The future of retail in Russia: tech trends in the next 5 years

A new Data Insight report summarizes opinions of leading local experts on key tech trends changing the future of retail in Russia

Consumer behavior all over the world changes along with customer expectations. But which technologies are going to become “the new normal” in Russia in 5 years? In this article, we’re going to present a summary of the Data Insight report (available in Russian here) with summaries of interviews with various retail and e-commerce experts.

 

Current state of digital transformation in Russia

As we wrote about digital transformation among Russian consumers,

“[i]n Russia, internet penetration has reached 70%, one of the highest rates in the world. Furthermore, 59% of Russians use smartphones and the percent of citizens that use online banking and contactless payments remains one of the highest in Europe.”

For many industries, including retail, this means that technologies are driving further growth.

For Russian businesses, this means that marketing technologies are one the primary areas for digitization.

Market growth_technology

 

Future of retail: main trends and technology applications in the next 5 years

According to the experts interviewed by the Data Insight team, the technologies that are going to be driving retail development in Russia in the next 5 years are AI, IoT, AR/VR, and blockchain.

These new technologies are going to shape the development of both traditional retail and e-commerce.

  • AI is expected to become widely used by Russian retail businesses in 3 to 5 years, and primarily used in marketing
  • IoT is less likely to become widespread in the immediate future, but is likely to become the norm in 5–7 years, both in traditional retail shops, and as a part of storage and logistics solutions
  • Despite having a lot of potential for use in various areas, AR/VR solutions are likely to be used primarily in sales and marketing
  • As for blockchain, it’s most likely to be used either for supply chain quality control, or for personal data security. This could mean a new boost for “sensitive” industries, such as medications, weapons, etc.

It’s likely that the Russian tech market will have more demand for niche products that would facilitate integration of new technologies with retail and e-commerce solutions. See below for summaries of expert predictions from the Data Insight report.

 

How new technologies are going to affect retail in Russia

New tech trends: AI in retail and e-commerce in Russia

Experts interviewed by Data Insight expect AI to become used more widely than merely in marketing and personalization. AI might expand into logistics, HR, and resources management, as well as into automation of legal and paperwork workflows.

The primary customer-facing implementation is expected to be in predictive analytics: helping brands and stores offer relevant products at the right time, as well as automate ordering and delivery.

In the longer term, some of the experts interviewed by Data Insight expect that AI is going to enable companies to market to micro-audiences and react to changes in demand on a hyper-segmented level.

 

New tech trends: IoT in retail shops in Russia

The Internet of things (IoT) can potentially transform the customer experience and create new retail solutions and formats.

However, the first stage of IoT implementation in Russian retail is likely to lead to higher costs due to the need to install sensors, and to collect and analyze data. After that, IoT solutions can be used to personalize offers, set up “smart” shelves, facilitate navigation, and automate checkout.

In addition to improving the shopping experience, IoT will become an extremely powerful tool for gathering feedback, including measuring emotional responses to physical goods. IoT solutions might also be used for equipment control, inventory and goods management, and a wide variety of ways to reduce costs.

However, the experts interviewed don’t expect IoT to become widespread in Russia immediately. Implementation of IoT solutions in Russia is likely to be hampered by lack of data literacy and a low level of interest in retail innovations.

 

New tech trends: AV/VR solutions in Russian retail

Interestingly, not all of the experts interviewed by Data Insight believe that AR/VR solutions are likely to significantly change the way retail operates in Russia. For many it is primarily a marketing and sales tool. Whether or not it’s going to change the purchasing experience or retail landscape in Russia remains to be seen.

However, some possible areas where AR/VR technologies might be used include HR, staff training, and warehouse management.

 

Blockchain solutions in Russian retail and e-commerce

According to the experts, the main area for implementing blockchain solutions in Russia is likely to be supply chain control.

Blockchain can offer full supply chain transparency, reducing the number of counterfeit products sold in retail, and even lead to supply chain optimization. Blockchain solutions are likely to be used in market segments where anonymous purchases are desired.

In addition, the experts mention B2B and B2G as possible areas of implementation. Government monitoring of sales is another possible way blockchain could be used in Russian retail. Finally, peer-to-peer platforms could also adopt blockchain technologies.

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