By Dr. Yishai Ashlag, CEO & co-founder, Onebeat
The meteoric rise of e-commerce has perpetuated a narrative that physical retail stores are a thing of the past.
In reality, brick-and-mortar isn’t just surviving – it’s thriving in unexpected ways.
While online shopping offers customers convenience, retailers have come to understand that their advantage lies in offering a unique sensory and emotional experience that only a physical store can deliver. Because ultimately, customers want what they can touch
Physical still matters
Trying on a shirt or simply browsing in an inviting environment triggers an instant dopamine hit that no screen can replicate.
In this sense, retail success is increasingly found at the extremes: either retailers that sell everything, such as Target and Walmart, or those that sell one thing very well, such as Lululemon’s premium approach to athletic wear. In both examples, immediate sensory engagement is a powerful motivator – one that often drives the decision to buy.
While price and product quality remain important, 73% of consumers say that experience is also an important factor in their purchasing decisions. This reinforces the power of brick-and-mortar’s tactile, sensory engagement as something that e-commerce can’t replicate. In fact, as “online-first” brands, such as Alo Yoga, recognize that a physical presence can deepen customer loyalty and drive spontaneous purchases, many are exploring brick-and-mortar stores.
Inventory: the unsung hero
Behind every successful brick-and-mortar experience is a hidden detail: precise inventory management, often driven by AI.
Recent research reveals that 72% of consumers made an unplanned, discretionary purchase in-store just last month. But those impulse purchases don’t happen by accident. They depend on the right product being in the right place at the right time. Without accurate, responsive inventory management, even the most inviting storefront or engaging customer service can’t convert curiosity into sales.
Simply put, sensory appeal can only convert sales if desirable or needed products are available on the shelf. This is where operational efficiency and customer engagement meet.
Only with real-time accuracy at the SKU (stock-keeping unit) level, supported by granular micro-data, can retailers know exactly what shoppers want, when and where they want it. Without it, store stocking becomes a guessing game and the “touch and buy” moment can quickly turn into the frustration of an empty shelf.
Removing bottlenecks
Retail operations, especially in physical stores, face many bottlenecks that restrict the overall flow of goods and retail information.
Consider the disruption caused when a desired product isn’t available due to inaccuracies in stock tracking or too-slow replenishment. The customer experience ends in frustration, and potential sales are likely squandered. A chain is only as strong as its weakest link, and weak inventory availability causes the whole chain to suffer.
The “Theory of Constraints”, a management philosophy focused on identifying and alleviating such bottlenecks, offers a useful lens. By targeting the weakest link – in this case, suboptimal inventory management – retailers can optimize the entire system’s performance. The silver bullet then becomes improving inventory visibility and accuracy to remove a major constraint, enabling a smoother, more responsive in-store experience.
Technology saves
Inventory precision requires dynamic tools that go beyond static planning and periodic stock counts.
This is where AI-powered analytics come into play.
By ingesting vast streams of data – point-of-sale transactions, supply chain movements, seasonal trends, local events, weather forecasts, and more – AI can help retailers anticipate demand shifts before they occur. Combined with technologies like RFID (Radio Frequency Identification) that track in-store items in real-time, these AI models enable a continuous, consistent view of what’s available and where it’s needed.
This isn’t just about knowing what’s in the back room; it’s about predicting when and where a specific SKU will be in demand, and making sure it’s in the back room at the optimal moment. These technologies make it possible to deliver on the “see it, touch it, buy it” experience that physical stores do so well by predicting demand shifts, ensuring availability, and turning intent into immediate sales.
Customer centricity
The real advantage of physical stores is their ability to create customer-centric shopping journeys.
Understanding basic customer behavior patterns such as shopping frequency or preferred product categories allows retailers to tailor offerings and experiences that resonate more deeply with their shoppers, turning shopping from a routine transaction into memorable engagement.
High-end retail stores, which often emphasize exclusive customer experience, are thriving even as mass-market malls struggle because the highly personalized, luxurious experiences they offer to customers become part of the value of the product itself
Real-world shifts
Some online-first brands are already experimenting with physical locations, carefully measuring their potential and optimizing inventory accordingly. These efforts highlight the growing recognition that brick-and-mortar, when done right, complements e-commerce rather than competing with it.
Frankies Bikinis, for example, partnered with Leap to rapidly expand from online-only sales to six profitable brick-and-mortar stores in just two years. The move boosted sales, with over half of in-store shoppers new to the brand.
Retailers leverage analytical insights to pair experience with convenience, better understand their customers, and remove operational bottlenecks will smoothly make the transition to a hybrid retail world. Whether it’s a store selling a broad assortment or one focused on a niche, the common thread of success is agility and accuracy in inventory.
Let’s get physical
Brick-and-mortar isn’t dead. It’s simply evolving.
The future of retail lies in blending experience with operational excellence. It’s about more than just having products on shelves – it’s about leveraging real-time data and AI-powered intelligent systems to ensure that the right products are available at the right moment.
When inventory management becomes a dynamic engine rather than a static challenge, physical stores can deliver the instant gratification and sensory engagement that customers crave — and that online shopping struggles to match. The brands who fuse physical experience with real-time inventory agility will define the future of brick-and-mortar.
