Digitalisation in retail: Opportunities, trends and figures

What are the main issues with e-commerce?

At least since the coronavirus crisis, online shops have been an essential sales channel for retailers – and thus a significant element of digitalisation in retail. The customer experience is particularly important here: because most customers now shop with their smartphones, a user-friendly, mobile-optimised website is crucial for a successful online shop. Alongside clear product descriptions, retailers can minimise their bounce rate with high-quality images and the simplest possible checkout process, including as many payment options as possible.

A good customer experience in e-commerce, however, also comes from reliable, fast shipping (fulfilment) and a transparent and simple return policy. Digital marketing strategies like SEO, SEA and social media (campaigns) are the key to boosting the visibility and reach of the online shop in the context of the World Wide Web.

• Reach new customers beyond your region
• Not bound to a location
• Major increase in sales possible (dependent on product and price)

• High competitive pressure, mostly global competition
• High investment needed to remain competitive long term
  • User experience
  • Integration of all payment options
  • Fast, reliable shipping
  • Simple returns
  • Digital marketing required: SEO, SEA + social media campaigns

What do we mean by omnichannel and unified commerce? What are the opportunities and challenges?

The advancing digitalisation is fundamentally changing retail. In many cases, retailers use e-commerce as a sales channel while continuing to sell from a classic, physical store. With the so-called omnichannel approach, online and offline channels are cleverly linked: with a successfully implemented omnichannel strategy, their customers can switch seamlessly between online shops, physical stores and mobile apps, without losing their previous interaction with the brand or access to information.

If all the channels are actively communicating with one another and are continuously synchronised, unified commerce is also a term that is used. This is based on a central merchandise management system, which is used to synchronise product stock, customer data and orders continuously via interfaces.

The challenges arise not only from the technical integration and synchronisation of all the data: all internal processes – from logistics to accounting – also have to be consistently adapted to the new cross-channel strategy as part of the digitalisation in retail.

Customers in turn should never experience a break in the brand experience when switching channels: if they go to the POS after some online research, for example, they should recognise the brand immediately from the aesthetic and the key messages in the store.

The logistical processes themselves are another priority – they have to be not only efficient, but also be designed with maximum customer focus: if customers order using click & collect, for example, all their selected products should already be waiting for them, perfectly packed, at the POS when they arrive.

• Improved customer experience
• Greater customer loyalty
• Increased reach and sales
• Integrated data collection
• Personalised customer communication
• Optimised warehousing and logistics

• Expense of fully networking all online and offline channels
• Expense of adapting all internal processes
• High investment to create a consistent brand experience
• Logistics processes have to facilitate new possibilities and meet customer requirements

Data analysis and AI in retail

Knowledge is power. Whether your focus is customer behaviour when using the online shop, specific sales figures, optimisation of logistics processes in retail or the development of individual markets: the more data a company has and the better it can analyse this data, the more informed its decisions can be.

The idea: cleverly evaluate large amounts of data

Alongside targeted marketing campaigns, data analysis can help retailers improve the personalisation of their shopping experiences, thereby increasing customer loyalty and simultaneously boosting sales. A clever analysis of the collected data can also help retailers detect trends sooner, however, which means they can improve the management of their own order and warehouse volumes.

No wonder then that data analysis has become a key element of digitalisation in retail – and that companies are investing big budgets in this area.

• Targeted marketing possible
• Personalised shopping experiences
• Greater customer loyalty
• Optimised logistics (recognise trends early)
• Optimised warehousing and logistics

• Data collection: clean, well-structured and relevant data
• Investments for data evaluation
• Data protection always has to be considered

Artificial intelligence is revolutionising analysis

When it comes to data evaluation, artificial intelligence (AI) is also playing an ever more important role in retail. Quite simply because it can not only process large amounts of data (big data) quickly and accurately, but can also draw direct conclusions.

In retail, AI can do far more than just improve customer service with automated chatbots. It can anticipate customer behaviour, create forecast models for future demand or even set prices dynamically.

Reliable forecasts can help to make the logistics processes for purchasing, warehousing and shipping or delivery much more efficient. This not only saves warehouse costs, but can also minimise the CO2 emissions produced by the transport.

Artificial intelligence also plays a crucial role in preventing fraud in retail. In the context of fraud prevention, AIs have learnt to recognise conspicuous payment anomalies – and thus to identify fraud attempts quickly.

Just as in all other industries, AI will revolutionise data analysis in retail over the next few years – opening up completely new opportunities for retailers. As a result, it will fundamentally influence the digitalisation of retail over the next few years.

• Huge amounts of data evaluated quickly and precisely
• Forecasts for customer behaviour, demand, price developments
• Optimisation of logistics processes
• Prevention of fraud attempts
• Efficiency increased through automation

• Imprecise data can lead to imprecise results
• Data protection and data security
• High investment required
• Lack of internal technical expertise
• Integration in existing IT infrastructures

Digitalisation at the POS

The digitalisation of retail is also progressing steadily at the physical point of sale. The topics of omnichannel and data collection for analyses and forecasts are also playing a key role in the digital transformation. At the checkout, new technologies and processes relating to retail payments, self-checkout systems and cloud-based cash registers and payment systems in particular are also playing an increasingly important role.

Cloud-based cash registers and payment systems

With cloud-based cash registers and payment systems, both the software and the data are hosted in the cloud. This facilitates the use of so-called thin clients, as the hardware mainly functions as an interface.

This aspect of digitalisation at the POS brings an array of benefits for retail: installation of the software on local devices is no longer required; use is flexible, easily scalable and no longer bound to a specific location. Thanks to automatic updates, IT departments no longer have to worry about maintenance, security and data integrity, which frees up capacities. Because a cloud-based system always works with centralised real-time data, the technology is ideal in the context of an omnichannel approach.

And by the way: we’ve outlined the benefits and challenges of cloud cash register systems in our magazine in a separate comprehensive article.

• Flexible access from anywhere in the world
• No installation of software required on local devices
• Real-time data always available
• Automatic maintenance and updates
• High scalability

• Only works with an internet connection
• Data stored on “foreign” cloud servers
• Costs from monthly billing
• Compatibility with existing infrastructure

Self-checkout systems as part of the digitalisation of retail

In addition to the increasing prevalence of cloud systems, there’s another digitalisation trend to keep an eye on at the POS: self-checkout systems enable customers to pay for their shopping quickly and completely independently. Customers scan the products themselves and then pay at the self-checkout cash register. Shopping baskets are sometimes weighed for monitoring purposes.

Self-checkout systems can improve the shopping experience by reducing waiting times. They can also reduce operating costs, as fewer staff are needed at the checkouts. With heavy customer volumes, more transactions can also be handled at the same time.

• Fast processing
• Reduced personnel costs
• Space saving compared to standard checkouts
• Higher flow rate (with heavy customer volume)
• More flexibility for customers

• Increased risk of fraud and theft
• Poor shopping experience if customers feel overwhelmed
• No personal service, no more human interaction
• High initial investment

Developments in retail payments

The digitalisation of retail also affects the development of digital payment methods: according to a Swiss study in 2024, 4% of physical retailers no longer accept cash. Alongside classic credit cards, more and more people are paying with debit cards or using mobile payment solutions like AliPay, WeChat Pay, Apple Pay or Twint in Switzerland.

Contactless payment via NFC

Contactless payment via NFC technology has become the standard almost everywhere. As contactless payment simplifies and substantially accelerates the payment process, these methods are extremely popular with retailers and customers alike.

Payment as a service (PaaS)

Cloud payment solutions are also becoming ever more common. With payment-as-a-service (PaaS) models, payment services are provided via a cloud-based platform.

Instead of laboriously setting up and managing their own payment systems, retailers can now outsource this – and simultaneously make flexible and scalable use of different payment functions (e.g. card payments, mobile payment, fraud prevention or currency conversions). PaaS providers also take care of compliance requirements, such as PCI DSS (Payment Card Industry Data Security Standard).

Buy now, pay later (BNPL) in retail

As the name suggests, BNPL is a retail financing model whereby the consumer can acquire goods immediately, but pay for them at a later date. No charge is made to the credit card or bank account at the time of purchase. The later payment can either be made in instalments or as a one-off. As long as the payments are made on time, no interest is incurred in most cases.

The BNPL model has become very popular with younger consumers like Millennials and Generation Z, who steer clear of classic credit products. Accordingly, more and more retailers are now integrating it as an additional retail payment option.

What is the current status of digitalisation in retail?

As explained above, the digitalisation of retail has many different facets. We take a look below at the latest figures for the digital transformation of retail in relation to e-commerce, omnichannel or unified commerce, data analysis, AI and payments (especially contactless payments).

According to Statista.com, in 2023 e-commerce accounted for 16.5 % of overall retail sales, and it’s still continuing to grow. This will force retailers to invest more heavily in e-commerce.

Online shopping’s share of overall retail sales in Germany in 2023

Online shopping is also growing fast internationally according to Statista. To be precise, by 16.6 % per year, as global online sales are expected to reach 8.1 billion US dollars in 2026.

Predicted annual growth
of global online shopping by 2026

According to a retail study by Adyen, 54 % of retailers in Germany have already invested in unified commerce or omnichannel technology. A further 35% are currently considering an investment.

of retailers in Germany
have already invested in unified commerce or are considering making an investment

The Adyen retail study also reveals some interesting results on the current status of retail data analysis in Germany: just 25 % of Germany’s retail companies are currently using a central system that consolidates all sales across all channels. 29 % of German retailers want to invest in the comprehensive collection and analysis of their own payment data in the future. This shows that there is still a lot of potential for digitalisation in German retail, especially through increased use of data-driven strategies.

of retailers in Germany
are planning to invest in the comprehensive collection and analysis of payment data

According to a study by management consultants McKinsey, over 50 % of German retail companies are planning to invest more heavily in AI as part of their digitalisation, in order to increase automation in their supply chains and make the personalisation of their offers more precise.

Looking at the global market, a study by management consultants Deloitte revealed that more than 80 % of retailers are using artificial intelligence for reliable forecasts to make their supply chains and warehouse logistics more efficient and sustainable.

of global retailers are using AI to optimise logistics

According to the annual retailer survey by the EHI Retail Institute, contactless payment via NFC is continuing to gain ground in Germany: while NFC accounted for 79 % of sales in 2022 (based on all payment options at the payment terminal), this value rose to 84 % in Germany in 2023, if you combine smartphone and card payments.

Would you like to learn more about the 2023 EHI retailer survey in Germany? We’ve summarised for you what we see as the most important results in this article.

Anteil des kontaktlosen Bezahlens an den Payment-Terminals im deutschen Einzelhandel

Quellen- und Link-Liste

• https://go.adyen.com/rs/222-DNK-376/images/DE_Adyen_Retail_Report_2023.pdf
• https://www.estrategy-consulting.de/de/insights/13-beispiele-fuer-digitalisierung-im-stationaeren-handel/
• https://cmk.handelsblatt.com/cms/articles/12674/anzeige/alvarez-marsal-deutschland-gmbh/die-digitalisierung-des-einzelhandels-was-bleibt-was-kommt
• https://www.sherpany.com/de/ressourcen/digitale-transformation/digitalisierung/digitale-transformation-beispiele/
• Statista – E-commerce share of retail sales in Germany in 2023: https://de.statista.com/statistik/daten/studie/267064/umfrage/anteil-des-e-commerce-am-einzelhandelsumsatz-in-deutschland/
• Statista – Forecast for the global e-commerce market by 2026:  https://www.statista.com/statistics/272391/revenue-forecast-for-the-global-e-commerce-market/
• McKinsey – The tech transformation imperative in retail: https://www.mckinsey.com/industries/retail/our-insights/the-tech-transformation-imperative-in-retail
• Deloitte – Artificial Intelligence in Retail: https://www2.deloitte.com/global/en/pages/consumer-business/articles/artificial-intelligence-in-retail.html
• Figures – dates – facts – the payment study for German physical retail stores