Here's what brick-and-mortar retailers need to do, according to one analyst

Khairiyah Ramthan
How retail is changing
How retail is changing

Wal-Mart reported earnings that beat analyst expectations this week, proving to be a positive note in a challenging retail environment.

Other brick and mortar retailers can only hope to achieve similar success if they commit to changing with the times, one analyst said Friday.

"When you talk to brick and mortar retailers, they're really very much stuck in what they used to do. So there isn't much technology being used in the retail scenario," Kenny Yeo, senior industry analyst at Frost & Sullivan, told CNBC's "The Rundown" on Friday.

"Having a census and data would enable the brick and mortar retailers to understand the customer better so they can give better customer service," he added.

He said, however, that the only pieces of data retailers really have are from the point of sales system, as well as counters where people are walking in and out of the store. Where the data is lacking, he explained, is where customers go once they enter a store.

"So frankly, I see that the strategy Wal-Mart is taking is really something that consumers want," he said.

Customers shop at a Walmart store on January 17, 2017 in Skokie, Illinois.
Getty Images

The changing face of retail is mainly due to the rise of e-commerce, and although Wal-Mart's physical stores generated most of its sales, its digital sales increased by 63 percent from the previous year. So as the retail industry veers further towards e-commerce, retailers need to adapt to meet new customer demands.

"Today's consumer is really different. When we go to a store, the first thing we do is pop out a phone and check what competitors are charging for the same item," Yeo said.

"Habits are changing so much so that you use both online and offline (avenues) at the same time," he added.

"Wal-Mart has an interesting strategy where it's embracing both. That's very interesting and is the way forward," he said.

According to Yeo, there are three key technological drivers — automation, awareness and immersion — that traditional retailers should focus on.

Firstly, automation helps with basic standard tasks, such as stock-taking, which allows for more time for staff to interact with consumers.

Awareness allows retailers to use technology such as online trackers to detect both the physical interaction of customers in stores as well as shopping habits on websites. This allows them to understand the consumer's buying behavior.

Lastly, immersion gives retailers the power to influence customers' buying habits in store and online by using previously collected information from tracking services. This can happen through the use of apps, location services and even augmented reality.

"They know what we're looking at and what we're clicking on, so that they are able to amend and change the page to optimize the experience," he said.

The incorporation of technology into bricks and mortar would create a better retail experience for the customer, and "so that in the end, is what the customer wants- better customer service from both digital and in the store itself," Yeo said.