in-store transformation
in-store transformation
The in-store
transformation
Bricks and mortar retail stores need to up their game.
Technology could give them a significant boost.
By Praveen Adhi, Tiffany Burns, Andrew Davis, Shruti Lal and Bill Mutell. Global Editorial Services
McKinsey & Company.
Now should be a great time in US
retail. Consumer confidence has finally
returned to pre-recession levels.
Americans have seen their per capita,
constant-dollar disposable income rise
more than 20 percent between the
beginning of 2014 and early 2019.
Yet despite the buoyant economic
environment, many brick-and-mortar
stores are struggling. In part, that’s due
to the rise of e-commerce, which since
2016 has accounted for more than 40
percent of US retail sales growth. In
McKinsey & Company’s recent consumer
survey, 82 percent of US shoppers
reported spending money online in the
previous three months, and the same
percentage used their smartphones to
make purchasing decisions.
Not surprisingly, younger shoppers
favour e-shopping even more: 42
percent of millennials say they prefer the
online retail experience and avoid stores
altogether when they can.
Meanwhile, the strong economy and
record-low unemployment are increasing
wage pressure and store operating
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costs. In the last three years, more than
45 US retail chains have gone bankrupt.
Retail stores have a real future
Rumours of the physical store’s death
are exaggerated. Even by 2023,
e-commerce is forecast to account for
Now they need to think about how
they use emerging technologies and
rich, granular data on customers to
transform the in-store experience. The
rewards for those that get this right will
be significant: 83 percent of customers
say they want their shopping experience
it is becoming increasingly clear
that the future of retail belongs to
companies that can offer a true
omnichannel experience
only 21 percent of total retail sales and
just 5 percent of grocery sales. And with
Amazon and other major internet players
developing their own brick-and-mortar
networks, it is becoming increasingly
clear that the future of retail belongs
to companies that can offer a true
omnichannel experience.
Retailers are already wrestling with
omnichannel’s demands on their supply
chains and back-office operations.
to be personalised in some way, and
our research suggests that effective
personalisation can increase store
revenues by 20 to 30 percent.
Several new technologies have
reached a tipping point and are set
to spill over onto the retail floor.
Machine learning and big-data analytics
techniques are ready to crunch the
vast quantities of customer data that
retailers already accumulate. Robots
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