Why retail stores are lagging behind in digital transformation

How we shop has evolved. When you can browse for nearly anything online in your PJs from your couch, how can physical retailers possibly expect to compete?

E-commerce has a digital advantage

The retail sector has seen an almost 7% decrease in revenue since 2011, mostly due to digital ecommerce advancing past the physical shopping experience. Online shopping has made massive strides in the past decade due to it's innate digital abilities that enable it to constantly transform.

E-commerce retailers know exactly how much product is available, exactly which products are being viewed, and their conversion rate which means they can make optimizations and actionable decisions instantly with the data they collect.

These digital advantages enable e-commerce to rapidly develop new innovations such as faster shipping times from logistics optimizations and new digital tech like AR previews & virtual showcases that are actually effective, not just gimmicks.

Our stores just aren't at the level of infrastructure shoppers expect anymore, and we're struggling to make digital transformations. If we can do this online, why can’t we do the same with our physical stores?

Physical retail is taking too long to keep up digitally

Online shopping will always be more convenient than visiting a physical store, and it’s time for retailers to approach shopping from a different angle to gain a leg up on the competition. Leading retailers know that playing to physical retail's strengths and integrating parts of the digital world into the physical has become key in staying competitive.

There are after all, certain things that only physical retail can do that online can't. Yet, despite 95% of retailers say they are increasing digital investments, we're barely seeing any new technology enter the mass market.

Did you know that 75% of shoppers prefer to buy from brands that provide a personalized and engaging in-store experience.

Why is it so difficult for retail to adapt and innovate?

Despite digital innovations and customer experience projects being at the forefront of virtually every retail CIO and CXO's checklist, we're still seeing retailers struggle to make impactful changes at any speed.

For example, self checkout machines were first introduced in the 1990s and it took 30 years and a pandemic for them to only just begin to become widely adopted.

Few changes between self checkout machines introduced in 1998 by NCR and modern checkout machines
Few changes between self checkout machines introduced in 1998 by NCR and modern checkout machines

From clothing stores, bookstores, grocery stores, home improvement centers, and department stores, retail is complex. You can't simply apply something that works at one type of retail environment into another, which means you're making massive risky infrastructure projects that take forever and are expensive.

Most of the time you might not even be sure if its worth it, and no one wants to be the first to take the leap of faith. The thing is, innovation doesn't have to be difficult. It's easy to see a digital transformations as a huge nebulous cloud of uncertainty, but in reality many retailers are approaching it wrong.

You need to understand your physical spaces before you can improve them

Just like how e-commerce has the strengths to fully understand everything that happens on every part of their platform to make optimizations, brick and mortar needs to do the same.

Could you imagine if the only information Amazon had to work with was how many people entered the front page, and what they end up paying at checkout for?

Challenge: Retail stores are a black box that we can't peer inside

Currently, that's the state of retail data: a black box. Existing understandings of our stores come from decades old people counters. You know how many enter and how little stock you have when they leave, but nothing about what’s happening inside to lead to that decision.

Analysts have to look at a black box where they have to make guesses of what's happening by only understanding what happens outside of it. That just doesn't make sense.

Retailers don't have a good understanding inside of the retail black box.
Retailers don't have a good understanding inside of the retail black box.

Solution: Bring smarter analytics to our physical stores

Data tools like google analytics enables e-commerce retailers to track exactly where shoppers are going and looking at, what goes in the shopping cart and comes out, and how effective changes are to their website. Just like e-commerce, our physical stores need tools like google analytics for the physical world.

We need data collection that unveils what's inside the box.
We need data collection that unveils what's inside the box.

Data isn’t a simple fix

Data isn't a simple fix to all your problems. If you're going to embark on better understanding your store, that's an investment into a form of digital transformation in itself. There are a few things however to keep in mind to make it easier.

First, take advantage of existing infrastructure

Implementing new dedicated hardware is expensive, takes forever, and just doesn't make sense. You're spending an incredible amount of money on hardware that will be out of date, leaving you stuck with devices built for an outdated purpose.

Why buy new tech when you have existing sensors like your security cameras to turn your physical space into a software one?

Second. don't just collect data

There's no value to data without being able to make decisions with it. When exploring options, make sure you're not spending more on hiring analysts to comb through your new data. Explore AI and automated platforms or dashboards that make your existing job easier.

Discover new tools to answer data questions
Discover new tools to answer data questions

Third, explore fast adopting tech

Don't spend years attempting to forcibly implement a project. Adopt projects fast, and if they don't work out well, explore alternative solutions that may work better for your use case. Don't spend years on a POC if you can implement other solutions to test in a fraction of the time. Sometimes certain tools just work better for certain spaces.


Our physical retail stores are behind, but it doesn’t have to be this way. By adopting some ideas from how ecommerce operates and playing to the strengths of our physical retail stores, we can not only stay competitive but offer customer experience centric solutions that only physical retail can do.

With tools such as Zensors that enable you to understand why you're taking actions, you can make safe calculated steps to advancing your digital transformations and guarantee any innovations you make keep you ahead of your competition.

March 13, 2023
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