The role of the store: Merging digital and physical: PwC

In the digital age, physical stores are far from becoming obsolete. Instead, they’re reestablishing parts of an omnichannel retail ecosystem that can blend real-life experiences with digital technology.

Our 2024 Holiday Outlook Survey indicates that Gen Z and millennials, with their increasing spending power and preference for technology, are helping drive this change. These groups are spending more than Gen X and baby boomers. They’re also contributing to a resurgence in in-store traffic with their demand for engaging and interactive shopping experiences. They expect smooth and tech-enhanced shopping, regardless of whether they are buying online or in-store.

The store of the future, a frictionless, tech-enabled hub, will be more than just a place to buy things. It’s becoming an intelligent space for connected exploration of brands.

Why should retailers invest in the store of the future? Shifting consumer demands require transformation to stay relevant. While these enhancements can help improve customer attraction and satisfaction, they can also strengthen operations, including security and loss prevention.

What’s holding retailers back? The challenge lies in developing the proper technology infrastructure to support these complex retail environments.

Stores are not dead

Despite the rise of e-commerce, our research shows that brick-and-mortar locations remain pivotal to shoppers across generations. With 46% of consumers telling us they value the ability to see and touch products, and 40% enjoying the immediate purchasing option in-store — the top two factors helping drive store visits — physical locations continue to play a central role in product discovery and buying decisions. Especially during the holiday season, where 40% of consumers plan to shop in-store and 23% plan to do so on Black Friday.

Millennials still spend more during the holidays, but Gen Z’s spending power is steadily rising, with budgets growing by 59% over the past two years. These groups are more likely to be mixed-mode shoppers, purchasing items both online and in-store.

Gen Z in particular — though often perceived as digital natives — shows a strong affinity for in-store engagement, with 60% using stores for discovery and 56% for purchases.

For them, however, the journey is fundamentally omnichannel, incorporating online marketplaces (47% for discovery, 48% for purchase) and even GenAI (50% for research). In comparison, 29% of baby boomers are doing their research with GenAI.

Many consumers under the age of 45 prioritize in-store digital services far more than baby boomers and Gen X.

72% of Gen Z value self-checkout technology (versus 55% overall)
70% of Gen Z prioritize mobile payments (versus 54% overall)
68% of Gen Z cite the importance of store/brand apps when shopping in stores (versus 56% overall)

This generational gap calls for a versatile omnichannel retail approach.

By leaning into the strengths of omnichannel retail — the immediacy and sensory experience of stores , the convenience of online marketplaces and the personalization potential of AI — companies can offer complementary experiences that cater to various consumer needs. This strategy helps improve customer satisfaction by accommodating different shopping styles and creating new opportunities for brand engagement and loyalty across the purchase journey.

Elevate the tangible: Enhance in-store experiences with interactive product displays and equip your staff with in-store tech that can help shorten the path to transact.
Bridge the digital divide: Integrate online and offline interactions to allow for easy price comparisons and product research while in-store.
Generational customization: Tailor marketing and store experiences generationally, balancing high-tech solutions for Gen Z with traditional display experiences for baby boomers.

Automating the add-to-cart process

Many retailers are already pioneering connected strategies, merging physical and digital worlds to help create engaging shopping experiences. Those who are doing it well have adopted emerging technologies to transform stores into interactive spaces. The tech-powered store is repositioned as the hub, offering data-driven engagement centered around improving customer satisfaction and market share.

Here’s an example of how a retailer can bring these seamless shopping experiences to life.

Imagine running a futuristic clothing store during the holiday rush. As a customer enters through a digital turnstile, your system instantly recognizes them via your app, where their payment information and style preferences are securely stored.

They’re there to pick up an online order but decide to browse for a last-minute outfit. You’ve equipped them with a smart tote that tracks them through your holiday-themed aisles.

When the customer places a jacket in the tote, sensors automatically update their digital cart with their choice. If they switch the jacket for a different color, the system updates accordingly in real-time — no need for manual scanning.

Once done, the customer picks up their online order at the designated spot and walks straight out without waiting in line at a traditional checkout. Your system charges their saved payment method and sends a detailed receipt to their app, also updating their loyalty points. This seamless process is not just about skipping lines — it can also help revolutionize shopping effectiveness and accuracy.

The integration of digital apps for in-store use helps retailers gather essential cross-channel behavior data on consumers, resulting in more personalized and effective services. This strategy can address the diverse needs of different consumer segments while capturing the value of physical retail space.

Computer vision and radio frequency identification (RFID) technology can provide real-time inventory updates and help streamline stock management. Over time, these technologies also have the potential to reduce theft to a great extent. Frictionless shopping combines tech convenience with a personal retail touch, helping to create a smooth — and safeguarded — personalized experience.

Secure long-term buy-in: Creating a seamless retail experience can take time. It’s important to have stakeholders committed to sustain investment, resources and backing as the anatomy of shopping continues to skew “frictionless.”
Data architecture is important: While initial pilots are relatively easy to deploy, scaling can reveal operational gaps. Linking activities, behaviors and processes across a company's retail footprint requires substantial cloud capacity. Establish a connected, scalable foundation for data storage and analytics that’s compatible with frictionless technology.
Enhance cybersecurity measures: As retail environments become more integrated with advanced technologies, the potential for cyber risks and fraud increases. Develop a holistic cybersecurity strategy with the store of the future in mind, including advanced fraud detection and prevention systems to safeguard customer data and transactions.
Frictionless checkout: Invest in seamless checkout technologies that can allow customers to collect their desired products and leave without the need to wait in lines.
Master the last mile: Improve in-store pickup and return processes to attract younger consumers and turn logistics into opportunities for additional engagement and sales.

From online to onsite: AI’s impact in the retail revolution

With the rise of AI-driven innovation, like styling assistants and dynamic product displays, retail operations are transforming, leading many consumers to rethink how they interact with brands and decide on purchases.

Forty percent of consumers in our survey say they’re more likely to shop in-store when offered contactless payment options. Retailers are expanding their adoption of technologies like mobile wallets and just-walk-out systems in response to this demand. RFID is already helping transform inventory management — with computer vision on the cusp of expanding the scope of analytics and loss prevention strategies.

Meanwhile, AI analyzes customer behavior in real-time, enabling personalized recommendations and improved store layouts. More than just convenience, the latest technological innovations are about crafting immersive, personalized experiences that online shopping can’t replicate.

Here’s another example of what a seamless shopping retail experience could look like.

A customer walking into your store is greeted by an AI-driven styling assistant on an interactive screen , which suggests outfits based on their recent purchases and previous online browsing history. As they browse through your store, dynamic product displays change to highlight items that complement what’s already in their tote, complete with rotating mannequins showcasing real-time mix-and-match options tailored to their style.

In a special section of the store, customers immerse themselves in a brand experience zone where they can interact with the latest fashion lines through augmented reality platforms. They try on different outfits virtually, see how they pair with accessories and make selections that feel tailor-made for their personal style and preferences.

For retailers, this can provide a differentiated way to engage with customers and deep insights into consumer preferences for more targeted marketing and inventory management.

What does investing in the store of the future provide retailers?

Investing in the store of the future can offer more than an enhanced customer experience; it can empower retailers to make smarter decisions and act on them faster. Salesforce Customer 360 can help unify data from all touchpoints — online, in-store and external sources — into a single, actionable profile.

By leveraging AI and machine learning, retailers can turn customer behavior, preferences and purchase history into insights that enhance operations, personalize marketing and inform product and inventory decisions. This opens opportunities to improve customer segmentation, tailor engagement and use geospatial data to understand in-store behavior, all while helping drive growth through data-driven insights.

By integrating a 360-view of customers with advanced technologies, retailers can blend the convenience of online shopping with the benefits of physical stores, including immediate product access and personal service.

This unified view of customer behavior creates a continuous shopping journey that links pre-visit online activities with in-store experiences, enhancing customer satisfaction across all channels. With these insights, retailers can provide a differentiated way to engage with customers and deepen insights into consumer preferences for more targeted marketing and inventory management.

As competition increases, this approach helps meet evolving consumer expectations and gives retailers valuable data to improve their operations.

Elevate the ecosystem: Transform your stores into multifunctional spaces that integrate online and offline experiences, serving as showrooms, fulfillment centers and digital engagement hubs.
Data-driven merchandising: Use Customer 360 and in-store technologies such as geospatial intelligence to refine merchandising, enhance store layouts and increase conversion rates.
AI-powered personalization: Implement AI-driven personalization tools to offer tailored recommendations and services to in-store shoppers.
Lead or get left behind: Shopping behaviors are changing quickly, but tech is a common denominator that’s here to stay. By acting now, retailers can position themselves ahead of the curve, adjusting their tech as needed and learning from their customers along the way.

The role of the store: Merging digital and physical for seamless shopping

Stores are not dead

Automating the add-to-cart process

From online to onsite: AI’s impact in the retail revolution

What does investing in the store of the future provide retailers?

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