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GUEST COMMENT Digital transformation has never been more important in retail

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GUEST COMMENT Digital transformation has never been more important in retail

Nikki Baird is VP of retail innovation at Aptos
Nikki Baird is VP of retail innovation at Aptos

Over the past few months, Covid-19 has forced brands to rapidly transform to adapt to a new, digital-first world. Rather than backing off on IT spend or pre-pandemic plans, retailers have had to keep digital transformation at the top of the agenda — in some cases even doubling down on their investments.

 

In fact, Lubomira Rochert, chief digital officer of L’Oréal, described how the pandemic spurred the beauty industry to achieve “in eight weeks what … would have otherwise taken us three years to do.” The same can be said of retailers more widely. Ultimately, the businesses with strong omnichannel capabilities and powerful, digital connections have been better able to weather the shutdowns and disruptions. While stores were closed, these retailers maintained services and strong customer experiences online. Fortunately, it’s not too late for other retailers to catch up.

 

There’s no going “back to normal”

Before positive change and transformation can begin, retailers have to understand the new market context. Online shopping was a bright spot during the shutdowns, but it isn’t nearly enough to offset the impact of closed stores on many retailers. As those stores reopen, retailers in the UK and US are seeing sales surge and a welcome return to growth. Yet this period of “revenge shopping” is unlikely to last.

 

Disruption is already being seen during the back-to-school period, with retailers working to accommodate customers shopping for both digital and traditional learning in some areas. In these tentative months of reopening, retailers also must prepare for a critical holiday season that’s more uncertain than ever as increasing economic pressures could put a strain on consumer spending.

 

Retailers need to prioritise digital transformation in order to successfully navigate this environment — focusing on a digital-first approach that includes omnichannel acceleration, inventory transparency and an emphasis on customer communication. The goal should be to provide the best, most competitive shopping experience, with the ability to fulfill from physical storefronts and to provide timely updates to customers regarding the shipping/fulfilment process.

 

Building omnichannel excellence

To build an agile, digital-first business, retailers should start by dissecting their online and offline processes. Consider what it is like for customers who want to “pre-shop” a store before they visit. Do inventory stock levels show up correctly online? Does the business support key in-store processes such as ship from store, pickup in store and curbside pickup? These flexible fulfilment options can make or break a sale for online shoppers. Additionally, retailers without delivery services already in place can consider partnering with third-party home delivery providers. It is crucial to be as accessible as possible.

 

Retailers should also take a look at their portfolio of physical stores and define the right role for each location. Although some stores may need to be closed due to low foot traffic or sales, other stores can be used as fulfilment locations. For example, some locations could be converted to dark stores or grey stores — where their only purpose is to hold or fulfill local orders or to offer a small selling space backed by a much larger fulfilment space. Another possibility is to use a storefront as a curbside pickup location for customers who don’t want to queue or enter the store.

 

Once each store location has a defined role, retailers should rebalance planned inventory to align with these roles. This should be revisited on a daily basis, especially as consumer behaviour shifts, resulting in even more in-store or curbside pickup as holiday shipping deadlines loom. It is also important to consider how Covid-19 buying habits are impacting inventory needs. If a store is engaging in both fulfilment and in-store selling activities, retailers could pull items that do high volume through fulfilment off the sales floor and restock with items that need a sales boost from in-store shoppers.

 

Enticing customers with new experiences and disrupting processes where it makes sense can also be beneficial. For instance, consider how in-store associates or fulfilment experts can engage customers with upsell or cross-sell opportunities as they collect an in-store pickup order. Another strategy is to offer impulse items near the curbside pickup tent.

 

Additionally, mobile-first should be the mantra rather than the afterthought when evaluating the holistic customer journey. Explore how mobile can be used to enhance the customer experience — like sending delivery updates or pickup instructions via SMS. Smartphones can also be used to deliver a safer, touchless in-store experience. One example would be a mobile app that allows customers to pick up an item in the store and scan it with their phone in order to make their purchase without needing to queue or deal directly with staff.

 

Omnichannel and beyond

It’s not enough for a brand to survive disruption — you want to be able to thrive in it. A demand-led approach, leveraging in-store fulfilment, integrated planning, allocation and replenishment should be the goal. A comprehensive, omnichannel strategy – focusing on customer accessibility and convenience — can help your brand emerge stronger. Digital transformation isn’t a short-term solution; it’s a long-term competitive advantage.

 

Nikki Baird is VP of retail innovation at Aptos

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