Innovation Line: Technology is maturing with age

As EuroShop celebrated its 60th birthday this February in Düsseldorf, Germany, there was one overarching theme that emerged at the “world’s number one retail trade fair” writes Toby Pickard, Retail Futures Senior Partner, IGD

After years of experimentation, pilots, and bold predictions about the “store of the future,” technology and AI in physical retail are finally coming of age.

What was once confined to innovation labs and limited trials, from smart shelves and computer vision to AI-powered workforce tools, is now moving into scaled deployment across store estates.

Digitally enabled physical retail

As margins tighten and shopper expectations rise, retailers are no longer asking whether to digitise their physical stores, but how quickly they can embed intelligence into every shelf, screen, and workflow. The era of the hyper-connected, AI-enabled store has begun.

The future of retail lies not in replacing stores with ecommerce, but in transforming stores into digitally enabled, data-driven assets that anchor a unified commercial strategy. To remain competitive, retailers must reinvent their real estate and evolve operations to create a “unified commerce” model.

This means seamlessly connecting stores with ecommerce platforms, loyalty programmes, retail media networks, and advanced data and insights capabilities.

Rather than treating stores and online as separate silos, retailers need to integrate every touchpoint into a single, hyper-connected ecosystem.

Improved experience, efficiency and profitability

The urgency is heightened by mounting industry pressures, including geopolitical instability, economic uncertainty, rising labour costs, cyber threats, and increasing regulatory demands.

In this context, digitalisation is not simply about enhancing customer experience; it is about driving productivity, efficiency, and profitability. Technology can improve stock management, automate routine tasks, optimise forecasting, and provide real-time operational visibility.

Time to connect the dots

While many retailers are experimenting with individual technologies, few have embraced the full suite of solutions required to create a truly connected store environment.

Handheld devices and generative AI tools are beginning to support store associates with on-the-job coaching and faster decision-making. Self-checkouts, scan as you go solutions, and smart carts are streamlining checkout and increasingly enabling targeted promotions and in-device payment.

AI-powered agents are reducing reliance on supervisors and accelerating time to competency for frontline teams. Connected shelves are turning the aisle into both a media channel and a supply chain intelligence hub.

The store is dead, long live the store

Importantly, IGD forecasts that physical stores will continue to dominate grocery retail, accounting for around 90% of market share through to the end of the decade.

This reinforces the strategic importance of investing in store estates. The connected store is no longer optional; it is essential to unlocking loyalty, sustainability, and long-term profitability.

However, retailers must be deliberate in selecting the infrastructure and systems that will underpin this transformation.

Partnerships and collaboration will be crucial. Retailers, suppliers and technology providers will need to be considered and mindful about who they partner with and how universally applicable their solutions are.

By sharing data, setting industry standards, and jointly investing in scalable solutions, retailers can accelerate innovation while reducing implementation costs. The message is clear: the race to build the hyper-connected store is already underway. Those who lead will define the next era of retail. Those who decide to wait may not be around in another 60 years.

Innovation Line: Technology is maturing with age

The industry stands at a pivotal crossroads, where digital innovation meets the shop floor. As technology reshapes every aisle, the race is on to transform physical stores into intelligent, efficient, and profit-driving powerhouses.

To help industry understand what is at stake and what needs to be done to create the hyper-connected store, we have published our hyper-connected store report. IGD’s Retail Analysis subscribers can access the full report, while non-subscribers can access an abbreviated version.

Alternatively, please get in touch with Toby.Pickard@igd.com