Why Flagship’s Simon Molnar says physical stores still matter

Recent headlines about the state of retail may seem pessimistic, but several of Australia’s most forward-thinking retailers are doubling down on their investment in brick-and-mortar spaces.

Simon Molnar, founder of Australian retail tech company Flagship, is working with brands to rethink physical retail entirely.

He shared his insights with RetailBiz on why Gen Z is driving a return to stores, the persistent lack of in-store measurement tools, the promise of unified commerce, and the importance of bringing a digital mindset into physical environments.

Molnar believes the next big opportunity lies in building smarter, more measurable stores. Today, physical locations are more than just points of sale; they are brand hubs and community spaces.

“Physical retail isn’t dead, it’s just evolving. In fact, we’re seeing strategic investment from some of Australia’s most progressive brands. Mecca is building the world’s largest beauty wellness destination. Adore Beauty is rolling out 25+ stores. Universal Store is expanding. Why? Because stores remain a powerful revenue driver — still accounting for ~70 percent of total revenue for many omnichannel brands,” Molnar told RetailBiz.

According to Molnar, the retail game has changed. Investing in physical locations now demands a new level of accountability, and that’s where Flagship comes in.

The shop floor blindspot

Molnar points out that most retailers still have limited visibility into what’s working in-store, which means many are “leaving millions on the shop floor.”

“Online, there are dashboards for everything: ROAS, clickthroughs, attribution models. But in-store? Once a customer walks through the doors, the data often vanishes. Offline attribution has long been treated as a nice-to-have, or worse, too hard to bother with.”

He calls this a “shop floor blindspot.” Even when digital campaigns successfully drive in-store visits, the lack of attribution may lead teams to wrongly assume the campaign failed, resulting in cut budgets and missed opportunities.

With advanced technology and AI readily available, Molnar says retailers no longer have an excuse to rely on guesswork.

Gen Z craves connection

Gen Z, often labeled as a digital-first generation, is actually a powerful force behind the revival of physical retail. They’re looking for connection, not just convenience.

“Gen Z may be digital-first, but they’re not digital-only. In fact, around 64 percent of Gen Z shoppers say they prefer shopping in-store, and three in five go to stores specifically to connect with brand communities,” Molnar said.

This shift presents a major opportunity for brands. To win Gen Z’s loyalty, they must offer immersive, real-world brand experiences, not just transactions. Flagship aims to help retailers transform stores into high-impact spaces that drive deeper engagement and increase lifetime value.

Closing the physical-digital gap

While online sales are tracked down to the click, in-store performance remains difficult to measure. Historically, physical retail has lacked a purpose-built optimisation tool. Without clear attribution, it’s hard to know what’s actually driving sales.

“There’s a major disconnect here. Retailers have built entire teams and toolkits around measuring online performance. But physical stores, which still drive the lion’s share of revenue, are often managed on gut feel,” Molnar said.

“Is that window display driving walk-ins? Is the front-of-store layout helping or hurting? Are merchandising changes lifting conversion? These are fundamental questions, and most brands can’t answer them. At Flagship, we’re changing that because performance without measurement is just guesswork.”

One of the most talked-about trends in the industry today is “unified commerce.” For Molnar, it’s more than a buzzword; it’s the future of retail.

It means delivering a seamless experience across online, in-store, and social channels, with a single source of truth for performance and behaviour.

“In practice, most retailers are still a long way off. Online and store teams often operate in silos, with different KPIs, tools, and perspectives. But the customer doesn’t see channels, they just see your brand. The retailers who will win are the ones who can connect the dots across every touchpoint and optimise holistically, from TikTok ad to shelf in Bondi Junction.”

A digital mindset for physical spaces

Molnar argues that retailers should start treating their physical stores the same way they treat their websites: as performance channels that are constantly tested, measured, and optimised.

“Online, we test everything—layouts, creative, calls to action. We iterate fast and optimise constantly. That mindset needs to extend into physical environments. Retailers should be asking: are we money-mapping by fixture like we do with product tiles online? Are we iterating based on in-store data? Are we allocating budgets based on measurable outcomes?”

“This is the shift—from static, intuitive store planning to dynamic, data-driven execution. The brands that embrace it are already seeing significant returns.”

According to Molnar, applying this digital-level discipline to physical retail is essential for long-term success.

“Would you launch a website without analytics or optimisation tools? Of course not. Yet that’s still how many brands manage their stores. At Flagship, we’re bringing digital-level clarity and optimisation to physical spaces. Because the future of retail isn’t online or in-store. It’s both, working together, in perfect sync.”

‍