How do you digitalise physical stores?

While some believe online retail is the key to future success, our analysis reveals that physical stores are here to stay, maintaining around 94% of total grocery market share through to the end of the decade.

This is why our recent Retail Analysis report, ‘The hyper-connected store: the retail revolution’, makes the case for reinventing physical stores as intelligent, efficient, and profit-driving powerhouses via digital technology. In fact, the report issues a warning: the race is on; get moving or lose ground.

Industry is fast approach a tipping point where it can no longer wait, unless it wants to get left behind and become irrelevant.

Laura Jacobson, Retail Futures Senior Partner, IGD

How tech is helping retailers and customers

The report shares various examples of how digital technology is helping businesses.

Many retailers are starting to embrace generative artificial intelligence (GenAI) and handheld devices to help store associates. For example, Target in the US is rolling out a new GenAI tool which can answer on-the-job process questions, coach team members, and support store operations.

There are also tools to help improve customer experience, as Mark Thomson, Retail Industry Director EMEA at Zebra Technologies, explains:

Many retailers use our Scan and Go solutions to make the shopping experience efficient both for the retailer and the shopper. This solution is developing even further, with targeted adverts or promotions directly on the devices, and the ability to complete the payment process directly on the device.

By integrating technology across every stage of the shopping process, retailers and suppliers can create a more engaging and frictionless experience that will ultimately drive shopper loyalty and business growth.

Acceleration through collaboration

Consumer expectations have evolved with the technologies permeating their daily lives: they want better engagement, improved personalisation, and more transparency from who they spend money with.

For retailers to meet and even exceed expectations, and enable their long-term growth, collaboration will be critical to help advance the tech innovations they need to succeed. By working together, retailers can share valuable data, establish industry-wide standards, and jointly invest in solutions to make them more affordable and scalable. Solutions like AI-powered forecasting, automated inventory systems, and seamless checkout technologies.

Some retailers are already coming together to accelerate their progress. In 2024, Edeka (Germany), MC (Portugal), Shufersal (Israel) and Zabka (Poland) launched ‘Disrupt Retail’ to source innovative technology-based solutions that will take retail to the next level.

How to digitalise your physical stores

You can find out more about the value and necessity of digitalising physical stores by reading ‘The hyper-connected store: the retail revolution’ (available to Retail Analysis subscribers).

In the meantime, here are the report’s recommended steps for digitalising your physical stores:

• Appoint a chief store digitisation lead
  Treat store digitisation as a business transformation, not a tech rollout. Give it executive ownership, cross-functional backing, and clear performance accountability.

• Redesign the store of the future around profitability, not just experience
  Move beyond customer experience pilots. Build a profit-first store model that integrates revenue generation (media, data), cost reduction (automation, analytics), and customer engagement.

• Make store data your single source of truth
  Shift from fragmented systems to an integrated, real-time store data platform that connects inventory, operations, and shopper activity. Make data the engine of decision-making.

• Upskill every store leader in digital
  Redefine store leadership roles with digital fluency at their core. Train store managers to lead tech-enabled teams, manage new KPIs, and deliver measurable digital ROI.

Looking for help?

Did you know IGD offers consultancy services, such as workshops and retail safaris? If you want a hand with getting ahead of the retail revolution, please visit our IGD Consulting page.