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How retail is embracing digital twins

With retailers setting their sights on enhancing operations in ways that traditional analytics or simulations can no longer deliver, digital twins look set to transform every industry element.

Digital twin technology is widely considered one of the most exciting industry 4.0 technologies. It enables businesses to create a digital replica of almost any physical entity, from sensors, devices, and systems to people and processes. Creating a virtual representation of nearly anything you can imagine allows teams to make data-driven decisions based on the results of the digital copy.

Many cities are using digital twinning to plan and design the building of more sustainable smart cities. Nvidia CEO Jensen Huang also revealed ambitious plans last year to take this concept to another level by creating a virtual copy of our entire physical world using its Omniverse 3D modelling software.

Although this technology is typically associated with industrial and manufacturing industries, it's now breaking into the world of retail.

How digital twins provide value to the retail industry

There is a notoriously complex relationship between every aspect of retail, from product placement to every step of the customer journey. But it's even more challenging to visualize any of this with floor plans and multiple emails. Alternatively, by creating an exact digital replica of a physical store, leaders can bring it to life with real-time data and take interactive virtual walk-throughs to test future changes before rolling them out in a live environment.

Inexpensive IoT sensors can capture live operational behavior at multiple touchpoints and be fed into the digital copy of a store. Data from consumer activities can be added and monitored, making it possible to customize distribution to fit their shoppers' patterns of interest. Visualization tools will also enable managers and employees to explore and experiment with optimal layouts and visitor interactions while also rebuilding work schedules based on data-driven insights.

Turning the physical world into data points and combining them with 3D technology allows retailers to think even bigger than the customer experience. The most significant opportunity is arguably in the not-so-glamourous side of retail when managing inventory, product selection, and POS displays across multiple stores. For example, a digital blueprint will make it much easier to deliver a consistent brand experience across multiple locations worldwide.

Reducing waste in supply chains

Over the last two years, we have all witnessed the fragility of the global supply chain. As a result, the industry is exploring new ways to improve processes, optimize international operations, and unlock insights that until now were hidden inside silos. The race to accelerate innovation, reduce costs, and remove complexity in supply chains is moving quickly, promoting the widespread belief that simulating all assets and interconnections could be the answer.

Digital twins can better manage their supplies by proactively identifying bottlenecks, supply shortages, buying trends, or other external factors such as traffic and weather in real-time to avoid any unnecessary disruptions. But most importantly, it reduced waste at every stage of the supply chain process.

Traditionally, retail buyers would fly to multiple continents to view new collections and place orders. But the European fashion house Retail VR leveraged Matterport's digital twin technology to create a more sustainable approach that was fit for a digital age. By creating a 3D replica of a client's apparel showroom and integrating its product catalogue with an additional layer of multimedia functions, their client reduced 1,200 tons of carbon emissions.

Increasing sustainability with virtual twins

As the so-called "eco-wakening" gathers pace, consumers are beginning to demand ethically and sustainably sourced goods. Welcome to a new age of sustainability where businesses are rated on their environmental and social responsibilities. For example, the WEF has currently signed up over 50 companies to adopt its Environmental, Social, and Governance (ESG) framework, which produces an environmental score for the world to see.

The jury is still out on whether companies that take their environmental or social responsibilities seriously will perform better. The problem with such ratings is that some will inevitably try to game the system and risk being exposed for merely greenwashing or virtue signaling their way to success.

Rather than getting excited by the next big thing in tech, it's crucial for retailers to clearly define the exact problem they are trying to solve and the business outcomes they want to create. It would be best not to think about digital twin technology until they have a clearly defined set of goals. Although it's easy to be distracted by the exciting opportunities around delivering new innovative experiences, the real value will be generated by the insights unlocked through the data retailers generate.

With the right plan in place, digital doppelgängers can improve processes, optimize operations, and accelerate innovation when retailers need it most. But it's not just the consumers that benefit or the retailer that benefits. Everyone can feel the value of this technology, from the store manager managers and production teams to the supply chain managers, data specialists, and even the planet we call home.

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