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The Digital Transformation in Retail Market size is projected to increase by USD 253.84 billion, at a CAGR of 17.15% between 2023 and 2028. The market's growth hinges on various factors, notably the imperative to boost operational efficiency in retail, the rising integration of IoT, and the widespread adoption of cloud services. Additionally, there's a growing emphasis on delivering seamless omnichannel experiences to customers. These trends underscore the industry's evolution toward more streamlined operations and enhanced customer engagement. As businesses strive to stay competitive and meet evolving consumer demands, investments in technologies facilitating efficiency and connectivity become increasingly paramount.
Moreover, the market growth and forecasting report includes key player's detailed analyses of the competitive landscape of the market and information about 20 market companies, including Accenture Plc, Alibaba Group Holding Ltd., Alphabet Inc., Amazon.com Inc., Capgemini Service SAS, Carmatec IT Solutions Pvt. Ltd., DXC Technology Co., H2O.ai Inc., Infosys Ltd., Intel Corp., International Business Machines Corp., Microsoft Corp., N-iX LTD, Oracle Corp., Salesforce Inc., SAP SE, Siemens AG, Tata Consultancy Services Ltd., TIBCO Software Inc., and UST Inc. Additionally, Accenture Plc provides digital transformation solutions for the retail industry, including Accenture's real-time data and analytics platform, aimed at enhancing customer experiences and optimizing supply chain operations.
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The market is propelled by a confluence of factors such as technological advancements, consumer demand for enhanced experiences, and the need for streamlined business processes. Key drivers include the adoption of AI, big data analytics, and AR/VR technologies to revolutionize retail operations. However, challenges like budget constraints, complexity, and employee readiness hinder progress. Trends like personalized marketing campaigns and predictive analytics are reshaping the landscape, emphasizing the importance of data-driven insights. Overcoming these challenges while leveraging emerging trends will be critical for businesses aiming to thrive in the rapidly evolving digital retail landscape. Our researchers analyzed the market research and growth data with 2023 as the base year, along with the key market growth analysis, trends, and challenges. A holistic analysis of drivers, trends, and challenges will help companies refine their marketing strategies to gain a competitive advantage.
Increasing penetration of IoT and adoption of cloud services is notably driving market growth. The advent of IoT technology has empowered retail stores to evolve into smart stores that acquire and analyze data related to customer needs, tastes, and habits in real time. This enables retailers to predict customers' behaviour and provide them with personalized products or services. A smart store is an approach that describes the principle of automating retail trading platforms utilizing IoT technology. In this concept, retailers deploy RFID sensors, point-of-sale (POS) terminals, smart shelves, smart carts, and video cameras to automate processes in retail stores. In April 2022, Kraft Heinz and Microsoft joined forces to accelerate supply chain innovation and develop solutions designed to accelerate the consumer goods company's transformation and enable a more resilient supply chain.
Moreover, the adoption of cloud-based products and services is growing rapidly, owing to their cost benefits and scalability. Major players in the market, such as IBM, Microsoft, and Salesforce, with their technological expertise, are offering different cloud-based products and services to the retail sector. For instance, Microsoft is offering Microsoft Azure, a cloud computing offering that helps retailers meet business needs. It allows developers to take advantage of pre-built APIs, including custom ML models, to run AI workloads on a global network to be more productive. Thus, the increased focus of retailers on adopting cloud-based solutions and IoT technologies is anticipated to drive the growth of the market during the forecast period.
Increasing technology partnerships in the retail sector is an emerging trend shaping market growth. The advent of technologies such as AI, cloud technology, and other enterprise software is helping retailers transform their operations and increase efficiency. Growing expectations of customers are driving retailers to enter into strategic partnerships with technology providers to grab new opportunities. These partnerships help retailers have better technical expertise and add value to their business. Retailers are increasingly collaborating with technology providers to develop the most suitable and sustainable business solutions.
For instance, in January 2021, Google announced the launch of Product Discovery Solutions for Retail. These solutions will enhance retailer's e-commerce capabilities and help them personalize the customer experience. The suite of solutions combines AI algorithms and a search service, Cloud Search for Retail, which leverages Google Search technology to power retailer's product-finding tools. Thus, the increasing number of partnerships between retailers and digital transformation technology providers is expected to support the growth of the market during the forecast period.
Lack of awareness of online payment is a significant challenge hindering market growth. In a world where transactions that used to require a physical presence or a manual process can now be made over the Internet with ease, a large segment of the population is either not aware or not well-informed about the advantages, risks, and complexities associated with online payments. This lack of awareness ranges from not knowing what online payment methods are available to not understanding how important cybersecurity measures are. This lack of awareness is largely due to the digital divide that exists across demographics and regions. In developed countries, many people have access to the Internet and are tech-savvy.
Moreover, the rapid pace of technological innovation can also be a factor in this lack of awareness. New payment platforms, mobile applications, and digital wallets are popping up all the time. People may feel overwhelmed by all these options and unsure which one is right for them. On top of that, the rapid pace of technology can also create a sense of insecurity, which can lead people to stick to the traditional methods of payment that they are more familiar with and trust. This lack of awareness of online payment will slow down the complete digitalization of the retail sector. Which as a result will decrease the growth of the market during the forecast period.
The market share growth by the IoT segment will be significant during the forecast period. The IoT refers to a network of connected physical objects embedded with sensors. It allows devices to communicate, analyze, and share data about the physical world via networks and cloud-based software platforms. Retailers are adopting IoT solutions across several applications to improve store operations, reduce theft, and increase purchases through cross-selling.
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The IoT segment was the largest and was valued at USD 26.86 billion in 2018. Retailers are leveraging IoT technologies to bridge the gap between online and offline customer experiences. Predictive equipment maintenance optimizes energy use and anticipates equipment failures like refrigerators, ensuring food safety. Smart transportation streamlines merchandise movement and enhances product quality monitoring during distribution. Supply and demand planning benefit from real-time sales monitoring and RFID-based inventory management. IoT-enabled smart stores track consumer behavior accurately, facilitating automated checkout and improving overall shopping experiences. With these applications driving IoT growth, the market is poised for significant expansion in the forecast period
The consumer electronics segment holds the largest market share in the global digital transformation market in the retail sector. Consumer electronics are the most prevalent consumer products in the world. Consumer electronics are electronic products for non-commercial use. Increased acceptance of a wide range of Consumers prefer these electronics through online channels owing to the convenience and high discounts on products, which drives the digital transformation in consumer electronics retail. The benefits of digital transformation have led companies to invest billions in digital transformation across their operating models, including the digital journey to purchase. Hence, owing to the high advancements in electronic products, the consumer electronics segment is expected to grow significantly, which will fuel the growth of the market during the forecast period.
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North America is estimated to contribute 34% to the growth of the global market during the forecast period. Technavio's analysts have provided extensive insight into the digital transformation market in retail Industry forecast, detailing the regional trends and drivers influencing the market's trajectory throughout the forecast period. The digital transformation market in retail Industry in the retail sector in North America is expected to grow at a steady rate during the forecast period, mainly owing to a rise in the adoption of cloud computing services and the presence of various leading vendors, such as IBM, Google, Microsoft, and Amazon Web Services, in the region. Retailers in North America are increasing the adoption of automation solutions that collect and analyze huge volumes of data to derive business insights. They are adopting edge processing to analyze customers' data in real-time. Furthermore, the increasing volume of data generated in the retail sector is driving the need for retailers to adopt advanced technologies, such as cloud, big data analytics, and AI, to optimize the decision-making process while enhancing the efficiency of business processes. Another reason for the rising demand for digital transformation in the region is an increase in the adoption of cloud computing services.
Further, the implementation of advanced technologies, such as AI and the IoT, requires substantial data center infrastructure to cater to computing demand. The US is the leading country in the region in terms of data center infrastructure and related services. The increasing demand for technology-specific hardware, such as AI chips and IoT sensors, will increase the adoption of advanced technologies in the country. These advanced technologies help retailers scale resources and processes as per their requirements. This acts as a feasible option for startups and SMEs in the region. Furthermore, organizations are increasing their visibility and control over the generated data to enhance the efficiency of operations management. Such factors are expected to drive the regional market growth during the forecast period
The market forecasting report includes the adoption lifecycle of the market research and growth, covering from the innovator’s stage to the laggard’s stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their market growth and trends strategies.
Global Market Customer Landscape
Companies are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.
Alibaba Group Holding Ltd. -The company offers digital transformation in retail solutions such as Alibaba Cloud for Retail that enable retailers to grow by providing comprehensive, end-to-end retail industry solutions integrated with their existing technology.
Market analysis and report of qualitative and quantitative analysis of companies has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize companies as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize companies as dominant, leading, strong, tentative, and weak.
The market research report forecasts market growth by revenue at global, regional & country levels and provides an analysis of the latest trends and growth opportunities from 2018 to 2028.
The Digital Transformation Market in the Retail Industry is witnessing a paradigm shift driven by the adoption of digital technologies and changing consumer behaviour. Retailers are leveraging digital platforms to enhance operational productivity and deliver personalized shopping experiences. Technologies like AI-driven insights, machine learning, and IoT are revolutionizing traditional business models, enabling retailers to optimize costs and improve customer service. Self-checkout systems, AR/VR showrooms, and branded mobile apps are reshaping the retail landscape, offering innovative ways to engage consumers. Additionally, geofencing and omnichannel integration are facilitating seamless interactions across various touchpoints.
Further, with the rise of e-commerce channels and curated online marketplaces, retailers are tapping into larger audiences and embracing targeted marketing strategies. Beauty and Personal Care segment are witnessing significant transformations with the adoption of digital influencers and beauty technologies, catering to evolving consumer trends. Amidst worldwide liberal trade policies and increasing internet penetration, retailers are investing in digital technologies to stay competitive and meet the demands of tech-savvy consumers. As the retail industry continues to evolve, companies are leveraging digital transformation to drive growth, enhance end-user experiences, and stay ahead of the curve.
Additionally, the market is driven by various factors such as consumer spending habits, technological advancements, and competitive pressures. Retailers are leveraging digital technologies like mobile devices, IoT, and blockchain to enhance customer experiences through personalization and targeted marketing tactics. Tools like POS systems, Lightspeed Retail, and iQmetrix aid in managing operations and improving employee productivity. Augmented reality (AR) showrooms and branded mobile apps offer innovative ways to engage customers, while RFID technology and GPS enable efficient inventory management and logistics. With the rise of e-commerce and direct-to-consumer firms, existing companies are adapting their business models and investing in digital adoption platforms to stay competitive in the evolving retail landscape. Maintaining hygiene, health, and appearance through beauty and personal care products is also a significant aspect of digital transformation in retail.
Market Scope |
|
Report Coverage |
Details |
Page number |
194 |
Base year |
2023 |
Historic period |
2018-2022 |
Forecast period |
2024-2028 |
Growth momentum & CAGR |
Accelerate at a CAGR of 17.15% |
Market Growth 2024-2028 |
USD 253.84 billion |
Market structure |
Fragmented |
YoY growth 2023-2024(%) |
16.32 |
Regional analysis |
North America, Europe, APAC, Middle East and Africa, and South America |
Performing market contribution |
North America at 34% |
Key countries |
US, China, Japan, UK, and Germany |
Competitive landscape |
Leading Companies, Market Positioning of Companies, Competitive Strategies, and Industry Risks |
Key companies profiled |
Accenture Plc, Alibaba Group Holding Ltd., Alphabet Inc., Amazon.com Inc., Capgemini Service SAS, Carmatec IT Solutions Pvt. Ltd., DXC Technology Co., H2O.ai Inc., Infosys Ltd., Intel Corp., International Business Machines Corp., Microsoft Corp., N-iX LTD, Oracle Corp., Salesforce Inc., SAP SE, Siemens AG, Tata Consultancy Services Ltd., TIBCO Software Inc., and UST Inc. |
Market dynamics |
Parent market analysis, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, COVID-19 impact and recovery analysis and future consumer dynamics, Market condition analysis for the forecast period. |
Customization purview |
If our report has not included the data that you are looking for, you can reach out to our analysts and get segments customized. |
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