Digital Transformation in Retail 2024

The digital transformation in the retail industry is gaining traction these days because of its numerous benefits. Companies in the retail industry are increasingly adopting digital solutions and earning huge profits. The project is not only increasing sales but also delivering customer satisfaction. Moreover, digital transformation in retail is being adopted due to changes in customer behavior since the pandemic and the inclination towards online shopping.

In this blog, we will be exploring the different aspects of digital transformation in the retail industry and how retailers can benefit from it. We will also be giving examples of the top 2 retailing companies in the world, that have grown immensely due to digital transformation.

What is Digital Transformation in Retail?

Digital transformation in the retail industry refers to the incorporation of technology to make operations more efficient, cater to the needs of customers, and grow the business. Such a change in the industry involves the adoption of modern techniques like contactless ordering, self-checkout systems, and AI-based product recommendations.

Gartner’s latest research reveals that in the next two years, over half of consumer spending will be carried out online, with almost 60% of these transactions being completed through mobile devices. It’s clear that in order to succeed and expand, retailers must fully embrace the digital revolution.

Through modern technology, retailers can easily access the data of their customers, and analyze their behaviour. The increasing use of e-commerce platforms and the Internet is also the reason why retailers are adopting digital solutions at their end. Digital Transformation in Retail is the need of the hour since it has the ability to directly boost revenues and fuel growth for the retailer.

Importance for Retailers

Digital transformation in retail is important for retailers because the top retail companies are increasingly adopting digital solutions for enhancing the customer experience and increasing satisfaction.

As per Kitewheel, the majority of the customers, which is over 447.2 million, interact with retailers through the web.

Moreover, customers tend to spend 4% more during their average store visits, whereas they spend 10% more online. The increasing demand for self-service is becoming popular amongst customers and therefore, retailers are keener on adopting digital solutions.

Demand for Digital Transformation in Retail

Technology remains at the core of digital transformation in retail, especially since PANDEMIC. In Germany, sales through the online platform increased by a whopping 23% from 2019 to 2020, whereas offline increased only by 3.6%. It is also helping customers become more connected to the retailers, and become more informed.

The retail industry is a global market with a revenue of over $7 trillion. As customers’ interface for shopping has changed from offline to online and engaging with brands, embracing technology through digital transformation is imperative. Digital technology helps retailers get insights about their data and helps increase the frequency of buying.

Digital transformation in retail industry is becoming quite the norm in the present time, with an increasing number of retailers adopting and infusing newer technology to revolutionise their activities. This shift is guided by some key trends in the industry, which we will talk about in the next paragraphs.

Adopting E-commerce Platforms

With the internet always on people’s side, e-commerce is also becoming a reality. Customers and retailers are increasingly buying and selling products and services through the online market, which is easier to handle and more profitable.

As Benedict Evans has highlighted, “Over the past three quarters, US e-commerce has grown as much as it normally would in three years”.

Through the use of e-commerce platforms, retailers can reach more people, while customers can gain a lot of amazing deals and better customer experience.

Omnichannel Retailing

A lot of customers prefer shopping both online and offline, and this is what attracts retailers. In this way, the retailer can connect with the customers and connect their experiences through digital solutions. An example is that of Home Depot, a global home improvement retail company. This company developed a customized omnichannel retailing system for a better shopping experience, through technology like personalized marketing.

Customization and Targeted Marketing

Digital transformation in retail is also guided by the customization of products through modern technology like 3D printing, voice assistants, et cetera.

As per reports, about 20% of retailers witness an average rise of 20% in sales when they sell customized items. Moreover, 80% of customers prefer buying customized items.

This not only improves the customer experience but also increases profit margins.

Using AI and Machine Learning

AI and machine learning are helping retailers make smarter decisions for businesses. The modern technology is used to personalize the experiences of customers, recommend products and cater to the needs of customers through chatbots. Moreover with AI, collecting and analyzing data becomes easier and faster thereby, improving customer service and launching targeted marketing campaigns.

Integrating AR and VR

There is a higher use of both AR and VR, which are known to enhance the digital experience of customers. The help of the “try and buy” technology, which allows customers to virtually try products beforehand, has really helped retailers gain profits. Moreover, the two are being used to create online stores, that can be used 24×7 and enhance customer satisfaction. Companies like Hugo Boss, Walmart and Amazon are known for using VR to provide a personalized experience to customers.

Benefits of Digital Transformation in the Retail Industry

Now that we have a basic idea about digital transformation in retail, it is crucial to understand its benefits to stay competitive. In the subsequent section, we will elaborate on the benefits of digital transformation in retail industry.

More customers retention

Digital solutions can help retailers analyze the behaviour and trends of customers, develop a good strategy, and customize their experiences and products. Target, which is the 7th largest retailer in the US, utilized AI, predictive analytics, and machine learning to cater to the needs of customers. This helped the company better understand the needs of its customers.

Market Insights

Digital transformation in retail also enables retailers to analyze customer data quite well. Through this, the retailers can create a strategy that works well for their customers. This also facilitates the growth and profitability of the retailers. Digital solutions can also lead to customer satisfaction and cater to their needs in a better manner.

Better marketing campaigns

Marketing is quite important to sell a product, and with digital transformation in retail, retailers can customize products as per the needs of their customers. The use of advanced technology like CRM, automation and data analytics also provides insights into customer behaviour, thereby reducing the cost and time of marketing.

Improved management of stocks

Managing stocks or inventory becomes easier with digital transformation in retail. With the computerization of all the data, it becomes easier to find products, improve operations, manage warehouses and prevent stock-outs. The entire process becomes automated and management is streamlined.

Better customer service

Digital solutions also come in handy with customers, who can be served through websites, mobile applications, and chatbots. Easy and 24×7 access will help increase customer satisfaction and personalize their experience. It also reduces costs and the efforts that would be put in otherwise.

Challenges of Digital Transformation in Retail

Digital transformation in retail is a continuous process of innovation, involving a lot of ups and downs. In the coming paragraphs, we will be explaining the challenges of digital transformation in retail.

Data security and privacy

The data of your customers is the most important part of your business, and therefore, it must be protected. With the increasing dependence on digital solutions, data is becoming more vulnerable to hacking, exposure to malware, and theft. The use of modern technology like AI, machine learning, and IoT is making it possible for hackers to attack data. Moreover, online transactions are also always at risk.

Cost of implementation

Retailers must pay attention to the costs that are involved in the digital transformation in retail. It is always advised that they draft a budget to keep a check on expenses. Moreover, it is important to ensure that there are no hidden costs, by discussing everything with the partner beforehand. Know that the process will be expensive and understand your future goals to get an insight into what you want.

Integration with legacy systems

It is important to have a strong base when it comes to digital transformation in retail. A lot of retailers suffer from ill integration with their legacy systems. Adopting newer technology can be tough but, incorporating it with the former ones is more difficult. However, once you have this step done, the management will become easier and your digital transformation in retail will be successful.

Resistance to change

The shift to digital technology can be resisted by the management or employees, who do not want to change their style of work. The lack of an organisational change management plan can really hamper digital transformation in retail. There should be an awareness of the need for change and how it is going to affect the overall business. Moreover. the key stakeholders must be focused on.

Examples of Successful Digital Transformation in Retail

Many retail companies initiated a digital transformation in their outlets and saw profits rise exponentially. We have listed two companies which have done quite well after implementing digital transformation in retail industry.


Walmart is a popular retail chain that offers its services globally. The company began with its digital transformation by focusing on its customers to increase sales and strengthen its position globally. It invested quite well in its e-commerce platform as well as its mobile app, and it introduced advanced machinery throughout its stores.

Walmart collaborated with Microsoft in 2018, for a better cloud experience. The retail chain also developed an online store, supply chain and logistics using AI, IoT and machine learning. With the help of modern software, the company was also able to price its products through predictive analysis.

It also deployed the Connected Content Provider Program, which allowed suppliers to escalate content or products on the company’s catalogue easily. Walmart also used technology like the blockchain to track its inventory easily. Today, the revenue of the company stands at 61,130 crores USD as of 2023.


Amazon is a global e-commerce platform that is popular for services like online advertising, digital streaming, cloud computing and AI. It has transformed itself with the help of advanced technology like a voice-activated assistant, Alexaand its online store that sells everything from A to Z, as its logo speaks.

The company took over stores like Whole Foods Market to reach out to a larger audience. To cater to the needs of its customers, Amazon provides exciting offers, cash-on-delivery services, and an easy return policy. It has also used its experience in supply chain management to further improve itself. Amazon’s revenue was recorded at 51,398.3 crores USD in 2022, making it one of the largest retailers in the world.


In this blog, we have highlighted the importance of digital transformation in the retail industry and how it has revolutionized the industry. We have also elaborated on the various challenges that digital transformation in retail involves for you to be sure about what you do. To make things clearer, we have also cited the examples of Amazon and Walmart for a better understanding. We hope this helps you out.

Share this Blog