Key Technologies Leading Retail Industry Transformation in Canada

Like any other industry, retail doesn’t stay the same as time passes. The COVID-19 pandemic, technological advancements, changing consumer behaviors, and economic shifts have significantly influenced the retail landscape in Canada over the last few years.

The steady growth of retail sales in Canada since 2012 was interrupted in the COVID-affected 2020 when they decreased by nearly 1.5%. However, afterward, the upward trend resumed at an even faster pace, and in 2022, the total sales amounted to more than 815 bln Canadian dollars.

As technology becomes increasingly integrated into daily lives, it also changes how retailers operate and interact with customers. That’s why this article explores the key technologies leading Canadian retail transformation. These include cloud computing, artificial intelligence and machine learning, augmented and virtual reality, and various automation technologies.

Read further to discover them in detail.

How the Retail Landscape Changed in Canada Over the Past Five Years

Over the past five years, the retail landscape in Canada has undergone many changes. The COVID-19 pandemic came first, leading to temporary closures of physical stores, social distancing measures, and other restrictions that pushed consumers toward online shopping. The resulting surge in e-commerce was not just a temporary shift. It marked a significant change in consumer behavior that continues to shape the market. Besides, it pushed the widespread adoption of contactless payments, so retail businesses have had to adjust accordingly.

The pandemic also induced economic uncertainty. Consumers became more price-sensitive, focusing on essential goods and seeking discounts. Global changes in trade policies and agreements, such as the USMCA (United States-Mexico-Canada Agreement), have influenced the cost and availability of goods. At the same time, fluctuations in tariffs and trade barriers have also affected the retail supply chain and pricing strategies.

Furthermore, technologies have advanced massively over the past five years, also affecting retail software development and shopping experiences. All of the above led to the following changes that have shaped and changed the retail industry.

Market Evolution

The retail market in Canada has witnessed a notable shift towards online shopping. This, in turn, led to the decline of traditional brick-and-mortar stores in several sectors, including the ones that were most present online before — for instance, the clothing and shoes departments.

E-commerce has blossomed, especially during the COVID-19 pandemic, when restrictions on physical stores pushed consumers to shop online. The value of monthly e-commerce retail sales in Canada doubled between January and May 2020 and remained at roughly the same level even after the pandemic in July-September 2023.

Many physical stores, particularly those in the fashion and electronics sectors, have struggled in the last five years. Some have closed permanently or scaled back their physical presence, while others have decided to focus more on their online operations.

Still, physical shops are hardly the things from the past in Canada. 67% of Canadian consumers prefer to shop in-store versus online. This balance may vary depending on the industry. For instance, almost half of Canadians are OK with buying electronics not in person, while the figure for luxury items is twice as small. In the end, it all depends on the preferences of your target audience.

Impact of Digital Transformation

As the consumer preferences changed and technologies advanced, digital transformation in the retail industry of Canada has also quickened. For instance, retailers have invested in high-tech digital platforms to support online sales, including user-friendly websites, mobile apps, and sophisticated digital marketing strategies.

Technologies like artificial intelligence (AI) and machine learning (ML) are also being used in retail. These days, they help personalize customer experiences, optimize supply chains, and improve inventory management.

Canadian retail companies also use big data to gain insights into consumer behavior, develop more targeted marketing strategies, and improve decision-making. One of the most notable use cases is the Mackenzie Health Foundation. In 2021, they received the award for the use of data to reduce the time required for patients to receive tissue plasminogen activator.

Adoption of Omnichannel Strategies

Over the past three years, Canadian retailers have started integrating omnichannel strategies more often. This helps them provide a seamless shopping experience that blends in-store, online, and mobile shopping. This, in turn, helps retailers generate more profit. Currently, in Canada, 80% of the retailer’s products sell through physical stores and only 20% sell through eCommerce. However, within the next three years experts forecast the rise of online sales to 25%.

These days, retailers use unified commerce platforms. They integrate all sales channels and ensure a consistent experience no matter where customers are shopping—online, via mobile, or in physical stores. Curbside pickup and click-and-collect services have also become essential. They are one of the safest and most convenient solutions for customers who prefer shopping online but making purchases in person.

Retailers also increasingly use social media platforms as part of their omnichannel strategy, allowing customers to purchase directly through social media ads and posts. Omnichannel strategies also ensure that branding, promotions, and customer service are consistent across all channels.

Sustainability and Ethical Practices

Overall, Canadians deeply care about climate and environmental changes. For instance, 8 in 10 value a sustainable lifestyle, while 65% feel that they are morally obliged to use environmentally friendly products. Naturally, this has influenced retail in Canada, too, as there has been a heightened focus on sustainability and ethical practices.

These days, retailers are expanding their range of eco-friendly products to meet consumer demand. Companies also adopt more sustainable practices, such as reducing plastic use, improving energy efficiency, and sourcing products ethically. Many retailers also invest in sustainable packaging solutions to reduce their environmental footprint. Furthermore, many retailers are emphasizing their Corporate Social Responsibility (CSR) initiatives to highlight efforts in sustainability and ethical business intelligence practices.

Innovations in Customer Experience

Over the past years, Canadian retailers have also focused on innovations that improve customer experience. For instance, Augmented Reality (AR) technology allows customers to try on clothing, accessories, and even makeup virtually.

Another great example of innovative technologies is AI-powered chatbots. They provide instant customer service and support, improving response times and customer satisfaction. AI and ML also help retailers offer personalized product recommendations based on customer behavior and preferences. Some retailers are also experimenting with voice-activated shopping assistants, allowing customers to make purchases through smart speakers and other voice-activated devices.

Furthermore, AI assistants can help not only customers but also employees. For instance, Canadian Walmart has launched an AI-powered chatbot called My Assistant to help speed up the work of home office associates. With its help, they can draft emails and presentation plans quicker.

Massive Mobile Wallet Adoption

Last but not least, retail in Canada started adopting contactless payments and mobile wallets over the past five years. Contactless payments became immensely popular during the pandemic when people wanted to minimize health concerns. Therefore, many retailers upgraded their payment systems to accommodate them.

The numbers prove that. In the last six months since June 2023, the percentage of Canadian consumers using mobile wallets has risen from 38% to 51%. Services like Apple Pay, Google Wallet, and Samsung Pay have seen increased usage. These days, they are one of the most convenient and secure purchasing methods. The convenience of mobile wallets extends beyond payments; they often integrate with loyalty programs, making it easier for consumers to track rewards and discounts.

Retailers also leverage mobile wallets to offer personalized promotions and discounts to enhance customer engagement and loyalty. Moreover, many mobile wallets now integrate loyalty programs and rewards to become more appealing to consumers.

Key Technologies Leading Retail Transformation in Canada Nowadays

The past years and the turbulence associated with them showed us that to remain successful, retailers need to quickly adapt to digital transformation. That’s why it’s so important to learn about the key technologies widely adopted in the retail industry these days.

These technologies are the following.

Cloud Computing

Cloud computing has become one of the most useful technologies in the retail sector due to its ability to offer scalable, flexible, and cost-effective solutions to businesses. With its help, retailers can store vast amounts of data, run complex applications, and scale operations efficiently without investing costs and time into building and maintaining a significant on-site infrastructure.

Cloud-based solutions can also enhance operational efficiency. For instance, they allow real-time tracking of inventory levels across multiple locations, helping retailers maintain optimal stock levels and reduce instances of overstocking or stockouts. What’s more, cloud-based CRM systems allow retailers to manage customer interactions and data efficiently. These systems help in analyzing customer behavior, preferences, and purchase history to tailor marketing efforts and improve customer service.

For instance, Shopify, a leading e-commerce platform based in Canada, uses cloud computing to offer robust, scalable services to millions of retailers worldwide. Its cloud infrastructure supports everything from online store creation to payment processing and analytics.

Loblaw, a Canadian grocery retailer, uses cloud computing to streamline its supply chain management, enhance its e-commerce capabilities, and improve data analytics for better decision-making. As you can see, cloud-based analytics platforms allow retailers to gain deeper insights into market trends and consumer behaviors, driving more informed strategic decisions.

Artificial Intelligence and Machine Learning

AI and ML technologies can analyze large datasets to identify insights companies can use later to personalize customer experiences. Understanding individual customer preferences and behaviors helps retailers offer tailored recommendations, targeted promotions, and personalized communication to their audience.

AI and ML algorithms also help predict demand trends, optimize stock levels, and reduce waste. These technologies can forecast sales patterns based on historical data, seasonal trends, and market conditions. Furthermore, ML models can analyze big amounts of data to predict future demand accurately. With their help, retailers can make informed procurement, production, and distribution decisions.

Canadian Tire is a retail company operating in the automotive, hardware, sports, leisure, and housewares sectors. It uses AI and ML to optimize its supply chain operations, improve customer experiences by offering them personalized marketing, and enhance inventory management across its stores.

Another use case of this technology is the Hudson`s Bay Company (HBC) — a retail business group that has implemented AI-driven analytics to gain insights into customer preferences, optimize pricing strategies, and improve the overall shopping experience both online and in-store. Moreover, some retailers are exploring the use of AI for dynamic pricing, adjusting prices in real-time based on demand and competition to maximize revenue and competitiveness.

Augmented Reality and Virtual Reality

AR and VR technologies are revolutionizing the retail experience by allowing customers to engage with products in an immersive and interactive way. For instance, these technologies can enable virtual try-ons, interactive product displays, and virtual showrooms to help customers make the most of their shopping experience and also reduce return rates.

This approach is used by famous brands operating in Canada, such as Sephora, a makeup, perfume, beauty, and skincare store. Sephora has introduced AR-based virtual try-ons that allow customers to see how makeup products will look on their faces without physically applying them.

Another famous brand that also works in Canada, IKEA, uses AR to help customers visualize how furniture and home decor items will look in their homes. With the help of the IKEA Place app, users can place virtual furniture in their physical spaces using their smartphones.

Automation

Retail automation involves various technologies, including robotic process automation (RPA), automated checkout systems, and robotic fulfillment centers. These technologies streamline operations, reduce labor costs, and enhance efficiency.

RPA automates repetitive tasks such as data entry, order processing, and inventory updates, allowing the staff to focus on more strategic activities. Automated checkout systems, such as self-checkout kiosks and cashier-less stores, reduce wait times and improve the customer experience. These systems use sensors and AI to automate the checkout process. Robots in warehouses and fulfillment centers speed up order processing and reduce errors, ensuring quicker delivery times and improved accuracy.

Sobeys is a national supermarket chain in Canada that has adopted automation technologies in its warehouses. Robots pick and pack orders, improving efficiency and reducing operational costs.

Conclusion

The retail industry in Canada has seen dramatic changes over the past five years due to a combination of many factors, from the COVID-19 pandemic to economic shifts and technological advancements. Reacting to changes and implementing innovation has become essential for retail businesses that want to stay relevant and competitive during this turbulent time.

The ability to adapt quickly to these digital transformations has already proven essential and will only become more critical as the industry continues to evolve. If you are looking for a reliable partner who can guide you through all the innovations and help implement the changes successfully, reach out to Integrio for a free consultation to help your business adapt, grow, and prosper.