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Summary:
According to a recent Kearney report on retail digital transformation, physical stores must adopt connected, data-driven technology to stay competitive and meet rising consumer expectations. The report highlights how integrating AI, automation, and real-time analytics into store operations — such as real-time inventory tracking and digital shelf monitoring — can improve stock conditions, reduce shrink, and enhance the customer experience. These insights reinforce that retail digitization is a strategic imperative for profitability and future-proofing brick-and-mortar operations.
Recently, the strategy firm Kearney published a ground-breaking report on the digital transformation of physical retail called “Closing the Digital Gap”. Presented at Tech for Retail last November, this report stresses an urgent need: while online retail has seen massive digital investments, physical stores remain largely analog. This imbalance creates operational inefficiencies and limits the ability to meet rising consumer expectations. The solution? A connected, data-driven retail model that enhances agility, optimizes inventory, and improves the shopping experience.
Staying Competitive By Modernizing Stores
It is becoming imperative for retailers to move past traditional planograms and reach real-time store management. The “Store of Tomorrow” (as called in the Kearney report) embraces a seamless integration of AI, automation, and real-time analytics. Case studies presented in the report demonstrate how B&M can already use the help of AI-powered robots to scan shelves, detect misplaced items, and optimize restocking. The 30% improvement in stock conditions reached through this implementation is why we are continuously working on solutions (Electronic Shelf Labels and Computer Vision / AI) that provide uninterrupted shelf monitoring, and help retailers increase efficiency by reducing human errors.
Streamlining Operations & Enhancing Customer Experience
Stockouts and waste remain major retail challenges. As highlighted by the Kearney report, retailers lose millions annually due to out-of-stock (OOS) situations. By implementing VusionCloud for automated stock tracking and Memory for demand forecasting, waste reduction, and lower labor reliance, Monoprix successfully increased product availability by 2–3 points and improved turnover by 1.2% per store.
The Business Impact of Digitalization
As the report highlights, store digitization is, beyond a technological upgrade, a strategic investment. Kearney’s analysis demonstrates how connected store models drive profitability thanks to optimized inventory, reduced shrinkage, and enhanced workforce efficiency. An iterative approach is possible, using data-driven KPIs to scale digital transformation. VusionGroup’s SaaS solutions, such as Engage and PDidigital, support this step-by-step adoption by minimizing capital expenditure while maximizing ROI. For instance, our digital shelf labels enabled Walmart to update prices directly via a mobile app, eliminating the need for manual paper tag changes and allowing associates to focus more on assisting customers in-store.
From reactive store management to predictive, AI-driven operations, retail is undergoing a fundamental shift of which VusionGroup has been at the forefront for over 30 years. Publications on the connected store like the Kearney report, solidify our conviction that Retailers can redefine the in-store experience by embracing these innovations, thus future-proofing their business.
To dive deeper into these insights, download the full report and contact our experts today.
Kearney is a global management consulting firm founded in 1926, with offices in over 40 countries. Specializing in strategic and operational issues, it serves businesses, governments, and non-profit organizations. Kearney is recognized for its expertise in areas such as, innovation, technology strategy, organization and transformation, and sustainability.
The Kearney report titled “Closing the Digital Gap” emphasizes that while online retail has seen heavy digital investment, physical stores remain under-digitized. It argues that connected, automated, and real-time store technologies are essential for operational efficiency and competitive advantage.
Digitization enables retailers to move beyond traditional manual processes and adopt AI, automation, and real-time analytics to improve inventory accuracy, reduce out-of-stocks, and enhance customer experience — key drivers of sales and profitability in today’s market.
A connected, data-driven model integrates IoT devices (like shelf sensors), AI, cloud analytics, and centralized systems to monitor and manage store operations in real time. This optimizes everything from pricing and inventory to staffing and customer engagement.
Digitization can lead to measurable performance gains — for example, the Kearney report references AI-enabled scanning and restocking technologies that improve stock conditions by up to 30%. It also drives profitability by reducing shrink, streamlining labor, and improving workforce efficiency.
Key technologies include:
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AI and machine learning for forecasting and automation
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Computer vision for inventory tracking
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Real-time analytics dashboards
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Cloud platforms for centralized control
These tools help retailers transition from reactive to predictive store management.
Retailers can begin with incremental, data-driven KPIs and scalable solutions (e.g., electronic shelf labels, real-time inventory monitoring) that minimize upfront capital while maximizing ROI — aligning with both Kearney’s recommendations and practical operational goals.
