Cybersecurity and data protection capabilities are expected to emerge as key differentiators for technology solutions for retailers in 2018, a new report has predicted.

Published by data and analytics company, GlobalData, 'Technology Trends in Retail, 2018' explains that with digital technology having become such a strategic imperative for all sectors, deploying the right technologies is essential for differentiation and survival.

The report points to various digital solutions that drive greater personalisation and a smoother shopping experience across online and mobile platforms, as well as in brick-and-mortar stores, such as artificial intelligence for customer service, analytics and smart supply chain management, but also interactive tools based on augmented reality and the latest digital payment methods.

Improving last-mile delivery is another major challenge for retailers this year, GlobalData says, which requires shorter delivery windows and innovative approaches such as small self-driving robotic vehicles.

"Personalisation can drive customer loyalty and the ability to collect more data about their behaviour and preferences," says Andreas Olah, lead analyst for digital retail at GlobalData. "By establishing what customers are likely to be interested in through the latest analytics and AI technologies, retailers can upsell more products and avoid going out of fashion."

Retailers are deploying a large number of Internet of Things (IoT) devices in their stores and warehouses to engage with clients and collect data through sensors, cameras and bluetooth beacons. But since most IoT devices are connected via open networks, they become increasingly vulnerable to cyberattacks.

Against this backdrop, GlobalData foresees cybersecurity and data protection capabilities to emerge as key differentiators for technology solutions in 2018.

The analysts say retailers will invest substantially in smart supply chain and inventory management capabilities this year to achieve cost savings, eliminate unnecessary steps in distribution, keep lower inventory levels and thereby assert greater control over their suppliers.

"Supply chain management systems are expected to get upgraded, with the addition of greater automation and predictive analytics, which is also increasingly powered by artificial intelligence and machine learning capabilities," Olah continues.

Retailers are also embracing digital payment technologies including digital wallets, mobile readers, integrated apps such as WeChat, as well as blockchain to provide a seamless omnichannel experience to customers.

GlobalData predicts that as shopping habits change and digital technologies advance, the automation of customer service based on AI and robotics combined with augmented reality experiences and new store formats will evolve further in the retail sector over the next few years.

"Instead of jumping on every trend bandwagon, retailers need to be judicious while selecting digital technologies, which should match customers' specific needs and the retailer's brand identity to address existing problems and challenges. In addition, customers should be allowed to choose their preferred channels of shopping and interaction rather than forcing them to use certain digital tools," Olah concludes.