6 Strategies to Revolutionize Your Approach to Physical Retail in 2024

Today’s retailers not only need to embrace the profound digital transformations happening in the industry, but also deliver real value for their consumers and their organizations. With the emergence of generative artificial intelligence (AI) and other innovations, 2024 marks a pivotal moment for the industry—and physical stores are ripe for disruption.

Forrester notes that “retailers still fall short of accelerating cloud-first operations needed to succeed in the new retail dynamic,” which is why 64 percent of retailers plan to expand their use of the cloud. Companies are adopting technologies like AWS Smart Store Solutions—a set of capabilities to help transform the customer experience, reduce costs through automation, and offer unprecedented opportunities to stand out from the competition—to address their top priorities, such as improving inventory visibility, boosting customer loyalty, and strengthening commerce infrastructure.

In this blog, we’ll spotlight six key strategies that will reshape the physical store experience in 2024, and how AWS is helping retailers drive value in this space.

Figure 1. 2024 physical retail strategies that matter

Strategy 1: Mobile, frictionless, and omnichannel customer engagement is table stakes

Retail customers, especially the most loyal ones, are increasingly moving across all channels or touchpoints of a brand to get what they want. These touchpoints include physical stores and an array of digital spaces—web, social media, emails, apps, and SMS, to name a few.

Given all these touchpoints, savvy retailers are implementing omnichannel strategies. They’re providing a seamless and unified shopping experience in brick-and-mortar stores as well as through a host of digital channels. With this approach, these retailers are not only differentiating themselves from competitors, but they are also gaining a competitive advantage over online-only retailers by using physical store assets.

In collaboration with AWS Retail Competency Partner JBS Dev, AWS helped Petco tackle this challenge. To fulfill customer needs quickly and conveniently during the COVID-19 pandemic, Petco successfully developed a curbside pickup service and deployed it in just 6 weeks on AWS.

Watch this video to learn more about how JBS Solutions is helping retailers innovate the physical store experience on AWS.

Strategy 2: Accelerate retail system modernization across all channels, particularly in store

As retailers look to implement a true omnichannel, unified experience for their consumers, system modernization will be critical. By adopting cloud technologies, retailers can harness near real-time data, unlock seamless converged channel retailing, and optimize for efficiency, scale, and agility.

Gartner forecasts that by 2025, cloud-based technologies will underpin over 95 percent of digital initiatives. Many retailers are using microservices, edge computing, and cloud-based solutions to create in-store digital innovations. Additionally, 79 percent of technology leaders want to increase headless or composable architecture, which will help them implement new features 80 percent faster than the competition.

AWS is helping retailers modernize their systems by promoting a composable commerce architecture with our ISV Partners. As a member of the MACH Alliance, we believe strongly in MACH-based principles to support convergence, composability, agility, and flexibility across retail channels. With 70 percent of MACH Alliance members on AWS, retailers have access to a wide range of proven capabilities.

Figure 2. AWS Retail Competency Partners in MACH Alliance

Strategy 3: The in-store experience matters more than ever

Retailers are increasingly recognizing that the journey from discovery to purchase extends far beyond the transaction or product. In fact, 60 percent of consumers expect retail stores to be focused on the experience rather than the product. With personalized assistance and the right ambiance, retailers can create memorable moments in their brick-and-mortar stores, enhancing customer satisfaction and loyalty. This comprehensive strategy enhances the overall retail experience, helping customers feel valued, understood, and inspired at every step.

AWS Retail Competency Partner Last Yard helps retailers enhance the customer experience with technologies such as Electronic Shelf Labels (ESL), Digital Shelf Edge (DSE), mobile screens, and more. Its digital automation platform, built and run on AWS, helps companies like Woolworth’s, Australia’s largest retailer, better engage shoppers at the point of purchase. Check out this video to learn more about Last Yard.

Immersive technologies are another way to truly elevate the in-store customer experience. At NRF 2024, in partnership with Proto Hologram and Firework, we showcased how retailers can provide a truly unique, immersive, and life-like atmosphere—all powered by the cloud. Learn how AWS and its partners like Proto and Firework are re-imagining shopping experiences here.

Strategy 4: Address in-store opportunities and challenges with RFID (IoT)

Advancements and cost reductions for both radio-frequency identification (RFID) and Internet of Things (IoT) technologies are helping retailers improve inventory accuracy, elevate shrink management, foster predictive maintenance, reduce costs, and enhance customer experiences.

For example, RFID can facilitate a Just Walk Out experience for apparel retailers. Customers enter the store, try on what they like, and then leave through an exit gate by using their credit or debit card or hovering their hand over an Amazon One palm-scanning device. When they pass through the gate, the RFID tags are read and the payment method is charged accordingly.

Generative business intelligence capabilities of Amazon Q in Amazon Quicksight can help retailers already capturing IoT or RFID data. Using Amazon Q, users can build, discover, and share actionable insights and narratives in seconds using intuitive natural language experiences. For example, users can ask questions and create executive summaries using RFID-captured data as well as other business intelligence data sources.

Strategy 5: Criticality in collecting first-party data and obtaining a holistic view of the customer

Other than third-party cookies and point-of-sale data, retailers are finding new ways to capture customer data. With a holistic view of the customer, retailers can unlock opportunities for hyper-personalization, relevant in-store ads and promotions, and generative analytics and insights.

One way to capture customer behavior data is by using retail video analytics. By using computer vision edge processing, retailers can unlock in-store insights and analytics. Although most retailers can monitor the entire customer journey on their ecommerce websites, they often struggle to capture these same insights within their physical stores.

On AWS, they can benefit from an array of analytics, as the Canadian retailer Parkland realized after rolling out the solution at its Phillips 66–branded stores. To better manage customer traffic, for example, Parkland used automated heat maps to track in-store behavior, parking lot vehicle volume, and license plate analysis.

Figure 4. Computer vision edge processing to unlock in-store analytics

Strategy 6: Start to leverage generative AI in physical retail stores

Generative AI in retail has predominately focused on ecommerce content, chat bots, and imagery. The use of generative AI is not a current priority in physical retail, but we predict a focus here in the future. For example, chatbots, using natural language processing, can be integrated into existing workforce management tools so that store staff can query and access information in near real time.

A US electronic and gaming retailer is currently deploying generative AI for a workforce chatbot embedded into the point-of-sale browser. The solution is built using Amazon Bedrock, a fully managed service that offers a choice of high-performing foundation models, and Amazon Kendra, an intelligent enterprise search service. It taps into operational manuals, new product information, and other document sources.

With the power of generative AI, store staff can get immediate answers to questions and provide a richer experience for customers.

Looking toward the future of physical retail

At AWS, we are truly excited about the future of physical retail and believe the time is now to reimagine the in-store experience. When you add intelligence to your stores, you’ll reap the benefits of loyal customers and increased sales.

To learn more about AWS Smart Stores, check out this video.

To learn more about our extensive industry partner network and how AWS can help support your retail transformation, visit aws.amazon.com/retail.