As brick-and-mortar retail transforms, merchandisers need to advance their in-store technology and leverage the power of the smartphone or face extinction, according to a report from ABI Research.

The firm says younger generations are the agents of this revolution, and identifies the stages of technological development that retailers must undergo before the total market makeover is complete in 2025.

“Millennials play a large role in the in-store shopping revolution, as their smartphones are basically an evolutionary extension that the retail industry has yet to catch up with,” said Patrick Connolly, principal analyst at ABI Research. “The conceptual battle between brick-and-mortar versus online is dead. All retailers must become omnichannel and harness the power of the smartphone by developing next-generation, personalized experiences.”

Because retailers don’t only have one type of shopper, the first step to understanding the customer base is to bring online analytics to the real world by leveraging existing technologies, such as iBeacons, camera analytics and Wi-Fi. Using the smartphone as a platform then creates a new way for retailers to personally engage and entice customers, while also opening a new advertising revenue channel.

“Installing an iBeacon network is not enough,” Connolly said. “Retailers must upgrade and aggregate all data across their brick-and-mortar, online, and mobile outlets. It is otherwise impossible to understand the customer enough to personalize offerings, streamline processes and create new services.”

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