IGD: retailers must digitalise physical stores or risk being left behind in an omnichannel world

Retailers must accelerate investment in technology to digitalise physical stores or risk becoming irrelevant, according to analysis by Institute of Grocery Distribution (IGD).

Its latest report, ‘The hyper-connected store: the retail revolution’, posits that for retailers to stay relevant in the digital age and thrive under complex industry pressures, they need to reinvent their real estate and evolve operations to create a ‘unified commercial offering’.

This means joining up online and offline shopping experiences by linking stores to e-commerce, loyalty, retail media, and data and insights.

“Retailers have to accelerate their investment in technology to digitalise the physical store and create a hyper-connected environment that enables them access to unparalleled data and insights to drive efficiencies and profitability,” says Toby Pickard, Retail Futures Senior Partner at IGD.

The report contextualises the discussion around growth hindering challenges affecting the retail industry, such as geo-politics, economic uncertainty, labour costs, cyberattacks, and legislative changes.

Pickard says: “In the face of significant challenges, retailers are leveraging technology to boost productivity and cut costs by enhancing stock management, efficiency, and customer experience. However, no one is embracing the whole suite of solutions available to create a truly connected, digitalised store, which is what will provide the edge needed to adapt and succeed in a rapidly evolving market.”

While some have predicted ‘the death of the high street’ with the growth of online shopping, IGD forecasts that physical stores will retain their market share for years to come, making up approximately 94% of the total grocery market through to the end of the decade.

“The future of retail lies in investing in the store estate, not replacing it. That’s where loyalty, sustainability, and profitability converge,” says Vusion Group’s CEO UK & Ireland, Roy Horgan, who contributed to the report.

“The connected store is no longer a concept, it's a necessity. This isn’t just about operational efficiency; it’s also about enabling hyper-personalisation, empowering store colleagues, and making the shelf the most powerful media and supply chain node in retail. However, retailers should think very carefully about what infrastructure and systems they invest in to achieve this.”

Consumer behaviour is a major driver behind the need for change. IGD’s analysis shows people are looking for more engagement through personalised and customised interactions, while also seeking greater transparency and traceability to ensure that businesses are operating in line with their expectations.

Pickard comments: “As consumer expectations evolve and competition intensifies, fostering a culture of collaboration will be key to building a more resilient and future ready industry. Collaboration not only accelerates innovation, but also reduces implementation costs, making tools accessible to retailers of all sizes. Those who lead this transformation will shape the next era of retail. Retailers that wait for certainty will be left behind.”

2025 RTIH INNOVATION AWARDS

Physical stores will be a key focus area at the 2025 RTIH Innovation Awards.

The awards, which are now open for entries, celebrate global tech innovation in a fast moving omnichannel world.

Our 2024 hall of fame entrants were revealed during an event which took place at RIBA’s 66 Portland Place HQ in Central London on 21st November, and consisted of a drinks reception, three course meal, and awards ceremony presided over by comedian Lucy Porter.

In his welcome speech, Scott Thompson, Founder and Editor, RTIH, said: “The event is now into its sixth year and what a journey it has been. The awards started life as an online only affair during the Covid outbreak, before launching as a small scale in real life event and growing year on year to the point where we’re now selling out this fine, historic venue.”

He added: “Congratulations to all of our finalists. Many submissions did not make it through to the final stage, and getting to this point is no mean feat. Checkout-free stores, automated supply chains, immersive experiences, on-demand delivery, next generation loyalty offerings, inclusive retail, green technology. We’ve got all the cool stuff covered this evening.”

“But just importantly we’ve got lots of great examples of companies taking innovative tech and making it usable in everyday operations - resulting in more efficiency and profitability in all areas.”

Congratulations to our 2024 winners, and a big thank you to our sponsors, judging panel, the legend that is Lucy Porter, and all those who attended November's gathering. 

For further information on the 2025 RTIH Innovation Awards, please fill in the below form and we will get back to you asap.