Bringing the store into focus: How retailers are tackling physical retail’s digital black hole

For years, stores have played somewhat second fiddle to ecommerce as retailers rushed to invest in online transformation, especially post-pandemic when ecommerce boomed and brands placed their bets on that digital demand being sustained.

From investment in ecommerce platforms to online loyalty programmes and mobile apps, retailers were already going ‘all in’ on optimising every inch of the digital customer journey, even before the advent of AI.  Yet for all this innovation online – and even as bricks-and-mortar experiences a revival led by Gen Z and Gen Alpha – one part of the retail ecosystem has remained surprisingly disconnected: the store itself.

And that disconnect was the challenge put to retailers by retail technology analyst, publisher and author, Miya Knights, who was speaking at 4POS’ Retail Tech Trends Outlook event earlier this month.  Joining retail technology leaders, including Datos Insights, Vista and Datalogic, she explored how retailers are bringing the store back into focus and how they are beginning to close the gap between their digital and physical channels.

Knights opened by describing the stark reality of the store.  For most retail businesses, bricks-and-mortar remains what she described as a “digital black hole” – the polar opposite to online, where ecommerce teams hold near-infinite amounts of data on their customers.

She described how retailers know more about their customers than ever before online, from tracking browsing behaviours, purchase histories, loyalty engagement and product preferences in granular detail.  Yet, when those same customers walk into a physical store, much of that intelligence disappears.

“Online, they know everything about you,” she said.  “But when you walk into store, you are anonymous. You’re treated the same as an anonymous cash-paying customer.”

That mismatch is becoming increasingly difficult to ignore as ecommerce growth normalises following its post-pandemic peak, consumer behaviours evolve, with digitally fatigued younger customers seeking more human-led shopping experiences, and store estates come under pressure to work harder.  And the commercial imperative becomes even harder to overlook when research consistently shows that shoppers who engage across multiple channels are more valuable than single-channel shoppers.

The discussion repeatedly returned to a simple question: if retailers can personalise experiences online, why shouldn’t they be able to do the same in-store?  And, according to Knights, recognition is becoming the next major battleground.

Antavo’s recent UK consumer research showed that one of the most important factors influencing retailer choice is increasingly recognition. Its poll showed that 78% will stay loyal to brands that reward them for continued custom, with the strongest programmes combining tangible rewards with experiences that make customers feel recognised and appreciated.

As a result, loyalty programmes are evolving beyond traditional points, vouchers and discounts.  “Loyalty is no longer really a programme… it’s an infrastructure,” she said.

The ability to identify shoppers, understand their preferences and deliver more relevant experiences in-store is becoming just as important as collecting customer data in the first place when it comes to driving competitive advantage.

Retailers are recognising this need – and that shift is already influencing technology investment priorities within store environments, Alan Burt, Retail Technology Lead at Datos Insights, explained.

He described how self-service technology continues to grow despite periodic headlines suggesting some retailers, such as Booths, are rowing back on self-checkout.  Datos figures suggest that over 200,000 self-checkout terminals were shipped globally in 2024, with installations expected to continue growing over the coming years.

At the same time, retailers are increasingly investing in technologies designed to generate richer data flows – and subsequent visibility – across their stores.

“It’s that flexibility and modularity which we’re seeing more of,” said Burt.  “Rather than a huge self-checkout unit that has to have all the bells and whistles, it has to be the right kind of unit and the right kind of experience for that particular retailer and customer.”

Earlier this year, for example, Scotmid Co-op completed the rollout of a modular hybrid checkout solution from 4POS across 90% of its food stores and Semichem locations.  The deployment allows shoppers to self-serve while enabling colleagues to step in and support transactions through dual-facing screens, helping the retailer balance convenience, service and loss prevention. Scotmid said the modular architecture also gives it the flexibility to model different store configurations and adapt formats as customer behaviours evolve.

This need for flexibility is becoming even more important as store tech environments grow more complex, according to 4POS’ latest report, which warns too many retailers are still managing POS estates using procurement models designed for a different technological era.

“With growing pressures from AI adoption and rising infrastructure costs, brands need to rethink traditional POS architectures to ensure stores remain innovation-ready,” added Craig Bevan, UK Country Manager at 4POS. “Our approach addresses this by offering modularity to retailers, providing customer-tailored solutions which allow for that agility and future-ready foundation.”

Connecting the store is about far more than deploying new technologies or finding ways to connect point solutions, an operational reality that David Beer, Chief Revenue Officer at Vista, said was becoming more pronounced.

According to Beer, a typical mid-sized supermarket now contains more than 1,000 individual technology assets, ranging from self-service systems and mobile devices to digital signage, robotics, sensors and workforce solutions.

“Everybody is going down some form of self-service route,” he said. “Whether it is a kiosk, whether it is a hybrid solution, a self-checkout solution… [but] the more things you put in somewhere, the more things are likely to go wrong.”

As stores become more connected, they also become more complex. Beer argued that retailers need to think beyond deployment and ensure technology works effectively in day-to-day store environments.  “If you don’t think about how it actually operates in the store, then you won’t get the benefit of that investment,” he said.

The conversation also explored how products themselves are becoming part of the connected-store ecosystem.  Datalogic’s Paul Hewitt shared the example of how retailers are transitioning from traditional barcodes to GS1 Digital Link QR codes, which are capable of carrying significantly richer information.

While the technology offers clear use-cases for inventory management and waste reduction, Hewitt argued longer term the true value lies in the information it places directly in shoppers’ hands.  “You’ve got the power to give consumers information at the point of decision,” he said, whether that’s allergy information, provenance, sustainability credentials or authentication data to help consumers inform purchasing decisions.

This neatly reinforced that the success of the connected store lies not simply in collecting more data, but in using it more intelligently.

Taken together, the discussion painted a picture of an industry entering a new phase of digital transformation within physical retail.

For much of the past two decades, retailers have focused on digitising transactions, operations and customer engagement. The next chapter is about coming full circle and digitising the store itself, connecting customers, colleagues and products through data, elevating stores beyond spaces for transactions to where experiences and loyalty are built.

“The store isn’t going anywhere,” Knights concluded, and after years of operating as retail’s digital black hole, it is finally starting to come into focus.