Retail Growth Resting on Brick-and-Mortar: The Technology Gap

The Current Landscape of Retail Technology

The retail industry is witnessing a significant shift as many retailers are doubling down on brick-and-mortar stores for growth. Despite this investment, a recent study reveals that many are struggling to meet customer expectations due to a lag in technology adoption.

Understanding Retailers’ Challenges

Fashion, apparel, and specialty stores have emerged as leaders in adopting retail technology. However, a striking 62% of these retailers report that customer demands for in-store experiences have outpaced their current offerings. Even though 85% of retailers still consider their physical stores as a primary growth channel, 65% acknowledge that their existing tech stack is inadequate for delivering the experiences consumers crave.

Insights from Retail Systems Research

This information stems from a comprehensive study conducted by Retail Systems Research (RSR) and sponsored by Jumpmind, a retail technology provider. Conducted from December 2024 to January 2025, the survey involved retail executives and store managers who provided insights into the gaps in technology and spending priorities across the retail landscape.

Point of Sale Technology: A Bottleneck

When it comes to operations, the point of sale (POS) system is identified as a significant hurdle. Retailers report struggles with basic store operations, even as consumer expectations soar. Alarmingly, only 47% feel that their POS systems support an innovative in-store experience, and about one-third say it’s actively hindering their performance. Issues range from insufficient support in checkout processes to inadequate functionality for managing returns or integrating loyalty programs.

Challenges in Keeping Up with Technology

Retailers express frustration about the rapid pace of technology change, with 34% stating they can’t keep up with consumer tech adoption and 31% saying the costs of new tech make it inaccessible. More than half, at 54%, view the constantly changing tech landscape as a barrier to seizing improvement opportunities.

Optimism Towards Mobile Solutions

On a brighter note, many retailers are looking towards investing in mobile capabilities to enhance in-store experiences. About 63% rate mobile devices for associates as offering high value by increasing operational efficiency. Moreover, 70% of retailers plan to invest in capabilities that support assisted selling and “endless aisle” functionalities within the next 12 to 18 months.

Emerging Competition: The E-Commerce Threat

Investing in technology becomes increasingly vital as e-commerce competitors rise. Over 41% of respondents feel the threat of online competitors diminishing the value of physical stores, while 38% observe that direct-to-consumer brands are challenging their relevance. Furthermore, challenges like same-day shipping set by e-commerce players add pressure.

The Evolving Consumer

Perhaps most alarming is the shift in consumer behavior. More than one-third, at 36%, acknowledged that increasingly demanding consumers pose a serious threat, with 35% admitting they cannot deliver the anticipated service levels expected today.

Future Directions in Retail Technology

Joe Corbin, CEO of Jumpmind, underscores that the urgency to enhance in-store experiences is escalating, particularly as inflation affects consumer buying power. With shoppers seeking value, the need for compelling, seamless experiences becomes paramount.

Looking Ahead

Steve Rowen, Managing Partner at RSR, calls attention to the transformative tech available today. Instead of dealing with exorbitant costs for outdated systems, retailers can now leverage cost-effective, consumer-grade technology that promises to enhance the shopping experience significantly. With adequate funding set aside for tech investments, the upcoming year holds promise for retail innovation.

Conclusion: Bridging the Technology Gap

Retailers are confronted with the considerable challenge of modernizing their in-store experience while navigating evolving consumer demands and swift technological advancements. As they look forward, the investment in technology is not just an option but a necessity to remain competitive.

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