With the advancement of technology and the rapid changes in consumer preferences, the physical retail industry in Malaysia faces huge obstacles. As a result, traditional retail institutions in Malaysia must now adopt tailored strategies to stay up-to-date and adapt to future market demands. This paper explores the challenges and opportunities that physical retailers face in the process of digital transformation as they adapt to changes in consumer mindsets and consumption habits. This study first sheds light on the need for digital transformation, including its efficiency in big data operations and consumers' feelings and attitudes towards online and offline consumption. This paper then details the key strategies deployed by physical retailers in the process of digital transformation. These strategies include blending online and offline shopping experiences, applying big data analytics and artificial intelligence technologies for inventory control, and using social media and digital marketing technologies to enhance brand awareness. But digital transformation also brings challenges. This paper carefully evaluates the main challenges faced by physical retailers, such as limited infrastructure resources and the competitive advantages provided by online marketplaces such as Amazon. As part of the exploration, this paper also delves into the cultural and organizational inertia that may hinder the adoption and effective execution of innovative practices. To overcome these obstacles, this paper proposes several recommendations for these obstacles. These recommendations include increasing collaboration with technology companies, investing in employee training to provide excellent customer experience, and developing flexible digital strategies to quickly adapt to the changing market environment. The government also emphasized its involvement in digital transformation and proposed fiscal incentives, upgrading internet infrastructure and developing supportive policies. Finally, this paper introduces the use of big data questionnaires to explain consumers' attitudes towards online and offline retail. The analysis of these success stories helps to understand best practices and insights; in addition, these case studies also reveal potential opportunities for digital transformation, such as entering new markets, cultivating additional revenue sources or strengthening brand loyalty.
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