At its core, merchandising is all about how products are showcased in-store—through eye-catching displays, smart placement, and managing inventory to make shopping easy and boost sales. But in today’s retail industry, the old-school ways of doing this, which depend a lot on past sales data and manual tweaks, often fall short.
Relying solely on historical sales to guide the future doesn’t give you the real-time data needed. It’s tough to predict exactly what customers will want next or quickly adapt when their habits change. And that leaves you with missed opportunities and resources that could have been better spent elsewhere.
The stakes are huge. Worldwide retail sales are projected to hit $31.3 trillion in 2025, and by 2030, that number is expected to climb past $37 trillion. With that much on the line, every shopper interaction matters. The challenge is that consumer behavior changes fast, sometimes in ways you’d never expect.
Shoppers may walk in intending to buy one item, yet 84% end up making impulse purchases. That means you have the opportunity to influence them, but not the luxury of figuring it out through slow, in-store trial and error. That’s why testing and simulation are critical.
Now there’s a game-changing technology reshaping how retailers approach merchandising: digital twins in retail. This innovative tool creates virtual replicas of everything from stores to customer interactions that are constantly updated with live data. Using 3D models and computer vision, retail teams gain unprecedented control over their operations, giving them the power to optimize store layouts, cut costs, and create a better shopping experience.
How Does a Digital Twin Work?
A digital twin might sound like something out of a sci-fi movie, but it’s quickly becoming a reality of how businesses, including retail stores, operate. Essentially a digital twin is an AI-powered virtual model that mirrors its physical counterpart in real time. Think of it as a real-time simulation constantly fed data from the physical store, just like how your GPS updates your location as you drive. This allows businesses to not only observe but also predict outcomes, simulate changes, and make improvements without touching a single physical object.
A variety of industries already use digital twins. In manufacturing, for example, digital twins help companies monitor machinery to predict maintenance needs before a breakdown occurs. In construction, they allow for virtual building models to test structural changes or simulate environmental impacts. In healthcare, digital twins model patient health and improve treatment strategies. When it comes to retail, the potential is enormous. With customer behaviors changing rapidly and the rise of e-commerce, retailers can no longer afford to take months to test what works in stores. A digital twin allows retailers to make changes virtually in real time so that they can then keep pace with market demands in-store and outmaneuver the competition.
In retail, a digital twin pulls in data from various sources—sensors in stores, sales records, customer interactions—and syncs it to a virtual environment. This “what if” machine enables retailers to test and refine their merchandising, inventory, and store layouts based on use cases derived from real-world data. For example, if a store is considering rearranging its layout, it can simulate customer foot traffic with computer vision insights in the digital twin to see how the changes might impact sales. 
How Digital Twins Revolutionize Merchandising Strategies
Real-Time Store Visualization and Layout Optimization
Digital twins give retailers and brands the rare ability to step inside their store concepts before a single display goes up. Using virtual reality, teams can walk through a fully formed 3D digital twin and test how product placements, signage, and merchandising choices will guide customers through the aisles. Instead of crossing their fingers after an expensive reset, they can see the impact in advance: Where does traffic slow? Where does engagement spike? They test and then make adjustments that lead to more streamlined store operations.
This functionality especially pays off fast in high-traffic environments like grocery stores, where even shifting an endcap can change the flow of hundreds of shoppers an hour. With a digital twin, retailers can simulate the effect of moving an entire aisle or tweaking a key display without physically lifting a single product. That level of automation helps optimize store operations, fine-tune staffing, and boost performance without the waste and downtime of trial-and-error changes.
Personalized Customer Experiences
The value of digital twins doesn’t end with better store layouts. They also open the door to in-store experiences designed for specific customers. A virtual replica of the store can be layered with shopper data to see how certain groups respond to different product placements, signage, or promotions. Retail teams can watch those interactions play out in the virtual model and refine merchandising strategies until they feel effortless for the shopper.
Picture a grocery store that learns its early-morning crowd shops for specialty coffee and organic produce. By analyzing this behavior in the digital twin, the team can adjust displays and pathways so those items are front and center for that audience. The result is a smoother customer experience, with shoppers feeling as if the store were built for them.
Testing and Experimentation Without Risk
One of the biggest advantages of digital twins is that they strip the uncertainty out of changing a store layout. Teams can jump into a virtual environment, test a product launch or rethink merchandising strategies, and see the results instantly. They can forecast how customers might respond and optimize the design before making a single change in their physical stores.
Because the experimentation happens digitally, there’s no disruption to shoppers and no downtime on the sales floor. Aisles stay open and store teams can keep working while new ideas are refined in the background. This fast, low-risk approach lets retailers run multiple scenarios in a fraction of the time it would take to do so in the real world, then move forward with the strategies most likely to perform.
Seamless Collaboration Across Teams
Cross-team collaboration can be a juggling act in larger stores, but digital twins create a shared virtual model accessible to multiple teams, such as marketing, merchandising, and store operations. Now everyone can work from a single source of truth. The marketing team can drop in new promotions, the category team can adjust product placements, and store managers can confirm that the changes make sense, all inside the shared virtual environment.
For brands with multiple locations, this functionality multiplies. It ensures that merchandising strategies are executed consistently across every store, no matter the size or geography. It also eliminates the miscommunication and delays that come from working in silos, keeping the focus on delivering the best possible customer experience.
Supercharge Your Strategy
As part of our commitment to digital transformation and innovation, InContext Solutions offers a suite of powerful digital twin technology to drive immersive experiences in retail. ShopperMX, InContext’s virtual store platform, allows brands and retailers to harness the power of new technology to create highly detailed digital twins of their stores. This immersive tool enables retail teams to test merchandising strategies, store layouts, and displays in a virtual environment before making any real-world changes—whether that’s reconfiguring an entire grocery aisle or testing a seasonal endcap for back-to-school. By doing so, retailers can make data-driven decisions that maximize ROI and improve customer engagement.
The future of digital twins also comes to life with SMX GO, InContext’s augmented reality (AR) field enablement app. Retail teams can use this new technology to overlay digital displays, signage, and planograms onto the physical store space—for instance, previewing a new holiday decor package in the exact location it will be installed—making it easier to validate and refine merchandising strategies. This seamless integration of AR and real-world execution fast-tracks decision-making, ensuring that stores remain consistent and effective. With SMX GO, retailers can collaborate in real time, leveraging immersive AR technology to provide dynamic insights and solve problems instantly, improving the alignment of displays with customer preferences.
Beyond visualization, Arrangement AI, InContext’s artificial intelligence tool, uses real-world shopping behavior data to predict customer actions with more than 85% accuracy. For example, it can anticipate how shifting a popular snack brand closer to checkout might affect impulse purchases. This technology combines AI and digital twins to help retailers create smarter, more efficient merchandising strategies. By using data-driven decisions and deep insights into customer preferences, Arrangement AI ensures that stores are not only well organized but also optimized to meet the evolving needs of shoppers. With these tools, InContext helps retailers stay a step ahead.
In addition to offering full digital twin capabilities, we also help brands succeed with targeted virtual testing. For example, a national frozen breakfast brand used our virtual shelf research to evaluate six pricing scenarios across everyday and promotional formats. The insights revealed the brand could raise its everyday price slightly without hurting sales and use a “3 for $7” promotion to drive volume, contributing to an 8.16% sales lift the following year.
Whether you need to simulate a full store in virtual reality, run a quick pricing test, or refine in-store execution with AR, InContext has a solution built to fit your strategy.
Get Started with InContext Today
Digital twins are revolutionizing merchandising, from optimizing store layouts to creating personalized shopping experiences that meet customer preferences in real time. By leveraging augmented reality, artificial intelligence, and immersive technologies, retailers can make data-driven decisions that improve both efficiency and customer engagement. Whether you’re looking to enhance inventory management or experiment with merchandising strategies, InContext’s cutting-edge solutions can help you stay competitive.
Don’t wait. Explore digital twin technology with InContext today and lead your business into the future of retail.
