Digitalise retail stores or fall behind

Why must retailers digitalise physical stores to succeed? And how do you achieve it? Find out in 'The hyper-connected store: the retail revolution'.

For retailers to stay relevant in the digital age and thrive under complex industry pressures, you need to reinvent your real estate and evolve operations to create a ‘unified commercial offering’. This is the argument we put forward in our new Retail Analysis report, released today.

‘Unified commerce’ means joining up online and offline shopping experiences by linking stores to ecommerce, loyalty, retail media, and data and insights.

Drive efficiencies and profitability

Toby Pickard, Retail Futures Senior Partner at IGD says:

Retailers have to accelerate their investment in technology to digitalise the physical store and create a hyper-connected environment that enables them access to unparalleled data and insights to drive efficiencies and profitability.

The report contextualises the discussion around growth-hindering challenges affecting the retail industry, such as geo-politics, economic uncertainty, labour costs, cyberattacks, and legislative changes.

Pickard continued:

In the face of significant challenges, retailers are leveraging technology to boost productivity and cut costs by enhancing stock management, efficiency, and customer experience. For example, Mark Thomson, Retail Industry Director EMEA at Zebra Technologies, shared that they are jointly developing an AI Agent that will reduce questions to supervisors, speed up the time to competency, and ensure ‘operational excellence’ in stores.

However, no one is embracing the whole suite of solutions available to create a truly connected, digitalised store, which is what will provide the edge needed to adapt and succeed in a rapidly evolving market.

Investment, not replacement

While some have predicted ‘the death of the high street’ with the growth of online shopping, we forecast that physical stores will retain their market share for years to come, making up approximately 94% of the total grocery market through to the end of the decade.

Vusion Group’s CEO UK & Ireland, Roy Horgan, who contributed to the report, said:

The future of retail lies in investing in the store estate, not replacing it. That’s where loyalty, sustainability, and profitability converge.

Horgan continued:

The connected store is no longer a concept, it's a necessity. This isn’t just about operational efficiency; it’s also about enabling hyper-personalisation, empowering store colleagues, and making the shelf the most powerful media and supply chain node in retail. However, retailers should think very carefully about what infrastructure and systems they invest in to achieve this.

Consumers driving change

In the report, which also provides step-by-step advice on how to digitalise physical stores, we discuss consumer behaviour as a major driver behind the need for change. Our analysis shows consumers want greater transparency and traceability to ensure businesses are operating in line with their expectations, as well as more engagement through personalised and customised interactions.

Technologies that enable these outcomes will see positive results for retailers and suppliers. For example, Instacart’s Chief Connected Stores Officer, David McIntosh, told us:

Smart carts drive in-aisle purchase decisions through tailored recommendations and ads based on shopper behaviour and location.

In a rallying cry to the industry, Toby Pickard warns that the race is on to evolve physical stores, and businesses should collaborate to accelerate their progress:

As consumer expectations evolve and competition intensifies, fostering a culture of collaboration will be key to building a more resilient and future-ready industry. Collaboration not only accelerates innovation, but also reduces implementation costs, making tools accessible to retailers of all sizes.

Those who lead this transformation will shape the next era of retail. Retailers that wait for certainty will be left behind.

Alternatively, non-subscribers can read a preview of the report in the highlights.

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