2024’s Retail Odyssey: Going Small, Artificial, and Augmented!

Predictions 2024: Digital
Commerce
Brendan Witcher
Vice President, Principal
Analyst
January 24, 2024

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© Forrester Research, Inc. All rights reserved.
In 2024, Forrester stated “Digital Commerce Will Go
Small, Artificial, And Augmented”
Exactly what we meant was:
•Only 25% of businesses will benefit from genAI-powered digital commerce.

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•Smaller, targeted moves will replace 50% of major tech replatforming projects.

7
•At least 25% of digital tech spending will shift away from maintenance.

8
•Social media giants will partner with 3 retail media networks for commerce.

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•Social media giants will partner with 3 retail media networks for commerce.
•Around 6% of businesses will boost rep productivity with computer vision and
augmented reality.

10
To understand what drove these predictions, we need to
accept some harsh realities of around commerce.

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1%
8%
68%
23%
0%
Very Poor Poor OK Good Excellent
The Distribution of US CX Index Scores
To understand what drove these predictions, we need to
accept some harsh realities of around commerce.
What we’ve been doing has gotten us to a state of “good”,
not so much to “great”.

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12
© 2023 FORRESTER. REPRODUCTION PROHIBITED.
“Good is the
enemy of great.”
- Jim Collins

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“Everyone is doing personalization.”
Are they really?
92%
“We’ve made significant
investments in personalization and
related technologies.”
— Digital professionals
Base: 50 digital retail professionals; 5051 US online adults
Source: Forrester’s Top Retail Tech Initiatives for 2021 Survey; Forrester's Retail Benchmark Recontact Survey, 2022

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“Everyone is doing personalization.”
Are they really?
92%
“We’ve made significant
investments in personalization and
related technologies.”
— Digital professionals
33%
“Companies do a good job
creating relevant experiences
for me.”
— Consumers

15
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Digital leaders must not
be blind to how their
strategic technical
decisions are leading to
missed commerce
opportunities.

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How digital pros think about the
applications, costs, upgrades, and
overall stack designs of their
commerce solutions…

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Tech Strategy
Customer
Experience
…is ultimately what leads
to achieving or failing to
achieve business
outcomes.
How digital pros think about the
applications, costs, upgrades, and
overall stack designs of their
commerce solutions…

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Only one-quarter of
businesses will
benefit from
genAI-powered
digital commerce…
…and despite the
hype, that makes a
lot of sense.

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Only one-quarter of
businesses will
benefit from
genAI-powered
digital commerce…
…and despite the
hype, that makes a
lot of sense.
• At the core of the discussions around genAI, digital pros
and CIOs are using terms like experimenting, testing, trying,
learning – very few are using terms like “doing” and
“launching.”
• Use if genAI to automatically tailor content is running into
some snags as copywrite issues come into play.
• Increasingly privacy-aware consumers are calling for tighter
controls over their data, and by extension all use of data.
• Given the blow-ups and scrutiny being pointed at
companies like Facebook, Amazon, and Google, many
organizations are in wait and see mode for more serious,
wide-reaching applications.
• GenAI, like most new innovations, is being used by
organizations to improve ops and increase capabilities of
knowledge workers, not necessary to improve CX.

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Smaller, targeted
moves will replace
50% of major tech
replatforming
projects…
…because money
and time matter.

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Smaller, targeted
moves will replace
50% of major tech
replatforming
projects…
…because money
and time matter.
• In 2024, half of replatform projects won’t be of the “rip &
replace” commerce/OMS flavor, but instead will be shorter
time-to-value, needle-moving improvements like
decoupling the front-end for agility (although many have
already done this first step).
• The attributable value of customer-facing commerce tech is
now a critical part of the strategic planning process.
• Smaller moves of targeted solutions help save time, effort,
and money while solving clearly defined problems.
• Small replacements of commerce parts inherently bring
much less risk into technology and organization change
management.
• Good example of this: adoption of packaged commerce
search solutions or product recommendation tools.

22
At least 25% of
digital tech
spending will shift
away from
maintenance…
…with a portion
moving into
maintaining new
tech investments.

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At least 25% of
digital tech
spending will shift
away from
maintenance…
…with a portion
moving into
maintaining new
tech investments.
• Retailers and brands have learned a hard lesson: uncertain
economic conditions require more capital flexibility in the
face of the next unexpected event.
• Most retailers are making net new investments in tech, but
finite capital means having to pay for that through reduced
maintenance costs from existing technologies.
• Some of this happens organically, as retailers and brands
shift on-premise tech to cloud tech – sometimes even with
the same vendor.
• Some of this happens as retailers and brands put pressure on
solution providers to help with the burden of maintaining
profitability.
• Of course, net new tech enabling net new capabilities often
comes with net new maintenance costs; however, as a ratio,
the cost/capability for much of the industry will decline.

24
Social media giants
will partner with 3
retail media
networks for
commerce…
…in fact, they
already are.

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Social media giants
will partner with 3
retail media
networks for
commerce…
…in fact, they
already are.
• Companies that play big roles in consumer’s lives have
always had a love/hate relationship with one another, but
they have learned that playing together is beneficial.
• Examples: Meta/Dollar General, Pinterest/Tesco
• Why such a low number? Because partnerships need to
make sense for both parties; in truth, relatively few industry
retail media networks will generate large enough volumes
of traffic (and income) to make it worthwhile.
• 2024 will set the tone for how these relationships work,
especially from a data sharing perspective; regardless,
anyone participating will need to vet how their own
technologies enable them to get in the game.
• This puts pressure on anyone not playing at this level –
retailers/brands must use strategic tech investments in even
smarter ways to maintain or grow their share of market.

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…because what
choice do they
have?
6% of businesses
will boost rep
productivity with
computer vision
and A/R…

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• In the US, retail open employment roles expect to be higher
than any other industry every year for the next ten years.
This means work requiring labor won’t have the bodies in
place to execute what needs to be done.
• Retailers and brands today are using computer vision tech in
physical spaces such as stores, warehouses, and even at
their suppliers – much for the purpose of replacing manual
work and getting better insights into operations.
• GenAI has been getting a lot of attention as of late, but
computer vision (a component of AI) will play a significant
role in retail’s future when it comes to both physical and
digital retail, especially as it shifts from just an operational
solution to a customer experience solution.
• A/R takes computer vision to then next level; rather than
automating processes, it enables workers to do things faster
and more accurately.
6% of businesses
will boost rep
productivity with
computer vision
and A/R…
…because what
choice do they
have?

Thank You.
Brendan Witcher
Vice President, Principal Analyst

2024’s Retail Odyssey: Going Small, Artificial, and Augmented!

2024’s Retail Odyssey: Going Small, Artificial, and Augmented!

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