Post-COVID Commercial Spaces Strike Back... 'Retail Tech' on the Rise [Tech Talk by Im Ju-hyung]

Traditional Shopping Districts Face 'Double Hardship' Due to Social Distancing and E-commerce Rise
New Competitiveness Needed to Prepare for Post-Corona Era
Breakthrough with 'Retail Tech' Integrating IT into Retail
Automation of Inventory Management and Payments Using Cameras and Sensors
Personalized Services Provided Through VR, AR, and Big Data

A shopping district in Suncheon, Jeollanam-do, which strengthened social distancing measures last year, is completely empty. / Photo by Yonhap News

[Asia Economy Reporter Lim Ju-hyung] One of the industries hit hardest by the COVID-19 pandemic is retail. As social distancing measures tightened, the number of customers visiting stores sharply declined, while online delivery services such as e-commerce emerged as strong competitors. However, recently some stores are finding new breakthroughs to regain their former glory. By combining existing stores with information and communication technology (IT), so-called 'retail tech,' they plan to offer unique consumer experiences that cannot be felt through e-commerce.

Retail tech is a compound word combining retail and tech, referring to a store format that actively integrates physical stores with IT.

Retail tech has recently begun to attract investors' attention. According to a report by business research firm CB Insights, global investment in the retail tech sector reached $31.5 billion (approximately 36.726 trillion KRW) in the second quarter (April to June) of this year, more than tripling compared to the same period last year.

The reason global investors are pouring tens of trillions of won into retail tech is to inject new competitiveness into stores in the 'post-COVID' era.

With the surge in non-face-to-face consumption due to the spread of COVID-19, the delivery industry has also become busier. On the morning of March 17 last year, parcels were piled up at a delivery logistics center in Seoul. / Photo by Yonhap News

Last year, as COVID-19 spread, many countries strengthened social distancing, causing many stores to suffer huge losses or close down. Consumers began using global e-commerce platforms such as Amazon and Coupang instead of supermarkets or department stores, and now many customers are accustomed to internet platform-based delivery services.

As a result, stores are facing a 'double hardship' of customer decline due to COVID-19 and the rise of new rival industries. They are forced into a position where they must provide differentiated services to survive.

Global companies are already reducing operating costs or improving consumer experiences through various forms of retail tech.

For example, Walmart, a leading U.S. retail company, recently incorporated automation technology in a store it opened in Levittown, New York. Cameras and sensors are installed throughout the store to monitor inventory on shelves in real time, and if a product is running low, a signal is sent to waiting staff to restock. This reduces consumer inconvenience while increasing in-store efficiency.

Unmanned convenience stores incorporating automation technologies are also increasing, such as 'Vision and Pick,' which detects whether customers are shopping via in-store cameras and processes automatic payment through a smartphone application (app), and 'Scan and Go,' which automatically processes payment by measuring the weight of items placed on the checkout sensor after being picked up.

Amazon has launched unmanned stores called 'Amazon Go' in New York, London, and other locations, and some convenience store companies in Korea are testing similar stores.

The recently unveiled Amazon Salon by the US IT company Amazon. Using virtual reality (VR) technology displays, customers can preview their hairstyles in advance. / Photo by Amazon

There are also cases where services combining virtual reality (VR) and augmented reality (AR) enhance consumer experiences. In April, Amazon opened a hair salon called 'Amazon Salon' near its London headquarters. This salon offers the same beauty services as traditional salons but with one important difference. Inside the salon, there is a VR-supported display where customers can stand in front of a mirror and preview their appearance after receiving services such as haircuts and coloring.

Meanwhile, there are cases where digital technology is used to blur the boundaries between online and offline stores. The British luxury brand 'Farfetch' operates both an online platform and offline stores, providing personalized services using customer data.

Offline store staff can recommend products based on customers' online shopping history, or conversely, data on products selected by customers in offline stores can be analyzed to change the priority ranking of recommendations on the online platform.

Regarding this, CB Insights emphasized in its second-quarter report, "Stores need technology more than ever to solve immediate problems and upcoming challenges," adding, "Innovation in retail tech is crucial to provide seamless shopping experiences, personalized services, and to address labor shortages."