Are You Ready For the Store of the Future?

Retail is undergoing the biggest change since the dawn of credit cards. Here's what it looks like

Written by Deborah Aarts
Welcome to the store of the future

This vignette is a hypothetical composite—but not for long: Technology is transforming the in-store experience. Inexpensive analytics software and slick hardware already allow retailers of all sizes to make shopping easier for consumers who demand convenience. “Online shopping has conditioned consumers to expect more from retailers in-store,” says Kevin Falk, CTO at Montreal point-of-sale system developer LightSpeed.

The tech-enabled store is good news for retailers—especially small ones—eager to convert browsers into customers. “It’s taking large retailers a long time to figure out all this technology,” says Mark Startup of the Retail Council of Canada’s MyStore division. “Independents can change the store environment almost on a dime.”

Read: 4 Game-Changing Retail Trends You Can’t Ignore

Perhaps the most important tool in this evolution is the smartphone. You might be fretting about mobile devices turning your store into a mere showroom, but that’s the wrong attitude, says Jeff Roster, a VP at Gartner who specializes in retail technology. “How retailers engage with people using these devices is where the battleground is going to be,” he says.

The key is to hit shoppers with relevant and compelling offers (as opposed to spam) as they’re walking by the store and once they enter it. That’s best done by tapping software to crunch aggregated customer data from rewards programs, loyalty cards and even credit cards. Forget “spray and pray” emails; going forward, even small retailers will have to send highly individualized incentives to shoppers, use apps that curate recommendations and extend such personalization to how they engage with shoppers in the store. “Customers want the in-store experience tailored to them,” says Trey Courtney, an Austin, Tex.-based senior VP at Mood Media Corp.

Read: How to Turn Showroomers Into Customers

Technology can also elevate merchandising. You can now buy cameras and sensors that map out and aggregate shopper movement, giving a real-time view—via back-end analytics dashboards—of who is lingering where. You can also install increasingly affordable screens equipped with cameras and iris-movement and facial-recognition software that reveal who is actually reading your promos.

This surge of in-store technology is also creating demand for a new tier of product suppliers (think apps, analytics software, sensors, cameras and display screens) and service providers—especially IT firms that are able to integrate them all. In addition, those who embrace the tech-enabled store will need help with adapting their branding, marketing and strategy.

Doug Stephens, who runs the Toronto-based consultancy Retail Prophet, is convinced these changes are what’s needed to save brick-and-mortar retail. “In five years, all this stuff is going to be the table stakes,” he argues. “Retailers really have to elevate their game significantly so that the in-store experience is jaw-dropping.”

This story is part of PROFIT’s 2014 Opportunity Guide, full of trends, ideas and markets you can jump on right now

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