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Mastering the New Rules of Retail
Disruption is snowballing across the retail industry, forcing retailers to create adaptable business models to scale using digital transformation. There's no doubt about the critical role that is being played by digital transformation in modern retail. However, the challenge for companies is fully utilizing the values offered by this game-changing transformation.
This blog explores why digital transformation in retail is crucial to developing and maintaining the adaptability that has a huge demand today.
Digital Transformation in Retail: 3 Key Pillars of Modern Retail
Many retailers shifted rapidly to the digital world over a few years and now find themselves working with outdated software and tools. These challenges are forcing today's modern retailers to emphasize discovering advanced features such as - AI, IoT, data analytics, and cyber security.
Let's take a quick look at them.
Balancing Customer Focus and Financial Objectives
While providing better customer satisfaction, CX is a primary focus for retailers this year; they release their tight grip over financial measures. While targeting revenue and decreasing operational costs were still a priority last year, many retailers shifted their focus to customer experience and engagement, assuming this would support growth and efficiency measures.
Boosting Competitive Advantage Through AI, IoT, and Data Analytics
Retailers strive to find better ways for IoT, data analytics, and AI to create direct channels between their brands and customers regarding digital transformation in retail. These promising technologies have a lot to offer to serve customers better while consistently creating value. With financial pressures becoming higher, it is essential to have operational processes optimized. Here, IoT can help significantly, being a process enabler and a cost saver.
Retail data analytics enables retailers to turn to their data rather than going with their instinct to make things right. Leveraging a combination of AI and retail business analytics, teams can learn more about customer behavior to modify the sales funnel and branding accordingly.
Against this fast-changing retail landscape, brands are finding themselves to be unprepared for escalating cyber-attacks. Earlier, the industry framed IT security as "checkbox compliance."
There's a new focus on complying with HIPAA, PCI, SOX, and other privacy rules to make data protection critical. Brands can no longer afford to ignore the cyber threats and are slowly embracing new retail security and business approaches.
Benefits Of Digital Transformation in the Retail Sector
The industry has fierce competition, and digital retail transformation can provide unique opportunities and challenges. Retail brands that look for better efficiencies and ROA (return on assets) can prosper even in disruption. Here, the benefits of digital transformation in retail are impossible to ignore.
Let's take a deep dive to know more about them:
Innovation & Competitiveness
Necessity is the mother of invention. It is a pattern repeated throughout history - a massive disruption creates a market shift in behavior that innovation uses for launching new services and products. Consumers can now search, buy, and receive products in numerous ways. Shopping is no longer a chore; it gets done in a few clicks nowadays, making it a journey of discovery.
The 'one-size-fits-all' mantra is no longer an appropriate survival strategy because it gets difficult for a customer to emotionally connect with store experiences that serve the unique needs of all consumers.
The future of retail is channel-less. It is a significant ecosystem of physical and digital spaces extending beyond showcasing and selling services or products. Buying has become an amalgamation of several elements, such as social interactions, learning experiences, and functional consumption. Constant innovation to improve customer experience and drive efficiency is key to a healthy and competitive retail organization, and digital transformation (DX) is increasingly driving that innovation.
Improved Operations and Productivity Gains
Operating in a world where consumer behaviors and supply chains are turbulent and derailed can get quite challenging. As the need for DX continues to accelerate, retailers focus on specific tools and technologies for operational improvement and customer-focused experiences to stay ahead of the curve.
For example, Endless Aisle is one of retail's significant benefits of digital transformation. Endless Aisle is a virtual shelf that enables consumers to virtually browse or buy a range of products that are either unavailable in-store or out-of-stock and, therefore, can be shipped to their house or nearby store for pickup.
To improve operations within the company, cloud technologies can be helpful. Additionally, it will enable retail employees to respond to customer queries faster, improving customer experience. Moreover, the real-time data supply helps forecast demand ahead of time and stock goods in advance.
Seamless Customer Experience and Consumer Preference
Digital transformation in retail has a significant impact on customer experiences. As several technical tools are available, they can increase the productivity of retail employees and make services more optimal. While digital transformation is customer-focused, it also works to make your business stay ahead of the crowd. Additionally, to accommodate evolving customer behavior and needs, a 360-degree customer profile can provide a single view of the consumer that enables all brand elements — from customer support to analytics to finance and marketing. This is useful for allowing the addition of new dimensions, data sources, and role-specific views.
Machine Learning and AI allow retailers to understand what items customers buy together, what things are viewed the most, and various other beneficial details. With the correct information, conversion rates can be increased drastically.
The modern customer has changed from being reactive, waiting to receive information, proactively seeking updates about the product or service, comparing the features, and making insightful decisions. This significant shift in buyer behavior is mainly driven by changing lifestyles, advancements in technology for more connected appliances at home, excellent ease of access to different types of information, etc. As a result, today's customer now adopts an omnichannel experience and switches brands spontaneously.
As new technologies and external influences come into play, retail brands should redefine the customer experience completely.
Automation is one of the great benefits that a retail or ecommerce company could leverage from digitalizing their businesses. It is not wrong to say that automation either helps make or even collapse retail businesses when done wrong. Digitalization opens doors to reduce manual costs and labor, but also to help reduce operational costs and peak processing times through automation.
Additionally, digital automation enables a business to automate product, inventory, item categorization, and supply chain management tasks. An API generation platform named DreamFactory enables retailers to digitalize the communication between the shop floor, a dashboard portal, and a backend MySQL database.
This digital connection automated the processes that help retailers reduce order processing time and operational costs.
Are You Ready to Reimagine Retail?
Brands often assume if they are embracing the latest digital technology, they're ahead with digitally transforming their business. However, digital transformation isn't only about including the latest tech stack to make efficiency and improvements. Instead, it provides new tools and opportunities to create a strong vision for the future of the customer relationship and the business.
To make the most of digital transformation, brands must remain aware of the potential opportunities and the universe of new possibilities to excel. Icreon provides solutions focused on digital and omnichannel growth for retailers in all areas. Explore Icreon’s Digital Transformation Services.