Ask any retailer about the most important strategic imperative they have right now and the chances are that ‘Digital Transformation’ will be at the top of the priority list. Some retailers are already some way down the digital transformation path, whilst others are only just starting their journey. But all agree that it is no longer a ‘nice to have’, but an ‘absolute essential’ for survival in the post-pandemic retail world.
What is digital transformation in retail?
Digital transformation is the process of embedding digital technology into every aspect of a business. This enables to respond more effectively to changing market requirements, access new revenue streams and drive efficiencies. It’s hard to think of an industry that has more rapidly (or dramatically) changing requirements than retail.
For retailers, digital transformation means integrating bricks and mortar stores with their online presence to create a seamless retail ecosystem. It means harnessing the flexibility of digital platforms to streamline business processes. It means using insights and intelligence to deliver the shopping experience their customers demand.
Generate new revenue streams for your Retail Enterprise
Connect with more customers digitally irrespective of their location
Why is digital transformation important in retail?
Digital transformation helps retailers to build the critical capabilities that they will need if they are to remain part of the retail landscape of the future. Those capabilities include efficient processes, flexible and agile technology platforms and data capture and analytics. As recent times have shown, future success cannot be taken for granted by any retailer. These capabilities are the key to long term survival.
Customers tell us that they are looking for a positive shopping experience, regardless of the channel they use. They no longer differentiate between online and offline, but take it for granted that they’ll be able to use any combination in their journey to purchase. They want convenience, shopping when and where it suits them, as well as the safety of contactless purchases.
Digital transformation gives the platform for retailers to meet these needs and delight their customers.
The steps to digital transformation
Retailers embarking on a digital transformation journey will implement one or more of the following steps:
Process transformation – using technology to streamline operational tasks and increase the focus on customer experience. For example, the use of mobile point of sale to enable checkout from anywhere in the store – decreasing checkout lines, enhancing safety, providing upsell opportunity and a more personalised shopping experience.
Flexible technology platforms – retailers need their technology to empower rapid response to changing demands, not to slow them down as it has so often in the past. Digital transformation, for many, is synonymous with a move to cloud point of sale systems – and the knowledge that they always have the latest technology, the scalability for growth and the agility to respond rapidly to market demands.
Online/offline integration – in the digital transformation retail world, the online and the bricks and mortar stores can no longer be managed separately. Retailers are integrating the two, enabling new transaction types such as BOPIS or curbside pickup.
ERP integration – marrying together the information from retail systems with accounting and operational data in their ERP (such as SAP retail, Sage, Microsoft Dynamics) for in-depth reporting.
Deeper customer insights – the ability to capture and analyse information about their customers’ preferences, profiles and buying journey is a key element of digital transformation. It enables them to develop targeted promotions that increase sales and give customers the sense that they are known and valued.
Inventory visibility – harnessing the power of digital tracking to get a clear picture of inventory location, levels and movement.
Digital transformation in practice
Retailers all around the world are realising the benefits of digital transformation – one example is Vietnam’s Thien Hoa, a leader in the electrical and furniture sector. They embarked on a digital transformation project with iVend retail that delivered benefits to every part of their business:
Better inventory tracking – the increased visibility generated savings of 10% through inventory movement
Customised loyalty and promotions – Thien Ho grew their loyalty membership to 20,000 and were able to use customer insights to build targeted promotions that increased sales by 10%
Integration – linking their retail management system with SAP Retail increased data accuracy by 95% and provided enhanced reporting for better business decisions
Business intelligence dashboards – the ability to present key information in highly accessible visual formats, tailored to suit their business, has enabled faster, better decision making.
Cloud point of sale – the iVend cloud retail point of sale system gives them high availability, swifter checkout and better functionality for increased staff productivity and greater customer engagement. Many previously manual operations have been automated, with time savings of 80% and employee satisfaction up 70%.
Omnichannel retailing ecosystem – by integrating their stores and website, Thien Ho can engage with customers at all touchpoints and have been able to create new routes to market. Customer satisfaction has increased by 30%.
Digital transformation in retail has many implementations. Some retailers have embraced them all, whilst others are taking a step-by-step approach. The key is to get started – digital transformation is the key to survival in the retail world and the sooner retailers start, the sooner they reap the benefits.