Digital and Customer-centric: the Future of Retail

28.07.2021 by Pauline Batzer

Woman pays contactless with her smartphone in a supermarket.

Constantly changing customer needs, an increasing focus on sustainability and growing competition from e-commerce mean that stationary traders face challenging times. What opportunities does digitization offer?

Many stationary traders have suffered revenue losses in recent months. In January to May 2021 alone, German non-food businesses reported sales down by up to € 40 bn compared with pre-Covid figures, according to the retail trade association Handelsverband Deutschland. Retailers not only need to boost their profitability and efficiency in the future; they must also respond to changing customer needs such as for customized shopping experiences or for more sustainability. In the webinar The Digital Future of Retail my colleague Alexander de Poel and I present strategies and technologies relating to the Internet of Things (IoT) that enable stationary traders to achieve these objectives and to shape their digital future successfully.

Digitize for a Swifter Response in Retail Business

During lockdown customers increasingly had to shop on the Internet because stores were closed, and their expectations of stationary shopping changed as a result. When shopping in a physical store people now expect much the same level of flexibility and the same swift response times and comprehensive product information as when shopping online, and these expectations are probably here to stay. Prices updated daily, for example, are no longer enough; instead, stationary retailers should be able to respond as quickly as possible to market changes and price adjustments by (online) competitors.

How? By means of digital product labeling, for example. Telekom has successfully implemented an IoT-based project of this kind with the Karstadt department store chain. Electronic in-store price tags are linked directly with the merchandise management system so that price changes can be managed and implemented centrally. Customers can also scan prices in-store with their smartphones and then order or pay for them directly. Customers and store employees can also locate the small IoT devices to within 30 cm and find the products they want faster.

Understand Customers, Optimize Market and Marketing

Customer centricity is one of the key success factors for digitized retail business in the future. Companies can only hold their own in the long term against online and offline competitors if they understand their customers’ needs, identify trends at an early stage and align retail spaces, marketing and other corporate areas accordingly. Retail digitization is essential for all of these. There are, inter alia, technological ways to analyze customers’ shopping behavior in-store by using IoT sensors and cloud platforms that track and analyze shopping routes – anonymized and GDPR-compliant, of course. Stationary retailers thereby acquire detailed in-depth target group knowledge, data on a par with what they learn from cookies and the like in e-commerce.

An EHI Retail Institute study reveals how important customer centricity is for retail business. Thirty-seven percent of CIOs and heads of IT polled said that customer centricity was one of the most important trends in retail.  Mobile apps and other measures are to make the in-store shopping experience even more customized and personal.

Digital Technologies for Sustainable Supply Chains

Customer centricity relates to more than merely how retailers design their shopping spaces. Companies themselves must cater for target group needs. Sustainability, for example, is an issue of major societal significance. Moe and more customers pay attention when shopping to sustainable products and to the retailer’s environmental awareness.

Here too, retail digitization and modern IoT solutions in the form of connected devices and cloud platforms present opportunities. Take, for instance, Telekom customer Chep. Telekom equipped Chep’s pallets, which, inter alia, manufacturers of consumer goods use for transportation and product placement in the market, with IoT trackers that incorporate sensors. If shocks or temperature fluctuations occur in transit or along the supply chain, these smart IoT devices sound the alarm. There are fewer damaged or spoiled goods and there is less waste as a result. Optimized management and conservation of resources improve the environmental performance of retailers and suppliers – a win for companies along the supply chain and for end customers in equal measure.

What Is Crucial for Success?

Customer centricity often goes hand in hand with optimized processes and greater profitability, and digitization in retail offers many other opportunities to support stationary traders. They include digital twinning, the mapping of a physical store to a virtual platform, and in-store analytics, which uses sensors to record the shopping behavior of customers.

A soundly based plan is definitely crucial for success in making full use of digital technologies and the Internet of Things in retail, and a holistic approach to digitization strategy is indispensable. That is why companies should attach importance to having a partner by their side who can advise and assist them comprehensively in, for example, applying for funding.

Would you like to learn more about digitization in retail and the opportunities it offers? Click here to watch the full webinar on the subject:



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Pauline Batzer
Pauline Batzer

Project Manager IoT

Since 2015, Pauline has been passionate about the variety of the IoT world. She has gained a lot of experience with the Internet of Things from different perspectives by working with customers, partners, and start-up companies. For the Telekom IoT blog she writes about technological trends, products, and innovations in the Internet of Things which are implemented in different industries.