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How grocers and mass merchants canembrace in-store technology to lower costs,improve margins, and enhance the experience It’s a digital world, even in thephysical store. How can retailersembrace in-store technology tolower costs, improve margins, andenhance the experience? Introduction Our latest consumer research signals a warningfor traditional retailers: in-store engagement isdeclining, with only 60% of consumers reportingsignificant interaction with physical stores—downfrom 66% in November 2023. Meanwhile, onlineshopping continues to rise, with 46% of consumersmaking digital purchases in November 2024, upfrom 36% the previous year. 57%Tech enabledin-store experiencesAre a top loyaltyfactor for groceryshoppers Do these numbers mean shoppers are abandoningbrick-and-mortar retail? Not necessarily. Instead,it highlights the need for retailers to rethinkand redesign the in-store experience to betteralign with evolving grocery industry trends andconsumer preferences. In today’s digital age, there’s no such thing as “justa store.” Modern retail spaces are evolving—fromsimple places to shop, to destinations for productdiscovery, personalized experiences, and value-added services. And yet, many stores lack the digital componentsthey need to deliver on consumers risingexpectations and evolving preferences. Thisis especially true of the grocery and massmerchandise categories, where organizations havemade substantial investments in digital solutions,but few technologies play a meaningful role in thestore experience. To stay competitive in 2025 and beyond, retailers—especially in the grocery and mass merchcategories—need to recognize that it’s a digitalworld, even in a physical store. In this article, weexplore how grocers can rethink their approach toin-store technology, leveraging new and advanceddigital solutions to solve the core challenges ofthe market and address the changing needs ofconsumers. Digital transformation for grocery: How grocersand mass merchants can leverage digitaltechnology to overcome core challenges with electronic shelf labels (ESLs) andconnected POSsystems, can enable real-time pricing adjustmentsbased on internal and external factors with limited orno human intervention. As a result, these automatedtools can help unlock any number of cost savings, be itthrough reduced waste, lower labor costs, or efficiencygains, while also enabling top-line growth by allowingteam members to focus on higher-value tasks. Below are seven common challenges and the innovativedigital solutions that can help grocers and massmerchants stay competitive in a challenging landscape. 1.Improving gross profit margin2.Food safety and traceability3.Rising labor costs and talent shortages4.Friction in the customer experience5.Lackluster customer experiences6.Technology sprawl7.Shrink and waste Walmart, which recently announced plans to expandthe use of electronic shelf labels to 2,300 stores by2026, has seen major advantages from this technology.In an early deployment, the retailer found that ESLshave drastically reduced the time required for pricechanges—from two days to just two minutes—allowingemployees to focus more on customer-facing tasks.Additionally, the system streamlines restocking andonline order picking by using mobile apps to guideassociates directly to the specific products that needreplenishing or fulfilling. Challenge 1:Improving gross profit margin Amid rising supply chain costs, escalating last-miledelivery expenses and increasing labor demands thatraise both the cost of goods sold and the cost-to-serve,grocers are struggling to maintain gross profit margins.In many cases, organizations have exhausted obviousopportunities to cut costs and customers can no longertolerate price increases. At the same time, additionalcuts will damage the customer experience. Challenge 2:Food safety and traceability regulation This is forcing grocers to take a more innovativeapproach to improving profitability. Digital technologyoffers powerful solutions to this challenge byenhancing efficiency and optimizing operations. Global food safety and traceability regulations presenta growing challenge for grocers, requiring them totrack inventory, monitor temperatures, and documentcompliance efforts with greater accuracy. For example,AI-powered demand planning and smartinventory management solutionscan help grocerspredict demand more accurately by incorporating awider range of datasets, such as hyperlocal weather,regional events and holidays, and more specificsegmentation of local behaviors and preferencesthat are either impractical or impossible to factor inmanually. Improved accuracy offered by these toolswould enable grocers to optimize stock levels andreduce waste, while automation could help reducelabor costs. Manual processes are no longer sufficient, makingdigital solutions essential for meeting evolvingstandards and reporting requirements. To staycompetitive, grocers must embrace technology thatstreamli