Retailers must accelerate investment in technology to digitalise physical stores or risk becoming irrelevant, according to analysis by Institute of Grocery Distribution (IGD).
According to IGD’s latest Retail Analysis report, "The hyper-connected store: the retail revolution", posits that for retailers to stay relevant in the digital age and thrive under complex industry pressures, they need to reinvent their real estate and evolve operations to create a ‘unified commercial offering’.
This means joining up online and offline shopping experiences by linking stores to ecommerce, loyalty, retail media, and data and insights.
“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,” said Toby Pickard, Retail Futures Senior Partner at IGD.
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.
“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.”
While some have predicted ‘the death of the high street’ with the growth of online shopping, IGD forecasts that physical stores will retain their market share for years to come, making up approximately 94 per cent of the total grocery market through to the end of the decade.
“The future of retail lies in investing in the store estate, not replacing it. That’s where loyalty, sustainability, and profitability converge,” said Vusion Group’s CEO UK & Ireland, Roy Horgan, who contributed to the report.
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.”
The report, which also provides step-by-step advice on how to digitalise physical stores, cites consumer behaviour as a major driver behind the need for change. IGD’s analysis shows consumers are looking for more engagement through personalised and customised interactions, while also seeking greater transparency and traceability to ensure that businesses are operating in line with their expectations.
In a rallying cry to the industry, IGD 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," said Pickard. "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.”
Download the IGD Retail Analysis report "The hyper-connected store: the retail revolution", here.