2020 Retail Trends, Predictions, and Insights - A Look Forward: Syte
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A Look Forward: 2020 Retail Trends, Predictions, and Insights
Table of contents
Don’t underestimate search 03
Who is using search? 03
Visual search in 2019 03
The untapped potential of Visual AI 04
Bringing innovation in-store 07
Clicks vs bricks 07
Brick-and-mortar turns local 07
Experience is everything 07
Technology’s role in the new brick and mortar 08
Unleashing the power of data 11
Fortune favors the data rich 11
Clean up catalog data 11
Understand user desire 12
Personalize user journeys 12
Next level AI in retail overview 14
Omnichannel experience with IoT 14
Optimized and predictive operations 15
Dynamic outreach 15
Guided product discovery 15
Where to go from here 17
Don’t Underestimate
Search
Amidst Black Friday chaos, record breaking Singles’ Day sales, and retail code freeze,
wrapping up the end of the year can be a high-stress time for retailers. However, just as
important as nailing the end-of-year sales, is being prepared for the challenges of the
coming year.
Whether it is evolving expectations for user experience, the shifting role of data, or nailing
eCommerce search and navigation, this eBook will outline the topics that can’t be
ignored in 2020.
Who is Using Search?
Shoppers who are interacting with search on an eCommerce site, whether that be voice,
visual, or textual, are some of the most high-intent shoppers. Significant effort should be
made to ensure their experience is as smooth and accurate as possible.
In an analysis of over $1 billion in sales on the Shopify platform over Black Friday and
Cyber Monday, it was found that search yielded a conversion rate of 3.04%, following only
behind email marketing with a conversion rate of 4.29%.1 Search-shoppers come to the
site with a clear idea of what they are looking for. They expect that, if a similar item is in
stock, it be presented quickly and easily.
Visual Search in 2019
As consumers are increasingly looking towards Instagram, Pinterest, and more recently
TikTok for their style inspiration, it is not just textual search that retailers need to consider.
The year 2019 was when visual search officially arrived on the retail radar.
From Farfetch to Tommy Hilfiger, retailers everywhere started leveraging consumers’
photo-first mentality by implementing this innovative technology. But is this just a flashy
new feature, or something here to stay?
The visual search market is projected to grow at a CAGR of 17.5% between 2019 and
2027.2 Companies like Pinterest, who chose to implement visual search to help users
visually discover, navigate, and buy through their platform, have seen that 80% of users
start with a visual search when shopping.3
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03
Don’t
Underestimate
Search
With brands like Intu reporting total website conversion uplift of +11% as a result of
implementing visual search technology on their website4, looks like visual search is here
to stay.
The Untapped Potential of Visual AI
But the current use of Visual AI to power visual search is not the limit of what this
technology can do. The same innovative technology that powers visual search can be
used for a number of use cases to solve prominent pains in the retail industry.
Visual AI technology can be used to analyze, track, and predict growing trends by
processing searches and extracting the metadata. Seen below is a sampling from millions
of visual searches from Syte’s database to extract the top 15 most common searches.
By leveraging Syte’s Visual AI technology not just for the user-facing visual search feature,
but also as an analytics and predictive tool, retailers can gain valuable insights into
consumer trends and make crucial business decisions accordingly.
The Styles That Will Be Rockin’ It In 2020
Visit us at www.syte.ai or contact us at info@syte.ai
04
Don’t
Underestimate
Search
Visit us at www.syte.ai or contact us at info@syte.ai
05
Don’t
Underestimate
Search
Learn how a few retailers are leveraging their search to engage shoppers.
Farfetch
Farfetch, the UK-based luxury
marketplace, partnered with Syte
to implement visual search on their
iOS mobile app. Farfetch defines
themselves as a tech company
first, and a retail company second.
With that digitally savvy mindset,
the luxury marketplace decided
they needed accurate visual search
to leverage the social media
inspiration shoppers experience
every day on Instagram, Pinterest,
and more.
PrettyLittleThing
PLT is a UK-based online retailer
that caters to female shoppers
aged 16 to 24. Wanting to leverage
their strong online and social
media following, PLT decided to
implement Syte’s visual search
to allow users to upload images
and screenshots to shop directly
from their online inspiration. After
implementing the feature, PLT
experienced substantial conversion
uplift (+11%) across their entire
website and total revenue per
purchase uplift of +2.3%.
Visit us at www.syte.ai or contact us at info@syte.ai
06
Bringing Innovation In-store Clicks vs Bricks As skeptics continue to debate whether the future of retail lies in clicks or bricks, it is clear that physical stores shouldn’t be written off just yet. In a McKinsey & Co. report, it was predicted that more than 80 percent of U.S. retail sales in 2020 will still happen within the four walls of a store.5 That being said, it doesn’t mean that brick-and-mortar retail will continue to look like the stores we’ve known in the past. Brick-and-Mortar Turns Local As malls and shopping centers continue to represent the “retail apocalypse,” stores are looking for alternatives to the classic model. Brands such as Reformation, Warby Parker, and Outdoor Voices are looking local, opening pop-up shops in residential neighborhoods to tailor to the convenience of online shopping, with the experience of in-store6. By occupying smaller stores which hold leaner inventory exhibited in a “showroom” style, these brands are using their physical stores as a means for shoppers to get to know their brand through touching and feeling the products, without necessarily expecting all transactions to take place in-store. Experience is Everything The convenience of online has become impossible to ignore and the draw to visit brick- and-mortar stores is shifting from transactional to experiential. Experience-first retailers like Glossier have built their brand on instagramable decor and ceremonious store openings which are known to draw mile-long lines. These growing trends have led retailers to begin measuring the added value of physical retail stores as a means to acquire new users and strengthen their brand story, outside of the increasingly saturated online marketing field.7 As Doug Stephens explains in his book “Reengineering Retail,” if brands start calculating the marketing value of consumers’ undivided attention while they are in-store similarly to how they calculate online impressions, investing in strong branding and memorable in- store experiences is well worth the cost. Visit us at www.syte.ai or contact us at info@syte.ai 07
Bringing
Innovation
In-store
Technology’s Role in The New Brick-and-Mortar
To further increase retailers’ ability to measure the impact and efficiency of brick-and-
mortar stores, in-store technology has become more commonplace. Innovations such
as Smart Mirrors use Visual AI technology to help shoppers locate similar items in the
store to what they are wearing, or send a screenshot of an inspiration image and locate
available similar items.
In a study by Retail Customer Experience, 51% of respondents who use retail mobile apps
use them while shopping in-store. This is mainly to redeem in-store discounts, compare
prices, view product ratings, and find products.8
Instead of shoppers resorting to checking their phones while in the brand’s store,
empowering in-store staff with clienteling apps that can locate products in-store, help
shoppers find what they are looking for. In-store apps also give insightful data about stock
which can help make the shoppers’ journey a memorable one.
By integrating online technology in-store, retailers are able to paint a more holistic picture
of their shoppers’ journeys in order to understand their full omnichannel experience.
Visit us at www.syte.ai or contact us at info@syte.ai
08
Bringing
Innovation
In-store
Here are a few retailers that got brick-and-mortar right in 2019.
Amazon
It wouldn’t be an end-of-year retail roundup without mentioning Amazon. The online-first
retail giant began opening physical stores early 2018, making headlines for investing in
brick-and-mortar in the age of the “retail apocalypse”.
However, 9 of the 10 most successful online retailers currently operate physical stores.
As the cost of new customer acquisition online continues to grow, brick-and-mortar is
becoming the new way to attract online traffic.
Data shows that retailers see an average increase of 37% in web traffic after a new
physical location is opened.9 Innovations like automatic check out have also worked to
reignite excitement about interacting with physical retail.
Source: Amazon
Visit us at www.syte.ai or contact us at info@syte.ai
09
Bringing
Innovation
In-store
Bonobos
Bonobos, another strong online-pure player, opened their first physical store in 2012 as
a place for shoppers to go and get custom fittings, later receiving their tailored products
at home. This year, however, they have expanded their in-store offering to include a “try
before you buy” service.
This expansion allows shoppers to actually leave with products in hand, ordering up to 12
products online and going to the store to try them on. Anything that works, they purchase
and leave with. Those that don’t are left at the store with no hassle of return.
A Bonobos spokeswoman said that of those who are using the service, about 35% are
new customers and 65% are repeat customers. They have a higher average order value
and conversion rate than those who don’t use the service.10 We can expect to see more
creative blurring of online and offline experiences as retailers attempt to deliver the
convenience of online with the emotional experience of in-store.
Source: Bonobos
Visit us at www.syte.ai or contact us at info@syte.ai
10Unleashing the
Power of Data
Fortune Favors the Data Rich
Brands and retailers no longer create and drive trends, subsequently feeding them to the
masses. Today, consumers define the trends and it is up to brands and retailers to keep
up.
Because of this, it is more important now than ever for retailers be empowered with deep,
detailed data to perform accurate trend tracking, predictive merchandising analysis, and
stay ahead of constantly evolving trends.
In fact, in a study done by alteryx and RetailWire of over 350 retailers, 73% said data is
important or fully essential to their department’s success. But how can retailers ensure
they are approaching data correctly?
1. Clean up Catalog Data
Retailers spend an extortionate amount of time and money manually tagging
products to enable product search, SEO, and analytics. However, to tag a brand’s
inventory manually is bound to have a limit in terms of accuracy and scalability,
especially for marketplaces who import thousands of SKUs daily.
More and more brands are
implementing automatic product
tagging to ensure scalable, accurate
product tags. Syte uses its Visual AI
technology to automatically tag a
retailer’s entire catalog of products
directly from the product page. With
a lexicon of over 15,000 attributes, this
ensures structurally consistent, accurate,
and deep data for every product online.
Visit us at www.syte.ai or contact us at info@syte.ai 11Unleashing
the Power of
Data
2. Understand User Desire
Once catalog data has been enriched and organized with Deep Tagging technology,
it’s time to use this data to improve analytics and user experience. Syte’s textual search
solution is powered by Deep Tags, providing the most robust and delightful user
experience on the market.
With the data from Deep Tags and the insight into user intent from search, retailers
can understand the products users are searching for and track growing trends in their
inventory to optimize for coming seasons.
3. Personalize User Journeys
Using Visual AI and Deep Learning to personalize user journeys can make the difference
when it comes to conversion. Search users are already some of the most highly
engaged consumers; well educated in what they want and ready to purchase.
Using Deep Tagging data to understand the nuances of a user’s past browsing history,
Syte’s technology can allow a retailer to offer the most relevant results first.
Let’s take a look at a few brands that nailed data in 2019.
boohoo
The UK-based online retailer yields a yearly
revenue of £580M by targeting mostly Gen Z
and Millennial users with their trend-ready,
fast fashion pieces. Boohoo implemented
recommendation engines, Shop the Look
and Shop Similar to supply visually similar,
tailored recommendations to shoppers.
By surfacing similar items to those the
shopper has already shown interest in,
boohoo saw 2X higher conversion rate
for customers who engaged with these
recommendations.11
Visit us at www.syte.ai or contact us at info@syte.ai
12Unleashing
the Power of
Data
Sephora
Sephora was recently voted number one in online personalization by Internet Retailer due
to its personalized emails, Beauty Insider loyalty program and in-store technology, such
as Color IQ, which scans customers’ skin to help them determine the right foundations,
concealers and lipsticks for their skin color.12
Source: Forbes
Visit us at www.syte.ai or contact us at info@syte.ai
13Next Level AI in Retail Overview Completing this year-end roundup is artificial intelligence (AI), which will start playing a much bigger role in retail as the technology continues to mature in 2020. Moving beyond just improving efficiency and reducing costs, AI will continue to blur the lines between eCommerce and brick-and-mortar, and introduce ways that leverage and augment the human element in both online and offline retail. In a report by Capgemini,13 25% of the top 250 global retailers already integrate AI into their organizations. AI penetration is highest in multi-category (42%), followed by apparel and footwear (33%), food and grocery (29%) and home improvement (26%). By 2022, Juniper Research14 revealed that global retail spending on AI will grow to $7.3 billion per year from $2 billion in 2018. Using AI in customer-facing functions, eCommerce players and retailers worldwide expect to enhance customer satisfaction, increase promotion efficiency, reduce customer complaints, and churn. With advancements in machine and deep learning, what will customer experience in the coming year be like? Omnichannel Experience with IoT For 88% of retailers, using the Internet of Things (IoT) in retail will provide better customer insight than any other data gathering method, according to Oracle.15 For instance, the use of RFID tags and GPS sensors that power smart shelves and mirrors allows retailers to get a granular-level understanding of the customers. AI-powered IoT will enhance the retail experience of customers, delivering dynamic pricing and personalized recommendations based on previous shopping behavior both online and offline. Visit us at www.syte.ai or contact us at info@syte.ai 14
Next Level
AI in Retail
Overview
Optimized and Predictive Operations
With data gathering and analysis at scale, AI allows retailers to optimize operations
such as stock replenishment and inventory management. IBM and NRF16 found that
85% of retailers plan to use intelligent automation for supply chain planning by 2021.
In the same period, 79% of retailers expect to use intelligent automation for customer
intelligence.
Armed with actionable insights, retailers will be more efficient at forecasting demand,
managing space for stocks, and showcasing the availability of products to shoppers.
Dynamic Outreach
IDC17 predicted that by 2019, “40% of retailers will have developed a CX architecture
supported by an AI layer […] providing up to a 30% conversion increase and thus up to
25% higher revenue.” Hyper micro-personalization in eCommerce has a lot more room for
growth, and AI is giving its push toward widespread use.
Besides the increasing focus on making eCommerce mobile-responsive, AI will help
retailers deliver real-time, contextual engagement—from highly tailored rewards to
relevant marketing campaigns based on a detailed consumer profile.
Guided Product Discovery
According to Sonar,18 70% of US millennials, and 62% of millennials in the UK, appreciate
retailers using AI to show more interesting products. Also, 72% and 64%, respectively,
believe that brands using AI will be able to accurately predict what they want.
AI-powered visual search supports a smooth product search experience. Eliminating the
difficulty of finding the right keywords, visual search enables shoppers to find products
of interest with only an image. Couple visual search with conversational and guide tools,
and retailers will be able to offer a 360-degree approach to online and offline product
discovery.
Visit us at www.syte.ai or contact us at info@syte.ai
15Next Level
AI in Retail
Overview
Discover the retailers that crushed guided product discovery in 2019.
Venca
Venca is one of the leading fashion retailers in
Spain. With a market share of 60%, Venca sells
fashion, cosmetics, textiles, and home products
both online and through catalogs. To keep
up with the shifting retail landscape, Venca
needed to innovate the buyer’s journey. With
visual search and intelligent recommendation
engines, the Spanish retailer delivers
better customer experience that improves
engagement and loyalty.
“Combining textual search and visual search,
the conversion is 8X more. Therefore, the two
kinds of search are not cannibalizing each
other. Instead, they’re complementing each
other,” shared Jordin Badia, Venca’s CIO-CDO
Digital.
Conforama
As furniture and home décor shopping
becomes increasingly popular, retailers must
find ways to encourage product discovery with
a guided browsing experience centered on the
product qualities shoppers care about.
French retailer Conforama partnered with Syte
to becoome one of the first retailers within the
global home décor and furnishings industry
to offer visual search. Available on mobile and
desktop, customer inspiration from the real-
world, social media, catalog stylings, and more
are now easily discoverable and shoppable at
Conforama.
Visit us at www.syte.ai or contact us at info@syte.ai
16Where to Go from Here Consumers today are demanding more out of the shopping experience, which will surely persist in 2020 and beyond. At the same time, there a lot of digital solutions available in the market right now to deliver what consumers are looking for. Retailers not only have exciting new ways to identify ever-changing customer needs but also powerful tools to win and retain consumers in the coming years. To decide which technological capability to add to an eCommerce platform or brick-and-mortar store, here are four essential steps to follow: 1. Define customer needs and business goals 2. Do a deep research about possible solutions and providers 3. Conduct due diligence and evaluate 4. Create a timeline towards implementation Whether it is transforming user experience, getting more out of data, or redefining product search and site navigation, combining the power of technology with a sound customer-centric strategy is a strong foundation as the retail revolution advances. Ready to see how visual search works on your website or app? Check out Syte’s Buyer’s Guide to Visual AI for Retail to know what requirements to look for, explore available options, and keep track with a vendor evaluation process. Visit us at www.syte.ai or contact us at info@syte.ai 17
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2
Global Visual Search Market Will Reach USD 28,470 Million .... 24 May. 2019, https://www.
globenewswire.com/news-release/2019/05/24/1842038/0/en/Global-Visual-Search-Market-Will-
Reach-USD-28-470-Million-By-2027-Zion-Market-Research.html. Accessed 17 Dec. 2019.
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The Retail Apocalypse that Wasn’t: Brick-and-Mortar is Thriving. 29 Jul. 2019, https://blog.
compliantia.com/2019/07/29/the-retail-apocalypse-that-wasnt-brick-and-mortar-is-thriving/.
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Boohoo Case Study - Syte https://www.syte.ai/boohoo-case-study/. Accessed 22 Dec. 2019.Sephora wins at online personalization - Digital Commerce 360. 20 Sep. 2019, https://www. 12 digitalcommerce360.com/2019/09/20/sephora-wins-at-online-personalization/. Accessed 23 Dec. 2019. Building the Retail Superstar https://www.capgemini.com/research/building-the-retail-superstar- 13 how-unleashing-ai-across-functions-offers-a-multi-billion-dollar-opportunity/ Accessed 7 Jan. 2020. Retail spending on AI to reach $7.3B by 2022 1 Feb. 2018, https://www.retaildive.com/news/retail- 14 spending-on-ai-to-reach-73b-by-2022/516170/ Accessed 7 Jan. 2020. The Impact of Emerging Technology on CX Excellence https://go.oracle.com/ 15 LP=82668?elqCampaignId=211872 Accessed 7 Jan. 2020. The coming AI revolution in retail and consumer products https://www.ibm.com/downloads/cas/ 16 NDE0G4LA Accessed 7 Jan. 2020. 17 IDC FutureScape: Worldwide Retail 2018 Predictions Oct 2017, https://www.idc.com/research/ viewtoc.jsp?containerId=US42404617 Accessed 7 Jan. 2020. 18 https://www.forbes.com/sites/rachelarthur/2016/06/15/future-of-retail-artificial-intelligence-and- virtual-reality-have-big-roles-to-play/#c6896a67f9df Accessed 7 Jan. 2020.
About Syte
Syte is a Visual AI technology provider that empowers retailers to tap
into the personal inspiration of individual shoppers and deliver the
right products at the right time, using the most accurate artificial
intelligence on the market.
Founded in 2015, Syte developed the camera feature for leading
brands such as Farfetch, Marks & Spencer, boohoo, Tommy Hilfger,
and numerous others, leveraging partnerships with technology
innovators, including Microsoft, and SAP.
To date, the company has raised $30 million from investors including
Viola Ventures, Storm Ventures, Commerce Ventures, Axess Ventures,
NHN Ventures, Magma, Naver Corporation, Line Corporation,
Remagine Ventures, North Base Media, KDC Ventures and Lyra
Ventures.
To learn more, visit:
www.syte.ai
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