Key Takeaways:
- Digital twins are transforming retail operations, sales and the supply chain
- Real-time data enables testing, simulation and predictive decision-making
- New levels of customer experience and personalization are possible
- Now is the time to get on board and maximize the potential
Future of Retail: The Role of Digital Twins in Shaping Consumer Choices
Digital twins are having a growing influence in shaping consumer behavior and choices across the retail sector. The combination of new technologies are helping forward-thinking retailers create digital representation of physical objects, which are changing the game for consumers, staff and the supply chain alike.
Despite the possibilities of digital twin technology, 47% of IT decision-makers still haven’t heard of it. This is good news for retail firms, who can still gain early-mover advantage by embracing the innovation. This blog explores where digital twins can be applied, the new developments that will shape their future, and how to approach adoption.
Understanding Digital Twins In Retail
Firstly, it’s important to define what digital twins are. They are virtual, faithful recreations of physical items, which can be objects, systems or processes. They bring together four technologies - the Internet of Things (IoT), the cloud, artificial intelligence (AI) and extended reality (XR) - to collect, store and utilize real-time data in creating the virtual models. Digital twins can also be updated in real-time with new data, making them ideal for simulating operations and informing decision-making.
In the retail industry, three main types of digital twin have emerged:
- Product Twins: models of physical products to simulate how they will perform in different circumstances and conditions, so that adjustments can be made before full production begins. As well as being able to monitor performance, this level of analysis can also support lifecycle management and predictive maintenance.
- Customer Twins: recreations of typical customer profiles to simulate their behaviors and preferences. This allows retailers to identify the right targeted messaging, recommendations and offers to be sent to customers as part of hyper-personalization efforts, without the risk of compromising or misusing personal data. These digital twins can be used to test dynamic pricing models and recommendation engines powered by behavioral analytics, consistently striking the right balance between profitability and customer satisfaction.
- Operational Twins: modeling of systems and operational processes so that new ideas and efficiencies can be tested and verified before being introduced. This can be applied to real-time shelf monitoring in stores that supports greater inventory accuracy, different supply chain scenarios and consequences for risk mitigation, and even simulations of entire warehouse layouts to maximize storage capacity and streamline product flows.
Discover the power of digital twins here: 10 Ways Digital Twin Software is Transforming Industry 4.0.
Applications of Digital Twins in Shaping Consumer Choices
1. Personalized Shopping Experiences
Digital twins can be used to suggest personalized product options, and to allow customers to visualize products using augmented and virtual reality before they commit to a purchase. These two innovations can also come together in the form of a virtual showroom, where customers can browse, discover and buy products in the same way that they would in a physical store.
Successful deployments of digital twins for personalization include The Fit Xperience, where shoppers are scanned in-store and have products suggested for them based on their body shape and fit; and Walmart stores where customers of their optician facilities can virtually try on new frames and see how they suit their faces.
Learn more about the role of augmented reality for retail innovation: Transform Your Retail Experience with Advanced AR Solutions
2. Enhanced Product Development
Digital twins have the power to make the development of new products much quicker and much more informed. Real-time consumer insights can not only support rapid prototyping and quick refinements of draft designs, but can also inform ongoing improvements and enhancements with feedback data gathered in the process validating the designs.
In both cases, manufacturers can move to physical production with more confidence that their designs will be a success, with informed revisions of ideas, in-depth testing and a greater degree of product optimization.
3. Optimized Supply Chain Management
The real-time data involved in digital twins can be instrumental in optimizing inventory and adding predictive modeling capabilities into it, especially when collaborating with vendors and their own sales and inventory data. New levels of visibility and informed decision-making have been found to improve sales, turnaround times and operational efficiency by as much as 15%, which can make a real difference in cost and profitability terms.
Similarly, digital twins optimize delivery strategies by allowing companies to simulate and refine logistics processes virtually. This approach enables businesses to test and implement delivery improvements without risking customer frustration, ensuring smoother, faster, and more reliable service delivery.
4. Immersive In-Store Experiences
The ability to create and implement interactive 3D product models can redefine the physical shopping experience, at a time when many shoppers favor the speed and convenience of online retail. Developing smart stores and interactive displays can add new possibilities to the browsing and enhanced product discovery that customers can explore in person, while retailers can also use digital twins to test out changes to store configurations and product layouts.
5. Predictive Consumer Insights
Being able to accurately forecast demand for different products at different times can make a real difference across inventory and the supply chain. Digital twin data can help spot trends and analyze current sales rates and supply chain flows, so that stock levels are constantly and proactively right-sized to demand.
The same principle can also be applied to customer retention. The behaviour of each individual customer can be predicted, based on their behavior and preferences, so that retailers can engage with them through targeted offers and messaging before the customer is lost. This predictive approach can help substantially reduce customer churn in a marketplace where it’s never been easier to shop around.
6. Sustainable Retail Practices
Retailers are increasingly expected to take responsibility for reducing their environmental impact, and digital twins support this through simulating sustainable designs for packaging, and modeling and reducing operational resource use. IoT sensors can generate data from machinery that can be used to guide energy efficiencies, as well as changes to processes that cut unnecessary energy and cost consumption without compromising performance or quality.
In fact, digital twins have become so pivotal to sustainability efforts that 57% of organizations now view this technology as a key driver of their environmental strategy, recognizing its potential to transform both operational practices and ecological responsibility.
In Summary: The Future of Digital Twins in Retail
The capabilities of digital twins in retail will only continue to expand in the months and years ahead. From our expert standpoint, we’re looking forward to new developments including:
- AI and Machine Learning Integration: using generative AI to create virtual prototypes and optimize highly refined customer journeys.
- Emerging Technologies: leveraging augmented and virtual reality for even more immersive consumer engagement.
- 5G Connectivity: Real-time updates to functions like AR-enabled smart mirrors in stores require low latency and rapid response that 5G will be able to deliver.
- Expansion into New Areas: growth of the use of digital twins in grocery, luxury and omnichannel retail.
- Sustainability Focus: leveraging digital twins to simulate carbon-neutral supply chains and optimize energy consumption in stores, further enhancing retailers’ eco-friendly and ethical credentials.
Given the scale of digital twins’ potential in retail, now is the time to get on board with the technology if you haven’t done so already. Partnering with a digital twin expert like Ciklum gives you access to comprehensive expertise, unique capabilities, a proven track record, and the ability to integrate with other advanced technologies.
Don't wait—future-proof your business now with Ciklum's innovative digital twin solutions. Get in touch with our team today.
