Retailers are constantly under pressure to improve customer experience while simultaneously lowering costs. Recent external threats haven’t made that easier. Global tariffs, trade wars, and uncertainty make managing a complex and constantly evolving business even more difficult than it has been. Customer expectations are continuing to rise, while they simultaneously become more reserved in their spending. Retailers are turning towards digital twins to help navigate these challenges, leveraging this emerging technology to help address key challenges in the customer experience, store, and supply chain areas.  

What is a Digital Twin? 

A digital twin is a virtual replica that mimics a physical object or system in the real world. They often involve a digital representation (like a 3D product rendering) as well as a dynamic model that shows how it can be interacted with. Note that a digital twin must include the dynamic interaction component – otherwise, it’s just a 3D image.

How are Retailers Using Them? 

3D Interactive Product Models 

Retailers like Amazon, Wayfair, and IKEA have implemented digital twins in the furniture space to help customers visualize the item in their room. They do this by leveraging augmented reality technology. Customers can select an item on the website, then use their phone camera to “see” what the new product would look like in their space. 

This helps customer experience in a few ways. Customers can gain a better understanding of the product’s size and appearance compared to the rest of their room. This can help minimize disappointment when the customer receives and assembles the product, reducing costly returns and negative customer experiences. Customers can also tweak product features and options, helping reduce exchanges for future changes. Lastly, this ability to visualize the product in their space can help reduce the hesitancy on larger purchases. 

Store Modeling 

Digital twins are also playing a role in stores. Retailers have often been challenged by varying store layouts and the costs associated with making modifications to shelving, customer flow, and product placement. This variety creates challenges that need to be navigated almost at the individual store level, which can be time-consuming for brands with hundreds of stores. 

Creating a digital twin allows retailers to model and evaluate changes to stores before actually implementing them. They can adjust the model layout and review the performance of the twin before making investments in the hardware and labor to make the same change in stores.  

Lowes has recreated some of their stores as a digital twin and uses it to continuously optimize the shopper experience by overlaying traffic and sales patterns with the layout. They have also combined this technology with AR experiences to help validate the location and stock levels of products on the shelves.  

Guess is taking a different approach. Guess is using their store digital twins to help with associate training and helping with brand consistency. Merchants are using this technology to improve buying decisions and better inform stores on product placement. Guess has estimated that this has enabled a 200% productivity increase, and reduced costs for travel and printing materials previously used.  

Warehouses and Supply Chain 

Retailers are taking a similar approach with their warehouses and supply chains. Supply chain uncertainty from the pandemic and ongoing trade disputes make supply chain management difficult. Combine that with growing customer expectations for faster shipping and increasing return volumes, and it drives a need to model and understand a dynamic environment. 

Some retailers are building digital twins for their warehouses. Amazon and PepsiCo are using NVIDIA-enabled digital twins to plan and optimize their warehouses. Especially given how automated these fulfillment centers are, these twins enable retailers to model changes in productivity and efficiency with newer robots. This helps avoid unnecessary spend on tools that don’t actually drive optimized behavior, as well as model other layout changes. 

Beyond the digital twin for a warehouse, retailers are experimenting with digital twins for their entire supply chain. Vita Coco partnered with Relex to create a complete digital twin model for their supplier and fulfillment network. Integrating this twin with cost data, they were able to optimize their 18-month supply plan. They reduced costs, improved their planning processes, and better plan for the “what-ifs” that arise from managing a complex supply chain. 

Final Thoughts 

Digital twins are an emerging tool that retailers are exploring to help avoid unnecessary expenses, optimize operations, and better plan for uncertainty. While this tool isn’t something all retailers need today, it is an area that retailers could look to help further improve their operations. If you’re looking to learn more about this technology or others that could benefit your retail organization, reach out to our Clarkston retail experts for their perspective.