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How Digital is Reshaping the Storefront

TechnologyGeorge DearingComment

In the era of mass access to mobile technology, consumers are not only spending more time using their phones — they can't seem to put them down.

Digital influences 36 cents of every dollar spent across all categories of in-store retail sales, according to "The New Digital Divide," a report by professional services network Deloitte. Smartphones alone account for $593 billion — almost 20 percent — of those in-store sales. Few analysts, much less CEOs, could have predicted that kind of acceleration. Just three years ago, smartphone influence represented just $159 billion — or 5 percent — of those sales.

With so much unpredictability and digital transition ahead, Gap Inc. CEO Art Peck recalled in a November interview with Buzzfeed how he told a team at Banana Republic that the collision of digital and physical won't "evolve in a nice linear, sequential way, it's going to be messier than that."

The digital-savvy storefront is the new launch pad. Gap sees Internet connectivity as a critical utility for experimentation, rolling out free Wi-Fi in more than 1,000 stores. As more sophisticated apps such as in-store reserve lists and digital loyalty programs are pushed to mobile devices, a retailer's Wi-Fi network will soon be a competitive advantage.

Self-serve kiosks and digital displays are already helping scale customer service. As more retail becomes digitally integrated, smart displays will deliver interactive catalogs, manage loyalty and reward programs, and distribute relevant content including recommendations, coupons and social media.

Augmented reality and 3-D applications are already making inroads in the fashion and apparel industries. Dressing rooms can literally take on a whole new dimension, letting customers see themselves in the latest styles with a couple of screen swipes. As interfaces evolve, expect storefronts to incorporate holograms and ambient technology that responds to customers' presence. 

Point-of-sale (POS) systems are going mobile, too. Sales associates armed with handhelds and real-time inventory data are already making the checkout line extinct. And those same handheld devices can help customers see product data, configuration choices and relevant promotions.

Bottom line: Digital will continue to transform the retail environment. Customers will push supply chain efficiency to the storefront, whether retailers are ready or not. The companies that thrive will balance how technology best intersects with the physical world.

"It's really hard to predict how it's all going to shake out when you're giving customers things that they never really had before," Peck said.