Uploading the Marketplace: How Brick and Mortar is Becoming Accessory to Digitalization

Walgreens, formerly, "at the corner of Happy and Healthy," has now revived some tired arguments in the South Loop of Chicago - as the one at the corner of Roosevelt and State has become a test store for what the company hopes will bring conveniences to customers. If you put your ear to the wall of our neighborhood, the chatter tells a different story. Change is not only scary for a lot of people, it can often be an appealing scapegoat for the things they're really scared of: spikes in crime, shadowy elites pushing nefarious brain chips, and not being able to find the Starbucks bathroom after one of their new olive oil coffee drinks kicks in. More neutral trends in the necessary digital transformation of their favorite brick-and-mortar stores are much less exciting on the surface than the boogeymen they'd like to attribute Walgreens' new renovation to. The familiar chorus of baristas trying to pronounce names and the sniffly rustle of customers perusing aisles for something to stop their seasonal allergies is now just the hum of us tapping on screens, transactions getting sent via lasers through Chicago's glorious fiber optic lines, and the periodic whisper of someone repeating their mobile order number to a masked worker solving for today's Wordle - and that, inevitably, has caused panic. This is an awkward moment of transition as we embark on a really important leg in this current industrial revolution, and I'd like to explore why this shift is happening while traditional retail brands modernize their models to meet the evolving demands of the digital marketplace. I won't focus too heavily on debunking the rumors, but hopefully this analysis has that effect by design.

I'll be blunt to start, though: this transformation isn't spurred by increased crime or in support of loss prevention strategies, contrary to lead-poisoned comment threads and fear-mongering in Facebook groups. It's a shift born out of necessity - the need to adapt and thrive in a digital-first world.

We know the damage not keeping up with e-commerce and digital trends has already had on some of the retail brands we grew up with, while others adapted quickly enough to reinvent themselves and survive. Walmart didn't roll over to Amazon, they built an army of software engineers, product managers, and UX professionals to become a tech company. Some traditional retail survived these transitions doing the bare minimum because of their niche and convenience, but what's coming next won't be as graceful: with little robots delivering your cold medication, startups like GoPuff and Getir offering mobile and digital-first on-demand delivery of the things you'd traditionally get at your local Walgreens, CVS, or 7-Eleven, and with the immediate ability to order any coffee drink your heart desires with the scan of your face from your local ghost kitchen and more streamlined food delivery options popping up, Walgreens isn't just trying out new concepts to ruin your day. Walgreens isn't just trying new concepts because sometimes people steal hygiene products. Walgreens is trying new concepts because this isn't your mom's South Loop, and there aren't nearly as many of your moms going to Walgreens to pick up that one thing they needed after work when that thing can be waiting for her when she gets home. Part of this current story arc for digital is also not just about having an app, but about meeting evolving customer expectations and providing much faster, personalized experiences. This comes from meeting you where you are - in the palm of your hand, driven by your data and preferences - rather than you coming to where they are and needing to run around the store Supermarket Sweep-style or stressfully read and decide from a tiny-font menu with a line of people behind you.

We are, undoubtedly, in a new era where technology has seeped into all aspects of life, including our buying habits. The market today is largely characterized by a generation of tech-savvy consumers who demand speed, convenience, and personalization. Whether it's ordering dinner, catching a ride, or picking up prescriptions, there's an app for everything. This ubiquitous digital evolution has made physical storefronts less of a necessity and more of an accessory.

The shift doesn't dismiss the importance of brick-and-mortar stores. Instead, it is redefining their roles in the evolving retail landscape. A physical store today (let alone 5-10 years from now) is not just about selling products but about providing a holistic shopping experience to the customer. It is about using the physical store as merely a touchpoint for customers to interact with the brand in a meaningful way, to experience products, and to pick up their digital orders, while the heavy-lifting of inventory, selection, and checkout is increasingly being handled online. Ulta Beauty is a great case study of how successful an omnichannel approach is to upgrading traditional retail to meet a modern customer base, and how much it pays off in customer loyalty and customers maintaining a healthy relationship, even in-store.

Companies like Starbucks are already leveraging this trend, as well, enhancing their mobile app experience and integrating it with the physical store. Starbucks' mobile app, for instance, allows customers to order and pay in advance and simply pick up their orders in-store, thus reducing the wait time and improving the customer experience. This convenience of digitally ordering your favorite latte while on the way to work, and then just picking it up, has contributed significantly to the company's success, and has granted them the flexibility to greatly reduce overhead costs for their physical locations by turning them into mobile pickup-only. It's a symbiotic relationship where digitalization streamlines the logistics and experience of the physical store, and vice versa.

The rumored idea that this shift is an attempt to combat crime or theft is a gross simplification of the underlying dynamics driving this change. While effective loss prevention and security are important considerations for any retail business, the root of this shift is anchored in changing customer behaviors and technological advancements. Even if there is a natural reduction in physical theft by nature of going digital, there are still serious challenges these brands must face on the new frontier in terms of cybersecurity and ops. Where data becomes more of a currency, and where all transactions happen digitally, the idea of "loss prevention" simply changes meaning; it isn't dissolved or solved.

Digital transformation, in essence, is about optimizing the customer experience. It's about making shopping as convenient, quick, and personalized as possible. With digital platforms, businesses can collect and analyze customer data to offer a more tailored experience, predict their preferences, and build stronger relationships. It's about companies maintaining their relevance and competitiveness in a fast-paced and ever-changing market.

To wrap, the narrative around the digitalization of traditional retail spaces being primarily driven by crime or loss prevention is misguided. The real drivers are changing consumer behaviors, technological advancements, and the quest for a superior, personalized, and seamless customer experience. So next time you step into your local Walgreens or Starbucks, take a moment to appreciate the blend of the physical and digital worlds working together to serve you better. This is the future of retail, and it's happening right now. It's not a response to fear, but a testament to the progress of our times, where brick-and-mortar becomes an accessory to digitalization.