Top 5 SMB Technology Disruptors for Retail

By: on April 20, 2017

The retail industry has been hit full force by the tsunami of digital disruption. Once strong retailers like Macy’s and JCPenney are closing stores nationwide, while other once prominent players like Payless Shoes have filed for bankruptcy.

For context, total sales for department stores was $230 billion in 1999. In 2016, that amount is now just $155.5 billion. Clearly, retailers need to reassess their business strategy to keep pace with the changing retail landscape and the rise of online shopping.

But what does all this mean for small to midsize (SMB) retailers? And what new technologies can help them succeed in this new era?

To answer this, we took an in-depth look at what major retail tech disruptions are on the horizon and identified five major ones that will impact SMBs retailers—either in the near future or years from now.

For each disruptor, we’ll answer the following three questions:

  • What is the disruptor and why should SMB retailers care?
  • When and where will the disruptor have the greatest impact?
  • How can SMB retailers prepare for the disruption?

First, let’s explain how we’re defining these disruptors:

Retail technology disruption: Any retail industry trend or new technology that is already changing or will fundamentally change how business success is achieved.

5 retail tech disruptors 2017

Here are the top five retail disruptions for 2017:

1. On-Demand Services and Support
2. Geospatial and Location Intelligence
3. Smart Machines and Artificial Intelligence
4. Wearable Technology
5. Autonomous Vehicles

1. On-Demand Services and Support

What is the disruptor and why should SMB retailers care?

On-demand services are having a big impact on the retail industry. Their rise has spawned a new “sharing economy,” which has changed the expectations people have around buying and receiving certain items.

Examples of popular on-demand services include:

  • Uber: Uber has upended the traditional taxi/cab model in major cities across the world by offering on-demand rideshares and even third-party restaurant delivery (UberEATS).
  • Instacart: Instacart has changed how, where and when consumers shop for groceries by offering a platform people can use to select and purchase products, which are then delivered to their door.
  • Stitch Fix: Stitch Fix is an apparel delivery service that allows people to create a fashion profile online, which employees use to curate and send new outfits to consumers each month.

According to Gartner’s report “Predicts 2017: Digital Business Elevates the Customer Experience Well Beyond Current Retail Multichannel Capabilities” (available to Gartner clients):

“Digital business is shifting the balance of power between all the stakeholders in the retail ecosystem, including consumers, suppliers and technology vendors. Moreover, the way in which consumers are using the converging technologies of cloud, mobile, social, big data and the IoT [Internet of Things] is fueling the ‘sharing economy.'”

These on-demand services support SMB retailers by helping expose their business to new customers and offering new ways to selling goods across online platforms. These services generally fall into one of three categories:

Pre-purchase: Stitch Fix is a great example of “pre-purchase” support. If the customer likes the item(s) they receive, they can purchase and keep them. If not, they can send them back and get a whole new set of clothes the next month. This service provides terrific promotional opportunities for the SMB retailers that partner with it.

Purchase: Instacart offers SMB grocery and other food retailers both purchase and post-purchase support. The ability to select and make payments directly through Instacart’s platform gives stores a brand new sales channel, allowing them to reach customers online who otherwise may not have set foot in their store.

Post-purchase: Uber’s same-day order fulfillment service, UberRUSH, is a great example of “post-purchase” support for SMB retailers. Partnering with such a service allows retailers to provide same-day deliveries to customers, which greatly improves the customer experience.

When and where will the disruptor have the greatest impact?

The disruption of on-demand services and support will happen by the end of 2018. The sharing economy continues to grow each month. Niche players like Cat Lady Box (a monthly subscription service that delivers unique gifts for women and their cats), are quickly popping up. They offer consumers fun and exciting ways to receive new products they might otherwise never have known about.

On-demand services have the potential to disrupt all retail sectors, but the impact of this disruption will largely depend on SMB retailers’ ability to partner with these services. For a grocery store to have its goods delivered via Instacart, for example, Instacart must already be operating in the city that store is located in.

On-demand services will have the biggest impact on retail inventory management and vendor ordering abilities. An accurate and organized inventory management system is already key for operating any type of retail business. But it will become even more important for SMB retailers so they can keep products stocked and available for distribution through on-demand service partners.

This disruption will also create a need for stronger data analytics. Retailers will need accurate snapshots into their sales numbers across all channels to make strategic decisions and grow their business.

Excel spreadsheets already put a strain on traditional brick and mortar data analysis, so adding another variable sales channel makes a retail analytics tool a must-have for being able to make predictive decisions that can boost sales.

How can SMB retailers prepare for the disruption?

SMB retailers first need to know about the support services offered in their area that they can leverage. They also need to have key software systems in place so they can work successfully with on-demand services.

Here are a few steps SMB retailers can take:

  • Gather key information on the performance of support services among other SMB retailers to determine the potential impact of partnering with such a service.
  • Develop a strong understanding of potential new customer demographics that can be targeted by partnering with on-demand support services.

Finally, if a partnership is established, retailers should be sure to promote it to both current and potential new customers in order to build awareness and encourage people to take part.

2. Geospatial and Location Intelligence

What is the disruptor and why should SMB retailers care?

Geospatial and location sensors track people’s location as they move about a space. These sensors gather data from customers’ smart and wearable devices using Bluetooth, WiFi, radio-frequency identification (RFID) and other technology.

According to Gartner’s report, “Maximize Customer Engagement With Location Technology” (available to Gartner clients):

“Use GPS, Wi-Fi, Bluetooth LE, NFC technologies etc., for maximum accuracy to enhance the path analysis of customers before and after entry to the business, to personalize experiences and to gain insights into how physical spaces are used.”

Tracking customer interactions and movements throughout a store provides details about their shopping behavior that allows retailers to optimize and personalize their experience. For example, if a certain area of the store shows heavy foot traffic, SMB retailers might consider rearranging the store setup to display popular, high-dollar products in that area to increase sales.

Optimization can also include the creation of more personalized in-store experiences via targeted marketing that leverages a customer’s prior shopping history.

When and where will the disruptor have the greatest impact?

Geospatial and location-based technology disruption will happen within the next two years. Sensor technology has already been around since Apple debuted the iBeacon in 2013. However, the retail industry has been slow to adopt beacon and sensor technology.

The reason? Most retailers can’t effectively process and analyze the vast amount of data collected by this technology. Without this ability, the data is essentially useless because users can’t unlock its meaning.

To capitalize on this technology, SMB retailers need to invest in analytics-heavy retail management software. They should also consider hiring consultants who specialize in setting up sensor technology and analyzing the data that is produced.

How can SMB retailers prepare for the disruption?

Plenty of location-based technologies already exist in the marketplace. Their slow adoption among retailers is due to many reasons, but mainly because they are expensive and require a combination of tech savviness, software and data analysis expertise to use.

Here are a few steps SMB retailers can take:

  • Immediately begin saving for location-based sensors and other technology.
  • Start small by implementing just one or two sensors to keep things affordable and get to know/be comfortable with using the technology.
  • Invest in installation or other support packages offered by sensor technology vendors.
  • Partner with consultants to provide general tech and data analysis assistance with the technology.

Retailers that are serious about adopting location-based technology should also consider training one employee as a “superuser” on the system who can also be the main point of contact with the location technology vendor(s). This will ensure any issues with the technology can be handled without pulling owners/operators away from important day-to-day retail operations.

3. Smart Machines and Artificial Intelligence

What is the disruptor and why should SMB retailers care?

Smart machines are devices that use artificial intelligence to solve issues and/or make decisions. They include tablets and smartphones, interactive wearables and voice-activated smart speaker devices that act as personal assistants (e.g., Amazon Echo or Google Home).

These machines can take over repetitive day-to-day operational tasks like inventory management and ordering, freeing managers and associates to spend more time helping customers. These machines can also use shoppers’ online and mobile shopping history to enhance the in-store experience.

For example, if a customer who recently bought a suit online comes into the store, associates could use the smart machine’s recommendations to suggest socks, ties, belts and other related clothing items to the customer.

The access that smart machines have to valuable store data can also “upskill” associates by providing them with answers to questions customers might have about a product.

While many customers still want their retail experience to have a human touch, expectations for what makes a good experience will continue to change as new technology emerges. Retailers will have to find the balance between leveraging new technology and still providing a personalized customer experience.

When and where will the disruptor have the greatest impact?

Virtual personal assistants (VPAs) are quickly entering the market, but widespread usage in the retail space is still three years away. Tablets and smartphones are everywhere, but their application as an AI-enabled resource in the retail space still has a ways to go.

As the AI behind smart machines becomes more common, point of sale systems might start to include functionality such as voice recognition and multi-channel connectivity—turning the traditional checkout register into a smart machine.

Smart machines will have sweeping effects across all retail operations. Machines can already access product inventories and the internet to provide associates and customers with certain information.

In the future, smart machines could be tasked with monitoring inventory and vendor orders, which would eliminate the need for SMB retailers to complete tedious stock counts. Smart machines will also be able to do things like monitor employee performance based on individual associate sales and set employee shift schedules.

How can SMB retailers prepare for the disruption?

The AI behind smart machines is likely more advanced than the average retail operator is comfortable with. The cost of adoption is also a major roadblock for SMB retailers. Given this, here are a few steps SMB retailers can take:

  • Research best practices for how other industries are leveraging smart machines in practical, everyday ways.
  • Identify the pain points smart machines can solve in order to improve in-store experiences.
  • Optimize their data management by implementing retail analytics software so the transition to smart machines is smoother and quicker.
  • Cut back on their hiring budget and instead bring in consultants and other services to train associates on how to use smart machines.

SMB retailers can also start by adopting cheaper, easier-to-use consumer smart machines (such as VPAs) to learn how these system work. This can help shorten adoption times when SMBs are ready to actually implement smart machines in their daily operations.

4. Wearable Technology

What is the disruptor and why should SMB retailers care?

Wearable technology consists of smart devices (e.g., smart watches, smart bracelets, smart glasses) that can be worn on a person’s body. The wearables “ecosystem” also includes the technology used to communicate with wearable devices, in addition to the devices themselves.

Wearables can help generate new opportunities to personalize the retail experience, especially when paired with sensor and beacon technology.

For example, say a customer has a pair of jeans in their cart on a retailer’s website, and they have the same retailer’s app downloaded on their wearable device. If they visit the store in person, the retailer could notify the customer when they are near the jeans so they can try them on and perhaps complete the purchase.

Wearables will disrupt SMB retailers by providing them with a large amount of new data they can analyze and benefit from. This data can also provide valuable insights into opportunities for improving store design and layout, as well as customers’ in-store purchase journeys.

By tying customers’ profiles and purchase histories to their wearable devices, retailers can create a more personalized in-store retail experience that customers will come to expect.

When and where will the disruptor have the greatest impact?

Wearable technology will begin to have a noticeable impact on the retail industry in the next three years. Wearables are still emerging from the health/exercise niche they’ve been stuck in due to the slow development of new/innovative products. As new products hit the market, however, consumer and large retailer adoption will increase and best practices and benefits will follow.

Wearables will have the greatest impact on SMB retailers’ data management and analysis strategies. Wearable interactions will provide a large amount of data that can be mined for actionable recommendations.

However, most retailers won’t have the skillset to do this on their own. In order to truly benefit from this technology, retailers will have to adopt retail analytics software and likely work with consultants.

How can SMB retailers prepare for the disruption?

Like smart machines, wearable technology is also a costly investment for retailers, so it’s important to have a clear plan of action in place before shelling out the big bucks. Here are a few steps SMB retailers can take:

  • Reserve funds from marketing budgets to use for wearable tracking technology.
  • Monitor enterprise retailers’ strategies for leveraging wearables and sensors in their stores to learn best practices.
  • Get to know consultants and key other players in the retail wearables space so it’s clear who to bring on when it’s time for adoption.

Like all the other disruptors mentioned, the wearable disruption will generate a huge amount of new data that will need to be organized and analyzed. Most SMB retailers aren’t yet ready to handle this new data stream, so determining what system(s), processes and people are needed will be the key to benefitting from this technology.

5. Autonomous Vehicles

What is the disruptor and why should SMB retailers care?

Autonomous vehicles are those that have the ability to sense and react to their environment, allowing them to move around without human interference. This disruptor is made up of the physical vehicle (e.g., cars, trucks, drones), the software and AI powering the vehicle and auxiliary mechanisms, and the newfound economy that will grow out of it.

The widespread adoption of driverless cars, vans, tractor trailers, drones etc. will reshape retail operational processes and lead to the creation of unique customer experiences.

The benefits for customers are clear: they will be able to travel to stores while performing other tasks, such as surfing the web, streaming online content, reading, working etc.—no need for eyes on the road. And stores will be able to offer same day (or even hour) delivery for most online purchases.

The widespread adoption of autonomous vehicles across the country will also transform customer demographics and redefine customer purchase journeys. With a more advanced, faster transportation system and goods readily available within a day, consumers may be more encouraged to move to rural areas, since they won’t lose access to the stores they prefer to visit.

Even without restructured demographics, retailers will be able to reach many more customers with the same-day delivery autonomous vehicles will make possible.

When and where will the disruptor have the greatest impact?

The disruption of autonomous vehicles is still at least 10 years away. While automotive manufacturers and technology companies like Uber and Google are pouring resources into researching and developing safe and efficient self-driving cars, they are still very much in test mode.

Once companies can safely put self-driving cars on the road, it will take some time for the public to be convinced of their benefits. It will also take time for businesses to experiment with—and incorporate autonomous vehicles into—their operational strategy.

But once it hits, the disruption of autonomous vehicles will be felt across the entire retail industry. Fleets of autonomous vehicles could simply receive orders from retailers and deliver them directly to the customers, who would never have to set foot in a physical store again.

These vehicles could also “bring the store” to customers by including products related to those the customers bought. This would essentially be a real-life “similar products” or “customers like you also bought” section that many online stores feature, only customers would be able to evaluate and purchase these add-on products on the spot.

How can SMB retailers prepare for the disruption?

Here are a few steps SMB retailers can take:

  • Streamline their online shopping experience across all channels and marketplaces that are used to sell their goods.
  • Closely monitor how enterprises are partnering with third-party shipping companies and leveraging same-day fulfillment capabilities to learn how autonomous vehicles would fit into this process.
  • Consider how autonomous vehicles could impact customer demographics, and start considering partnerships with adjacent businesses that could help deliver positive joint customer experiences.

The constant grind of operating a retail store makes it hard to recommend SMB retailers take time out of their day to prepare for such a modern technology disruption as autonomous vehicles. But make no mistake, this technology will be a game-changer for the retail industry.

Next Steps

A Software Advice analysis found that 64 percent of single-store retailers don’t have a POS system in place. Ensuring you have at least baseline software is the first step in preparing for these disruptors.

If you already have a POS, the next step is to organize and optimize the data you’re collecting, which means you should consider investing in inventory management and/or retail analytics software.

If you’re like many SMB retailers, you may be unsure where and how to start evaluating these types of new systems. But don’t worry, we can help!

  • Check out our retail software page. You’ll find detailed information about the most popular systems in the market, including real user reviews from people just like you.
  • Connect with a software advisor. Fill out a simple five minute form about your business here and we’ll connect you with a helpful associate who can recommend great products for you based on your unique needs, for free!
  • Email me at I’d be happy to answer any questions you may have about anything in this article.

You may also like:

4 Must-Have Retail POS Software Features to Boost Business Efficiency

How to Increase Retail Sales: Measuring Social Media Impact on Retail Sales

Improve Customer Experience in Retail Stores With New Technologies

Compare Retail Software