How To Adapt to Digital Transformation in Retail

Tips / 16.04.2025

The retail digital transformation is here and most importantly – it’s here to stay.

Emerging technologies are inevitably shifting the eCommerce arena, transforming the ways consumers think and behave when shopping online.

Data-driven decision-making is more important than ever in the retail industry, in a world where a seamless shopping experience is at the core of consumer expectations.

According to studies, the digital transformation market in retail is expected to grow from $243.57 billion in 2024 to $541.44 billion by 2029. This dramatic growth rate is not to be missed by retailers looking to stay ahead of the competition.

In the following sections, we share valuable insights on how retail businesses can adapt to some of the most important digital transformation trends today.

TABLE OF CONTENTS

Consumer behaviour and expectations

Many retailers fail to acknowledge the important changes in customer behaviour, preferences, and expectations.

Over the past decade, we’ve witnessed a significant evolution in the way digital technologies influence consumers’ preferences. Such are their desires for faster interactions with a retailer and a multi-channel engagement.

Address shifting consumer preferences

Online shoppers are nowadays looking for a seamless shopping experience throughout all digital channels, forcing traditional retailers (especially those with a heavy reliance on physical stores) to rethink their business models.

But that’s not all.

Here are a few recent findings that retailers must be aware of:

75% of shoppers expect a consistent experience across all channels that they choose to engage.
Nearly 60% of customers have switched to other brands because of poor customer service.
82% of retail buyers expect instant responses to sales and marketing queries.

To stay competitive, retail businesses must now invest time and resources into understanding new customer preferences and implementing strategies to adapt.

For example, setting up automatic chatbot responses to sales and marketing questions can help reduce the time necessary for allowing customers to receive an answer to their queries. On the other hand, hiring professional and experienced customer service agents can help provide the attention to detail and dedication expected from shoppers.

The rise of omnichannel retailing

Most importantly, let’s not forget that today’s shoppers are omnichannel customers. More than 70% of retail consumers rely on multiple channels to shop.

While omnichannel retailing is a must in the online world that we live in, it’s also a way to encourage shoppers to visit brick-and-mortar stores. In fact, Google data reveals that adopting omnichannel strategies can lead shoppers to 80% more visits to physical stores after being exposed to an advertisement.

Today, customers engage with an average of six touchpoints, with companies increasing their order rate by 494% by simply expanding to three or more channels.

When it comes to omnichannel strategies in the retail sector, it’s important to understand the importance of integrating online touchpoints and in-store experiences. Click-and-collect services, scanning barcodes, and mobile apps are all considered standard features nowadays. They enable retailers to meet the needs of the modern shopper.

Such omnichannel strategies, merging digital with traditional methods, are great for major retailers, for example, as they ultimately build a reliable and immersive shopping experience for consumers.

Technology integration

If you’ve stepped on the road to adapting to digital transformation in retail, technology integrations are inevitable.

Implementing new technologies into your strategy, including mobile apps, eCommerce platforms, and point-of-sale (POS) software such as POS systems are all crucial for staying ahead of the trends and meeting customer expectations.

Implement eCommerce platforms

Among the most important digital transformation efforts is the investment in and use of eCommerce platforms. These solutions act as the backbone for retail operations in the digital age, allowing retailers to target customers better and expose their products to a broader audience.

Ecommerce platforms are also key for inventory management, integrating with POS systems, and basically act as the virtual engine of your website.

When selecting your eCommerce platform, make sure it provides reliable features enabling your shoppers to browse products, read reviews, and complete purchases. At the same time, ensure it offers capabilities for recording customer data and setting up different digital transformation efforts.

Leverage mobile technology

Believe it or not, 65% of all eCommerce traffic comes from mobile devices. This naturally puts mobile technology at the forefront of digital transformations in the retail space. Mobile apps, for example, create a direct line for retailers to connect with their audience. These tools offer customised promotions, loyalty programs, and overall – a seamless shopping experience.

The capability to allow customers to make purchases, manage and track orders as well as get all the help they need from the comfort of their smart devices is nowadays a must.

If you still haven’t taken advantage of this channel as a retail business, make sure your strategies are adopted to mobile. Ensure your website is responsive to mobile devices to make full use of the opportunities offered by mobile apps.

Moreover, consider adopting mobile or countertop POS devices to enable quick and easy in-store checkout.

Data-Driven Decisions

Today, data analytics is fundamental in shaping business models and dictating decision-making processes.

Retailers who have the capabilities to collect and analyse high volumes of customer data can spot trends, optimise inventory, and personalise the customer experience to unimaginable levels.

Data analytics helps retailers create targeted marketing campaigns, customise offerings, and ultimately meet specific target customer needs, gaining a competitive advantage over others in the market.

Utilise big data and analytics

One of the trending technologies that facilitate data-driven decisions is Big Data and Data Analytics.

The Big Data Analytics in Retail Market size is valued at around $6.38 billion in 2024. This number is expected to grow to $16.68 billion by 2029. These tools create room for delivering personalised shopping experiences to diverse customer groups, always fulfilling the needs and requirements of your shoppers.

By putting these technologies in use, you can forecast industry trends, detect certain behaviours, and act on time. As one of the most basic examples, retailers who have access to data and can process it can better understand how to price their products, market to consumers, set up their deliveries, and more.

When implementing Big Data and Data Analytics, make sure you’re fully compliant with GDPR and other regulations. Explore the opportunities of using machine learning for an even more advanced level of insight gaining.

Personalise the customer experience with data

Although personalisation is nothing new in the retail space, it continues to dominate and take centre stage when it comes to digital transformation.

Personalisation in retail can undoubtedly encourage customer loyalty. In fact, 80% of shoppers say that it’s important for brands to collect purchase history in order to improve customer experiences.

But improving the customer journey is not all that retailers can achieve by making use of data to personalise experiences. They can also dramatically lower acquisition expenses. Studies reveal that personalisation can help brands reduce the costs of acquiring customers by 50%.

While there are plenty of ways to achieve this, some of the most popular strategies include using machine learning algorithms to analyse customer data for tailor-made product recommendations, personalised promotions, and techniques to satisfy specific customer behaviour.

Operational Efficiency

Another crucial aspect of adapting to the digital transformation in retail is the ability to enhance operational efficiency.

This requires reliable automation mechanisms, AI, and machine learning. These tools and technologies can help improve the supply chain and warehouse management, ultimately bringing down costs to a minimum.

In addition, they enable businesses to adequately handle the rising demands, empowering them to transform their retail operations.

Apply automation and AI

Two of the key instruments retailers are actively turning to are automation and Artificial Intelligence.

For example, self-checkout systems, automated POS systems, and machine learning algorithms can all be used to make pricing strategies more appropriate, boost inventory tracking and management, and more.

On a global level, AI in the retail industry is expected to reach $15.3 billion by 2025.

To adapt to this trend, retail companies can invest in solutions that enable:

AI-powered product recommendations;
Inventory management optimisation via in-depth analysis of historical sales data and external factors;
Analytics that offer predictions and demand forecasting;
Virtual trials via augmented reality, and more.

All of these capabilities can help create an unmatched customer experience and unimaginable levels of efficiency for retail brands.

Streamline supply chain management

Another key part of operational efficiency is supply chain management. Creating a more reliable supply chain can undoubtedly deliver cost optimisation and guarantee that products are always delivered on time.

New technologies like IoT-powered smart devices and blockchain technology are completely changing the way retailers think about warehouse management and logistics.

Some of the things that retail businesses can do to improve supply chain management as part of digital transformation are:

Automate mundane tasks via Robotics Process Automation or other similar solutions;
Achieve real-time visibility via the use of supply chain management tools;
Educate employees to efficiently use all available technologies.

As a result, companies can reduce waste, improve logistics, and overall – create stronger relationships with customers and partners.

Employee Training and Adaptation

The truth is that no matter how well you implement advanced and innovative solutions to drive digital transformation for your retail company, the results won’t be noticeable unless you have your whole team on board.

Businesses looking to digitise their processes, make use of customer data, and make informed decisions will need to set aside resources for employee training and adaptation.

The role of retail workers is gradually shifting. Today, it’s essential to equip workers with the necessary skills and knowledge to be able to work with new technology, no matter whether it’s operating with eCommerce platforms, managing self-checkout systems, or making sense of data analytics.

Cybersecurity and Privacy

As more and more businesses rely on digital technology, protecting customer data becomes a priority.

In order to ensure that consumer data is safeguarded, it’s key to take cybersecurity measures and stay compliant with privacy regulations.

Secure data

Research shows that 11.1% of all cyberattacks were directed at retailers. On average, the cost of a data breach comes to around $3.28 million. These numbers demonstrate how paramount it is to secure data effectively to prevent fraud and cyberattacks.

Such scenarios can not only harm your company’s customers but can also lead to significant financial losses for your business, a destroyed brand reputation, and legal conflicts.

To prevent this from happening, retailers are expected to use the available technology and tools, like encryption, multi-factor authentication, and consistent security audits.

Privacy regulations and compliance

Privacy is another popular concern.

63% of Internet users feel that businesses aren’t transparent about how they use their data. Nearly 50% of these users have stopped shopping with a company due to privacy concerns.

To build trust and ensure you’re fully compliant as a retail company, make sure that all of your practices abide by regulations like the GDPR and CCPA.

There are strict regulations outlined by these standards regarding the ways in which customer data should be collected, recorded, stored, and used.

Customer Engagement and Marketing

When it comes to digital transformation in retail, it’s inevitable to mention customer engagement and marketing – two central elements of this movement.

Develop digital marketing strategies

While traditional marketing attempts may still work for some industries, in the retail space, digital is the new way forward. This means that companies are expected to leverage online touchpoints, social media, mobile apps, and more to grab the attention of their target customers.

Think of creating targeted marketing campaigns across channels like email and social, but also investing in things like content marketing, SEO, paid advertising, and more.

Don’t forget that your customers are expecting a multi-channel experience. Ensure that your messaging and content are consistent across channels and that your digital marketing is synced with the demands of your shoppers.

Engage customers through social media

Modern consumers actively rely on social media channels (like Facebook, Instagram, TikTok, and others) to discover and research new brands and products.

More than 80% of social media users admit that they use Instagram to find new products. The statistics are similar for other social media platforms. This creates tremendous opportunities for retailers to engage with new users, create a wider customer base, and make their products easily discoverable.

To achieve this, it’s key to create a detailed content plan and content calendar that consists of interesting, valuable, and compelling content. You can be as creative and diverse as your brand image allows, covering informative, funny, educational, and useful topics.

In addition, you can take advantage of social media channels to run promotions with advanced targeting options, respond to customer inquiries, and perform market research.

By being active on social media, you can become an expert in personalised marketing, tailoring your messages to different segments.

Future Trends and Developments

As technology continues evolving and unlocking new opportunities, the retail space is expected to go through additional transformations in the future.

For example, technologies like AR, VR, and the Metaverse are likely to have a tremendous impact on the way customers shop.

Immersive experiential digital shopping environments will provide options for consumers to get to know products even better, getting a taste of how they would look and feel in real life.

Despite the fact that the Metaverse is still in its infant stage, retailers are already starting to explore ways in which related solutions can help shoppers spend more.

Conclusion

Overall, the retail sector is experiencing a shift like never before, resulting from the widespread adoption of digital technology.

Digital transformation in retail goes beyond implementing new technologies. It’s also about reviewing the big picture and rethinking the business model to be able to meet new expectations and consumer behaviours.

In order to fully adapt to digital transformation in retail, it’s crucial to address different aspects like the ones mentioned above.

By following the tips and tricks from above, retail companies can successfully make this shift towards digital transformation initiatives, ensuring future success.

Frequently Asked Questions

What are some of the most popular reasons why transformation in the retail space is challenging for companies?

While most retailers are actively striving to adapt to the digital transformation in the industry, others are failing to adopt the technologies to drive growth. One of the key elements behind this is limitations like budget constraints, limited integrations with legacy systems, and ineffective business processes as a result of improperly trained employees.

Why is adopting digital transformation in retail important?

By adopting digital transformation in retail, companies can stay competitive in a highly dynamic and aggressive market. This can help improve sales, win new customers, and create a stronger brand.

Where should retailers start when adapting to digital transformation?

The first steps include understanding your customer’s needs, implementing an eCommerce platform, integrating mobile technology, and using data analytics to make informed decisions. Retailers must also assess their current systems and look for ways to modernise their business models and operations.