Retail is intrinsically bound to social interaction and fundamental to the birth of civilization, initiating its first steps through bartering. We have come a long way from those bartering times used over 5,000 years ago, but problems to realize: fair, transparent, and effective retail have always existed. Today's retail industry's main concerns revolve around consumerism, environmental sustainability, and digital adoption.
On the bright side, digital adoption in retail is potentially ready to tackle consumerism and pioneering sustainable retail in the fourth industrial revolution. Walk with us to understand the technology potential and how to take full advantage. To provide a holistic overview of how we have reached this point in retail, introducing a description of its history is vital, from bartering to marketplaces going through to shopping malls and e-commerce. Continuing with industrial revolutions, their technological contribution to societies, and their results.
We conclude our retail journey by focusing on the opportunities and challenges the retail industry faces. With no further ado, let's get down to business by diving into the dawning of retail.
The beginnings of trade that set the mainspring for what we know as the retail industry began through specific necessities of individuals who needed a tool or service from another individual. For example, a hunter required the craftsmanship of a blacksmith to provide him with the tools to hunt and the blacksmith the food the hunter gathered. Trading became more complex and developed into not just needs but also wants.
Retail grew, cities integrated marketplaces into urban planning, and craftsmanship was a sought-after service. The first securely dated coin minting site was in Guanzhuang in Henan Province, China, announced in 2021 by Chinese archeologists and the State University of Zhengzhou. It's believed this began at around 640 BCE. The Greek poet Xenophanes, quoted by the historian Herodotus, ascribed the invention of metal coinage to the Lydians; King Alyattes introduced the first official currency during 630 BCE.
Once the foundations of trade were grounded in societies, the retail industry began to flourish, and one of the most important and oldest representations is Silk Road. The ancient trade route connected China to the West, a 4,000-mile (6,400-km) road, starting at Xi'an (Sian) and ending at the Levant. Things didn't change much until we reached the first industrial revolution, when the department store emerged in the mid to late 19th century, permanently reshaping shopping habits and redefining concepts of service and luxury.
Also known as emporia and warehouse shops in Britain, some of these innovative retail stores continue to serve: Harrod's (London), Macy's (New York City), and Galeries Lafayette (Paris). After the second world war, shopping mall stardom began, with the first enclosed one established in 1956 in Minneapolis, US. By 1975 there were 30,000 malls in the US, accounting for more than 50% of the retail dollars spent. Mall heydays are long gone, and in the US, for example, 2013 indicated there were 1,300 malls, and of those, roughly 200 were going out of business. The new uprise in the retail industry is e-commerce; online shopping has been around since 1979. When Michael Aldrich invented the earliest form of e-commerce, allowing online transaction processing between business and customers (B2C) and between business and business (B2B). The first online marketplace started in 1995 with US big-tech company Amazon.com and by 1999, Alibaba.com, the first Chinese e-marketplace, entered the scene.
The retail industry is constantly developing and reinventing itself. Now Industry 4.0 introduces a new approach incorporating innovative technology like augmented reality (AR), virtual reality (VR), artificial intelligence (AI), cryptocurrency, and blockchain. Customers are moving away from consumers and becoming prosumers. Smartphones, apps, social media, emails, and QR codes are the first contact customers' spaces with brands. From bartering to e-commerce, the path has been a winding, exciting, and treacherous road the retail industry has paved, and the best is yet to come.
Industrial revolutions have been the great movers and shakers in the retail industry as technological inventions provided optimization into workflows and product and service delivery. But unlike the fourth industrial revolution, the first three didn't set environmental sustainability into companies' business plans. The results of such a way of progressing have brought us to our present reality, where sustainable retail in Industry 4.0 is mandatory.
The United Nations' Sustainable Development Goals (UN's SDGs) have set the target for industries and countries to work towards decreasing their carbon footprint. Retail is still in its infancy, and parts of the industry must work extremely hard to reach the set UN's SDGs. For example, apparel's CO2 emissions are estimated to be between 4% and 10% of global gas emissions. The complexity and lack of transparency the apparel industry currently moves through; result in estimated disparages.
Industry 4.0's potential to provide the retail industry with the technological tools to create more transparency and uncomplex processes is paramount. These innovative tech solutions helping to fuse the physical with the digital world, as mentioned earlier, are:
For these technologies to perform at their full potential, various requirements must be achieved, but before we go down that road, let's look at the positive outcomes.
AR introduces to the retail industry several use cases benefiting the customer experience and providing valuable insights to the brands. Its growth is entering the brick-and-mortar businesses and direct-to-consumer brands, offering immersive shopping experiences, contactless transactions, and shareable and trackable content. In practical terms, virtual shopping is extending, and customers can try on apparel or set furniture in their houses via augmented reality. In addition, if they like the product, they can purchase it through the app.
Another augmented reality use case is virtual navigation, guiding customers through the mall and providing information about products and services. A handy tool, considering the biggest mall in the world occupies around 21 million square feet! In-store AR displays are also a great way to attract customers, but it is also used as data tracking device capturing real-time analytic data.
Although similar to AR, VR is a more immersive tool that customers use via VR headsets. Brands can deliver applications like VR showrooms, VR-based advertising, VR merchandising, and VR employee training. This technology became the go-to solution during the pandemic, and many brands are still using it due to its high returns and customer usage. The rise of VR gaming has caught the attention of brands to the point of partnering with VR game publishers to embed unobtrusive promotional materials into the gameplay to drive engagement.
Integrating advanced eye-tracking analytics solutions into VR wireless headsets creates valuable brand insights, from creating planograms or layouts of product placement on the shelves to moving products and signage around the shelves building optimal shelf layouts much faster. All without having to hassle themselves with real-world inventory and shelves.
AI use is fundamentally based on its capacity to analyze vast volumes of data resulting in insightful information for companies. In the retail industry, AI's top use is demand forecasting which goes through the whole value chain, optimizing the supply chain, inventory, and sales performance. Chatbots are also used for customer service purposes like improving searching, sending notifications about new collections, and suggesting similar products.
Specifically to brick-and-mortar retail, AI use in maintenance provides advantages; embedded AI helps to action predictive maintenance. Implementing predictive maintenance into workflows optimizes management maintenance at all levels of the value chain, from shopping malls equipment and machinery to transportation and supply chain. With this type of maintenance, leaks are known before happening, eliminating scheduled maintenance that is labor-intensive and doesn't assure the complete lifespan of the equipment.
The digital currency moved a long way since its initiation in 2008 when the Bitcoin white paper was published. The benefits it brings are becoming more apparent, and customers are seeing it; from quicker transactions to eliminating third parties, cryptocurrency is a force the retail industry must consider and be ready for its mainstream use. There are retail stores accepting payment with digital money: Whole Foods, Home Depot, GameStop, Newegg, and Starbucks.
Another fact retail stores and brands must consider is that the demographics most attractive to retailers are people aged between 18-54. A third of these currently own cryptocurrencies and 70% would use them to make purchases. Those who don't own cryptocurrency can access these through a growing service offered by retailers at brick-and-mortar store outlets. Some examples of retailers providing cryptocurrency purchases are Walgreens and Sheetz.
Closely linked to the emergence of cryptocurrency, blockchain technology is becoming a vital part of all industries. The benefits it gives to retailers are paramount, adding security, privacy, trust, and transparency to the whole value chain. A blockchain is a system that works within a decentralized network where data is immutably stored and has to be authorized by all the nodes in the blockchain to create a new block.
Its implementation opens new paths in which materials and work processes can be traced, and customers can follow, e.g., the journey of a coffee bean from cultivation to its placement in stores. Pioneering this tech deployment can set your business as a sustainable retail brand in the fourth industrial revolution.
The technology is there, and its potential to transform the retail industry into a more environmentally sustainable, less consumerism-focused, and digitally connected is obvious. But as all changes, it comes with challenges that current solutions have not tackled, and therefore, a paradigm shift is required.
Industry 4.0 is data-driven, and digital adoption in retail success must integrate a well-thought-after data management system. Otherwise, the constant burdens hindering the full potential of the tech innovations mentioned will never be tackled. These obstacles include:
In this paradigm shift, one of the first things that must change; for sustainable retail to be realized is moving away from centralized data management solutions. Decentralization must be the go-to solution when sensitive data handling is on the table and if you want your services to ensure a satisfactory customer experience. Let's look in more detail at the challenges.
Data management is governed by centralized solutions, i.e., the Cloud, and these server centers or data centers are remotely located spaces full of rows and rows of servers. High-tier data centers can accommodate well over one million 1U servers and each of these generate heat. To keep these spaces at an optimum level, heat must be mitigated, and to accomplish this on a 24/7 basis, the only way to go about it is by using fossil fuels.
It is hard to ascertain data centers' carbon footprint, but estimates set it at around 1-1.5% of global electricity in 2010. If data centers are the brains of Information and Communication Technology (ICT), and the brain is the organ with the highest energy consumption. Forecasts indicate ICT could create up to 3.5% of global emissions by 2025, surpassing aviation and shipping; a high percentage comes from data centers.
It's common knowledge that the Internet was never built with security as first thought because it was never intended to reach the worldwide usage it has today. The World Wide Web (WWW) only worsened the security problem as it's based on centralization, and cyberattacks target vulnerabilities like one point of attack. As such, a cybercriminal accessing one endpoint can take control of the whole network.
Another vital factor caused by data breaches and third-party control of data is data privacy. When contracting Cloud services, data ownership becomes a complex process as these cloud service providers indicate that the use of data is to provide a better customer experience. This is all very well when the data isn't sensitive, but when it is, the potential risks are too high and, thus, unacceptable.
Data is reaching the zettabyte era, and Industry 4.0 is data-driven; therefore, cost-effective data management is paramount. AI analytics is a great tool, but also costly, and centralized solutions' AI analysis is processed on all data generated. This can produce high monthly payments with very low ROI, something no business wants.
The current state of AI systems spending reached nearly $118 billion in 2022 and is estimated to surpass $300 billion in the next few years. Therefore, a well-thought business plan for data management is a critical issue. Data is gold, but if the cost of mining gold is higher than the gold produced, it isn't good business, and the same thing happens with data mining.
The competitive advantage data analytics offers in Industry 4.0 is its real-time usage. Without real-time data to inform assurance, its use loses value and is not worthwhile. As mentioned, data centers are remotely located, creating two problems: latency and bandwidth bottlenecks. The first one, latency, is the time it takes for data to go from the source to a data center and back. In practical use, we have all experienced a website taking a long time to download; this is latency.
The solution is simple you can wait while doing other things or go to a similar website that loads quicker. But when using the same technology for a customer using AR, VR, or a business, using AI for real-time data, the solutions aren't as simple as for slow website download. The second problem, bandwidth bottlenecks, is when the capacity of data traffic infrastructure isn't capable of managing the amount of data transfer. A simple description of this issue in real life can be observed in traffic congestions; there aren't enough lanes for the number of cars.
To counter the challenges the retail industry faces to pioneer sustainable retail in the fourth industrial revolution, decentralization infrastructure, embedded AI, and blockchain technology must be implemented. We at Internet of Everything Corporation (IoE Corp), via our Planet Partner Program, provide a decentralized software infrastructure blockchain-secured to analyze embedded AI on-premises, the Eden system.
Partnering with us assures you a place to pioneer sustainable retail in the fourth industrial revolution. We are ready to move into the new paradigm shift Industry 4.0 requires for technological innovations to reach their full potential. Pave the way for you and your customers' embedded technology use in online and brick-and-mortar retail stores reducing Cloud usage and actioning the computing hardware power on-site to store, process, analyze, and deliver data to information refined. Start your journey with us by applying to the Planet Partner Program here.