Much has been said about retail’s recent transformation into a more data-driven, digital-first industry. Retailers and technology leaders have lauded the returns on digitalization initiatives, touting analytics and connected systems’ potential to provide roadmaps for waste reduction, retail crime mitigation and customer experience enhancements

All of this is true; retailers’ investments in digital transformation over the last decade have helped make the industry more agile, responsible and reliable. However, if there’s one thing we’ve learned from our 60 years helping retailers improve their operations, it’s that there’s always more work to be done.

The next level

The initial wave of digital transformation was focused on digitalizing: bringing systems and processes online, connecting stores and gathering data. The next chapter will build on this foundation, with retailers investing in tools that centralize and integrate operations to make stores smarter and customer journeys more personalized, streamlined and engaging.

While strides have been made toward seamless omnichannel integration, barriers and friction still exist. This doesn’t mean that retailers have failed; quite the opposite. Optimization is a process. With each milestone, new roadblocks emerge. With each market obstacle overcome, three more appear. Moving goalposts and new challenges are signs that you’re doing something right.

The next set of digital transformation goals is a natural extension of the work done thus far. As personalization and convenience become the norm, customer expectations grow. To achieve it, retailers across the globe will need to mature their digital systems: undertaking consolidation initiatives and integrating legacy systems into cloud-based, API-driven ecosystems.

Pursuing mature, integrated, end-to-end solutions will enable retailers to better track customer journeys and sentiments, as well as their own performance. This contextualized insight can help them to enhance and personalize customer touchpoints regardless of how a shopper engages with the brand.

For example, growing use of source-to-store sensors and source-tagging programs is opening leaders’ eyes to the ways downstream events impact in-store performance. AI tools that can identify repeat visitors and differentiate between employees and shoppers demonstrate similar potential to reframe long-held metrics to better illustrate performance.

The proof is in the progress: Retailers already leveraging AI and machine learning significantly outperform their peers—achieving sales growth at 2.3 times and profit growth at 2.5 times higher than less-advanced competitors. However, there’s more to consider here. The convergence of data from previously disconnected business areas will redefine retail performance metrics, challenging long-held ways of thinking about inventory management, foot traffic, sales and everything else that happens within an enterprise.

It will also enable an era of unprecedented transparency, which will help strengthen the relationships that keep retail running: between internal departments; coworkers; retailers and their partners; and shoppers and the brands they love. This will help cultivate trust and loyalty to drive engagement and improve experiences for all.

We’re already seeing this shift play out, with integrated analytics tools changing the way leaders see total retail loss and their role in preventing it. Combining item-level inventory data with video analytics, sales, exit and supply chain data is helping retailers unravel the mystery of how, when and where shrink happens. Similar shifts are happening in evaluations of traffic and conversion, as integrated analytics empower retailers to differentiate between repeat visitors, staff and passersby, providing a more accurate picture of shopper engagement.

Supporting this transition will be state-of-the-art hardware that’s designed to support advanced analytics, including IoT sensors built for fusion and exit pedestals equipped with computer vision. AI and machine learning (ML) models will also play a key role, providing retail decision-makers with new ways to interpret and quantify unknown and unseen variables previously.

Change as a constant

Retail leaders have seen their operations change significantly over the past decade as emerging technology, changing market pressures and shifting consumer expectations drive constant re-evaluation and refinement. Keeping up has been a challenge, to be sure, and it’s one to which retailers worldwide have risen. However, the work is not done.

That shouldn’t come as a surprise to retailers. This is an industry defined by its stability and plasticity in equal measure. It sits somewhere between hospitality and critical infrastructure, both always changing and always there; it will continue to do so. And technology will continue to support leaders as they navigate whatever is ahead.