT spend in 2024 by 16.2% compared to average performing retailers at 3.6% spend growth, according to a new study from IHL Group.
“It’s like a race between me and Usain Bolt. He’s not only ahead on the first step but every other step he gets further ahead.” – Greg Buzek, President of IHL Group
The new research report “Winning the Race of Innovation: How Top Performing Retailers are Investing in Technology,” looks at how retail leaders are not just surviving but thriving by embracing technological advancements.
This aggressive investment approach underscores a clear message: innovation is not just an option; it’s a necessity for staying relevant in today’s fast-paced market.
The report dives deep into the strategic allocation of IT spending, highlighting that leaders are prioritizing transformative technologies such as Artificial Intelligence (AI). The integration of AI across 11 different technological domains – from Pricing and Forecasting to Marketing and Customer Relationship Management (CRM) – is not just enhancing operational efficiency but is also propelling customer engagement to new heights.
Moreover, the study outlines the pivotal role of key technologies that are set to define the retail space in 2024. It details the adoption curves of foundational systems like Point of Sale (POS), Self-Checkout, Mobile POS, and Mobile Checkout, as well as innovative solutions like Electronic Shelf Labels. However, it doesn’t stop there. The research illuminates the increasing significance of emerging technologies such as Data Lakes, Radio-Frequency Identification (RFID), and Computer Vision – technologies that are being leveraged by leaders to gain insights, streamline operations, and redefine the customer shopping experience.
Other key attributes of leaders vs below average performers include:
- 31x more likely to be using RFID in their stores
- 16x more likely to be using 5G at the Store Level
- 6x more likely to already be using a Data Lake
The research indicates that data maturity and the use of Artificial Intelligence with Machine Learning across a variety of software functions is becoming a true differentiator. The research looked at AI use in 11 categories of software (Forecasting, Order Management, Order Fulfillment, Supply Chain/WHS Management, Merchandise Allocation, Pricing/Promotions, BI/Analytics, Loss Prevention, Sales & Mktg, HR/WFM/App Dev/Customer Service, Other). Those already using AI/ML technologies in their solutions on average are seeing the following results compared to those retailers not using:
- 2023 Sales growth 2.3x
- 2023 Profit growth 2.5x
- 2024 Sales projections 2.4x
- 2024 Profit projections 2.6x
Furthermore, the report emphasizes the critical purchasing timeframes for these technologies, enabling vendors to better forecast their opportunities.
It is evident that the gap between leaders and laggards is widening. The study highlights that to win the race for innovation, one must not only invest but also innovate with intent and insight.
“Winning the Race of Innovation” is available immediately.
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