2017 is the year of digital transformation for the retail business. You only need to look as far as your local supermarket, which is likely to have replaced regular tills with self-service checkouts, to see the impact digitisation is having on everyday businesses. It’s no surprise that digital transformation has become a part of mainstream IT conversations, with leaders across the retail industry championing its ability to modernise company operations. While it may be simple to say, putting this initiative into action and revolutionising business processes to bring them into the digital age is presenting a serious challenge for many in the retail sector. Nevertheless, the numbers show that it is a challenge that must be met; with estimates that retailers failing to meet the expectations of their customers could lose £12 billion a year.
Digital first is difficult to replicate
Inspired by the likes of Uber and Airbnb, many CEOs and CTOs have gone full steam ahead with digital transformation, hoping that a complete overhaul of their IT systems will see the same level of success and profits. But what they are often neglecting to acknowledge is that these ground-breaking companies are digital natives, founded firmly in the digital age. Essentially, they interact with and rely on a consumer base that is already experienced in the technology that made the companies successful in the first place. It would be a mistake to try to draw comparisons between these digital-first companies and large, retail companies – a study of the former will never truly predict how the latter will fare when implementing new digital technologies.
So, what are the top three steps you need to complete to make a success of your digital transformation project?
1. Put a plan in place for digital change
While most business leaders understand that they need to adapt quickly to take advantage of all the opportunities on offer from new digital technology, the practicalities behind making this a reality are less clear. Older, more established organisations should take the time to evaluate the bigger picture and understand how to best approach this transition. This is not to dissuade these big brand businesses; many of which have made a great success of digital transformation. For example, only a few years ago, 72% of Shop Direct’s sales came from catalogue customers. Now, Shop Direct’s brands Littlewoods.com and Very.co.uk are wholly online, and a staggering 63% of sales are processed on mobile devices.
2. Adaptation not abandonment
Digital transformation does not necessarily mean traditional retail is obsolete. Nor does it call for physical shops to be closed down and everything to be moved online. For some companies this can be a success, but customers appreciate a physical presence. In fact, one survey has shown that 90% of consumers prefer shopping in a brick and mortar store. Instead of doing away with stores entirely, brands should incorporate new technologies into their shops as they are made available. For example, 42% of retailers have already made the move to incorporate mobile technology in-store. What’s more, the potential for revolutionising the in-store experience is vast, with technologies such as advanced robotics able to enhance the customer experience even further.
3. Put the customer at the heart of the program
At the end of the day, any digital transformation project should have the customer front and centre. Whether the new processes are focused on providing personalised sales offers to customers by using more meaningful data analytics, or giving consumers online access to inventory information for physical stores with click and collect services, the number one objective needs to be to improve the end-user experience.
For large retail organisations, true digital transformation needs to be based around customer experience and gaining a more personalised understanding of their preferences. New technologies such as virtual reality, chatbots and speech recognition will revolutionise how businesses interact with their customers. Consumers are only becoming more digitally-savvy, so you need to ensure you’re catering for these digital preferences, or else risk losing business to the competition.
At the end of the day, retailers need to do more than pay lip-service to the biggest business disruptor since the industrial revolution; this means going further than simply having a website or mobile app. Undertaking true digital transformation requires a new approach to processes and fresh business models. If you succeed in implementing these initiatives, there will be enormous opportunities for efficiency, customer service improvements and, ultimately, business growth.
Richard Whomes is senior director sales engineering at Rocket Software