Big retailers say they need more tech to deliver better customer experiences

Photo: Walmart
Oct 19, 2022

Technology is everywhere in retail today, but some big retailers say there is not enough, according to a new survey.

Many “big retailers,” defined as those with 50 locations or more and $1 billion in revenue, are calling for more digital transformation, with about half saying that they have not gone far enough, according to a new PYMNTS study titled “Big Retail’s Innovation Mandate: Convenience and Personalization.”

Fifty-three percent of general retailers and 54 percent of retail pharmacies reported believing that their digital tools allow them to provide the customer experience they need. The number dropped to 50 percent in the grocery channel.

Only 17 percent of retailers using the fewest digital tools (three or less) were happy with the customer experience they provide.

American retailers are using more digital tools than their UK counterparts (5.3 digital tools on average to 4.7 digital tools, respectively) and have a higher rate of satisfaction with their impact on the customer experience (56 percent to 43 percent, respectively).

While retailers were experimenting with technologies like in-store augmented reality games in the years leading up to the pandemic, March of 2020 saw omnichannel-enabling technologies taking center stage. A record number of consumers began utilizing online ordering and curbside pickup to purchase groceries due to the potential danger of in-store shopping.

Although an inflationary economy has caused shoppers to cut back on spending, a study reported in The Washington Post said that 33 percent of customers under the age of 50 who began using curbside pickup due to the pandemic see it as a habit that will continue.

On the other hand, despite big retailers calling for more technology, tech spend has actually dropped off significantly in retail according to CBInsights’ State of Retail Tech Q2’22 report. After a record-breaking 2021, retail spend on technology has experienced an ongoing decline, dropping 43 percent in Q2 of this year. Merger and acquisition activity in the retail tech space likewise declined, falling from a peak of 207 deals in Q4 2021 to only 160 deals in Q2 2022.

DISCUSSION QUESTIONS: Do you believe big retailers are still lagging in their implementation of technology? What common improvements do retailers still need to make technologically to meet the expectations of today’s shoppers?

Please practice The RetailWire Golden Rule when submitting your comments.
"Investing in tech to smash silos, integrate processes and improve collaboration pays off and improves loyalty."
"Retailers need to be far more skeptical of tech. Sometimes it is tremendous help, more often it’s a lot of work to arrive at more mediocrity..."
"As a group, retailers are 'slow followers' and imitators when it comes to technology."

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29 Comments on "Big retailers say they need more tech to deliver better customer experiences"

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Mark Ryski

Many retailers are still struggling to connect new technologies to legacy systems, and it’s not easy or simple. The challenge is to effectively implement new tech while not disrupting customers or operations. Every retail operation is different with different priorities, but having a modern POS system that is capable of managing BOPIS and curbside orders is vital. Inventory management, and RFID in particular, is critical. Ultimately, every retailer needs to think about which are their critical few technological priorities and then focus on executing – trying to do too much can lead to disastrous outcomes.

Neil Saunders

Technology can help retailers and there is a need to invest in things that enhance efficiency and/or customer service, especially if it also reduces costs. However solutions need to be focused and effective because there is so much out there that doesn’t deliver. The other thing retailers need to remember is that investing in technology is not an excuse to neglect the basics: things like good merchandising, having enough labor for goods customer service, having pleasant shops, and so forth are all too often underinvested in.

Cathy Hotka

This was one of the key messages coming out of the Store Operations Council meeting. Retailers continue to lag in technology, and recognize big gains when they implement it. Retail winners always have better technology.

Dion Kenney
1 month 7 days ago

There is certainly a gap between the technology and its use. But the issue is not so much retailers buying and deploying the tech so much as it is finding creative ways to leverage it. We need to embed the “creative” department with the “tech” department to enable new ways to augment customer experience, operational improvement, and cost reduction that were previously impossible and/or unimaginable.

Bob Amster

If the priority is on the customer experience, retailers are making progress. On the other hand, some retailers whom one would think have done better still operate with multiple product master files, one for each channel. Archaic.

David Naumann

Retailers have made good strides on improving the omnichannel fulfillment process with new technologies. However many retailers still have room for improvement in inventory accuracy and BOPIS processes. Inventory accuracy has been an ongoing challenge for retail and it is even more important as online orders increase and much of the orders are fulfilled from local store inventories.

Zel Bianco

Quite frankly, retailers cannot be expected to solve this problem on their own. There needs to be better and more effective collaboration with their suppliers to truly understand and accommodate the needs of the shopper. Retailers simply do not have the resources nor all of the data sources that will help them discover the granular insights on a frequent basis that are needed to get to the next level of customer satisfaction.

DeAnn Campbell

There is a risk in thinking that more tech will solve the problems plaguing big retailers today. Customer experience begins and ends with people. Retailers need to get back to basics like improving the employee experience, offering better training, investing in great merchandising and offering customers choices on how they shop and buy. Using tech to supplement the people part of the equation, rather than as a replacement, will always be more effective in the long run.

Melissa Minkow

A large part of the problem is that retailers invest in one-off technologies that enable one function, but they don’t modernize the whole architecture. In other words, many retailers today leverage a variety of vendors for different capabilities, but the holistic system isn’t in unison, so these technologies are operating at an individual level and creating inefficiencies overall. Application modernization is a crucial digital transformation project that gets placed on the back burner because it’s a decently sized investment up front, but it allows for long-term flexibility and constant customer experience iteration. The big theme with retailers is the struggle to justify an investment that will create significant efficiencies. Retail tends to take an “if ain’t broke” mindset regarding technology.

Dick Seesel

Discussion of technology tends to focus on “front of store” customer experience, from BOPIS to self-checkout. The widespread failure of supply chain management and demand forecasting over the past two years suggests that the need for more and better “upstream” tech solutions is just as urgent.

Lisa Goller

Yes, too many retailers lag in tech adoption to make the customer experience smoother. Investing in tech to smash silos, integrate processes and improve collaboration pays off and improves loyalty.

Georganne Bender

I believe technology at retail is important, but I don’t necessarily agree that more technology is what’s needed right now to improve the customer experience on the sales floor.

Since the pandemic many big retailers have been missing the human touch. When I visit stores, I don’t find many associates on the floor, and the ones I do meet are frazzled from having to juggle the work of two or three people because the store is short staffed. I am also likely to encounter messy, unshoppable displays or empty shelving.

Will more technology help? Of course, but the focus should also be on improving what’s actually happening at store level right now. Because too many retailers have taken their eyes off of that ball.

Paula Rosenblum

I’m in the middle of some conversation or another on LinkedIn on this very topic. No one can look at technology in a vacuum. People, process and then technology. This craving for a tech magic bullet will come to no good.

Georganne Bender

Good point. There is no tech magic bullet that can solve everything.

Christine Russo

This is a bit depressing! Talking about tech doesn’t get it implemented and so, in the end, the conveniences the employees and customers would get are still compromised.

Ken Morris

I love another chance to get on my soapbox and shout about “real-time” retail. Almost every retailer batches their store transactions until the end of the night before they update their inventory systems. What this means is the store inventory counts that a customer sees are “yesterday’s news” (a.k.a. inaccurate). How do you expect to compete with Amazon (who is always real-time) unless you embrace the proper infrastructure?

With retail tech, it isn’t always the more the merrier. It’s the more integrated, the better. If big retailers focus on tech that makes customers happy and more engaged, they will spend more efficiently. That also means applying the right tech to the supply chain, increasing SKU visibility and availability (see above!), and minimizing returns and associated costs. Strategy is key: make sure every piece of tech is orchestrated as well as possible with everything else. Not easy, but essential.

Jeff Sward

Retailers need more focus and discipline and prioritizing skills. Tech may or may not help in that regard. Tech in the wrong hands at the wrong time thrown at the wrong problem will create more problems than it solves. Demand forecasting, assortment planning and supply chain management are all in desperate need of updating. Tech will have a huge role in all of that. But the implementation of tech solutions is going to be a highly situational, retailer by retailer, process.

Rich Kizer

When I look at all the consumer options for acquiring purchases, I become more sure we are experiencing a claustrophobia of abundance of shopping options. I think a lot gets lost in that neighborhood.

Brian Delp

Absolutely. Many of the larger retailers are even struggling on basics, like implementing QR codes and RFIDs. The focus should always be around convenience and creating a frictionless experience for consumers. What that looks like will vary by retailer.

Ryan Mathews

As a group, retailers are “slow followers” and imitators when it comes to technology. And that’s not going to change until tech people go from supporting the C-suite to running it.

David Mascitto

With labor shortages, a climate emergency and so much waste in transportation (e.g. half empty trucks, multiple shipments per order), hyper-local fulfillment and the technologies that enable it (order management, warehouse management and automation) will take even greater precedence and enable retailers to meet customer expectations while responding to market and environmental conditions.

Doug Garnett

Unfortunately, “more tech” has become an obligation for retailers with nearly moral implications. What retailers do poorly is envision whether that tech is dramatically significant or just what they’re being sold or their investors demand (without adequate knowledge).

I’m saddened by how much store focused time was lost by retailers who ran after “online” for years based on that hype. Imagine if they’d put that time into stores.

Retailers need to be far more skeptical of tech. Sometimes it is tremendous help, more often it’s a lot of work to arrive at more mediocrity, and sometimes it’s a waste of time. We must determine the difference.

Mark Self

In contrast to the U.S./UK digital tools comparison in the article, there are two large retailers in the UK who are far ahead of the States in putting technology in the hands of store associates.
Large retailers will always have opportunities to increase their technology footprint! However in addition to the “install this and receive this benefit” approach, retailers have an opportunity to empower their edge (okay store) workers with technology enabling them to enhance various instances of the shopping experience while also improving the work experience. Workflow management and automation solutions are just one example of this opportunity.

James Tenser

Retail tech is a how, not a what.

To optimize customer experience, first get inventories right. In apparel, home furnishings and many nonfood categories, that means item-level RFID combined with real-time perpetual inventory. In food-drug-mass it means computer-generated replenishment ordering backed by advanced receiving practices and real-time perpetual inventory.

Too many retailers habitually neglect inventory accuracy in the mad rush to implement digital selling, personalized offers and now retail media revenues. Both are massive challenges but often they are built atop shaky operational foundations.

Slick digital and in-store experiences depend upon inventory accuracy and visibility. You can’t deliver items you can’t find. If you can’t fulfill, then your endemic advertisers won’t see an acceptable ROI from their retail media campaigns.

Natalie Walkley

Technology is definitely a part of the solution, but it has to be the right technologies combined. Expanding “feature sets” within a current tech stack doesn’t close the CX gap completely. Best-in-breed technologies will expand more and unseat the monolithic systems merely plugging holes.

The phrase “digital tools” is exceptionally vague, and I would pose that this lack of specificity doesn’t help entrepreneurs learn what tools to build – nor other retail brands to feel their voice has been shared. The number of “digital tools” employed by a single online retailer is out of control. But the reality is: every single thing we do uses a digital tool (except use pen & paper to put notes down). So every individual and company employs a super high volume of tech. So specificity matters. A ton. The title of the PYMTS study alludes to 2 broad categories that point us into a more specific direction. “Big Retail’s Innovation Mandate: Convenience and Personalization.” 1) Personalization Are these challenges related to lack of and need for more automation? Or are the challenges around a need for tighter control over assigning weights and rules to personalized-segments. Are personalization efforts not showing the ROI for investment in the current platforms – creating the impression that the existing toolset “out there” isn’t sufficient? 2) Convenience What… Read more »
John Karolefski

Here’s a different opinion: retailers don’t need more technology to provide a better customer experience. They have enough. What they need is more in-store associates to staff the customer service desk full time, to roam the store answering questions from often inquisitive shoppers, to staff checkout lanes fully (after getting rid of self-checkout) so there are minimum wait times, and to bag groceries. In short, invest in people and not more tech stuff.