The global smart retail market is set to reach nearly $40bn by 2024, according to market research company Global Industry Analysts (GIA).

The report presents perspectives on opportunities and challenges in a significantly transformed post Covid-19 marketplace.

Smart retail is a retail concept that strives to combine conventional shopping methods with modern smart technologies. Leveraging the IoT, data are gathered through communications between computers and implanted devices, which can result in consumers enjoying a more personalised, quicker and smarter experience.

Full-fledged implementation of smart retail-related processes holds potential to alter the dynamics in the retail industry. Many conventional retailers and industry leaders have already acknowledged Retail 4.0, the Industry 4.0 version of retail sector, and their core features to be the reliable solution to various problems endemic to retail business operations. For instance, factors such as transparency, decentralisation and optimisation all play vital roles in a modern smart retail platform.

The smart retail ecosystem, comprising visual marketing technologies, smart labels, smart payment systems and intelligent systems, strives to empower brick-and-mortar retailers to attract more consumers into the store, improve customer retention, compete with online retailers and focus on recapturing lost market share.

By incorporating smart retail technology, physical retailers can seamlessly attract, engage and convert prospective visitors into shoppers. Smart retail technology enables physical retailers to display pop-ups and targeted promotional messages on in-store screens specific to preferences of shoppers and visitors, while creating awareness and enhancing in-store engagement. The implementation of end-to-end smart retail technology typically helps retailers gain from quality, output sustainability and overall efficiency. A smart retail platform will typically have its impact on supply chain adaptation, workforce skill alteration and IT security, among others.

Amid the Covid-19 crisis, the global market for smart retail is projected to reach $39.6bn by 2024, registering a compounded annual growth rate (CAGR) of 22.4% over the period.

Europe is the largest regional market for smart retail, accounting for an estimated 34.6% share of the global total. The market is projected to reach $15.9bn by the close of the analysis period. The USA is forecast to emerge as the fastest growing regional market with a CAGR of 26.1% over the analysis period.

Growing investments on digital technologies by retailers across the world and rising incorporation of technologies such as augmented reality (AR), virtual reality (VR), artificial intelligence (AI) and IoT into retail environments to improve store operations, simplify accurate inventory management and augment the shopping experience of consumers. These will have a major bearing on growth and progress of the smart retail market.

The IoT is one such technology that has laid a strong foundation to transformation in sector operations and the rise of the smart retail concept. A growing number of retailers are actively investing in IoT to capitalise the potential of the retail industry.

For example, Amazon rolled out Amazon Go, a smart grocery store that leverages IoT technology to offer customers a better shopping experience while removing the need for checkout queues or physical cashiers. IoT technology is poised to escalate in the retail sector despite concerns over data security.

While the IoT is likely to solidify its role in the smart retail ecosystem, other novel technologies such as AR, VR and AI are likely to proliferate more aggressively in the coming years.

Surging investment in the retail sector, growing use of smartphones, growing retailer focus on connecting directly with shoppers, and a rising focus on offering an improved shopping experience and customer services are some of the major factors poised to drive growth in the market.

Major retailers are increasingly adopting smart retail technology to cater to their customers in a better way and seamlessly improve their business operations, and small- to mid-sized retailers are following suit. Brick-and-mortar retailers are collecting customer data and are assessing shopper behaviour to personalise shopping experience patterns.

Simultaneously, retailers are adopting technologies such as NFC payments, mPoS and beacons to greet customers by name and provide them with relevant in-store information. Progressive improvements to IT that aid in real-time messaging, communication and engagement in retail environments are also contributing to growth in the smart retail market.

A key challenge to making customers perform online purchases is that most prefer to touch or try on the item they purchased. In this scenario, smart retail technology such as AR and VR is helping address this issue by letting shoppers experience the product without actually holding it. Although many do not yet have access to AR or VR, the technology has potential, particularly for those who cannot go to physical stores to make purchases.

In the past few years, retailer focus on customer services has surged, thus paving the way for wider adoption of smart retail. Customer service has transitioned from answering queries to understanding the preferences and needs of customers. The growing need for sophisticated retail services is fuelling the smart retail market.

Concepts such as connected retail, retail automation and Retail 4.0, all of which emphasise improving customer service and ultimately the experiences and loyalty quotient, are poised to accelerate the adoption of smart retail technologies.