Digital Transformation In Retail: All You Need To Know

Due to the COVID-19 pandemic, there has been a huge uptake of digital solutions for commercial and personal purposes. Also, there is a steady shift from traditional buying habits to digital ones. That’s right!

Digital transformation has had a huge impact across the retail industry. It is prompting retailers to rethink their approach and tweak their customer journeys to respond effectively in these challenging times.

The ongoing health crisis has made one thing clear – plunge before you perish. As a result, retailers are weaving in adaptability and adopting new business models in the current retail climate.

• In a recent study conducted, 41% of consumers shopped online for things they would normally purchase in-store. The current situation also puts the spotlight on the adoption of new technology.
• A Gartner 2021 CIO Survey suggests that 70% of retail CIOs have a stronger foothold over business processes and are in a stronger position to accelerate digital transformation.

Through this article, let’s look at the specifics that can help retail companies to deepen their foundations and expand their digital footprint.

Here is what we will cover;

• Retail Digital Transformation trends
• Benefits Of Digital Transformation For Retailers
• Possible Impact of Digital Transformation on Retail Businesses
• Technologies that Power Retail Digital Transformation
• Challenges in the Transformation of Retail Industry
• Key Considerations Of Planning Your Retail Digital Transformation Strategy
• Popular Use Cases of Digital Technology in Retail

This year, capitalizing on the transformation is the key — especially when physical locations are in question to build and maintain the flexibility that is demanded of doing business today. The changing consumer behavior will also greatly impact the value in retail for the foreseeable future. The listed trends will not only help you engage better with customers but will also offer insights into optimizing processes.

• Digital Infrastructure Gains Momentum
  The traditional IT infrastructure is under transformation with the digital push. The success of the business now depends on flexible business models, user experience and quick time-to-market. A digital infrastructure offers an immersive user experience and facilitates business agility to drive customer loyalty & engagement. By fetching large data sets from physical facilities, companies can utilize advanced analytics to make better decisions. These decisions are much more effective in the sense that it allows you to explore new ways of designing, developing and delivering products to new-age customers.
• Touchless interactions
  An embedded expectation among consumers of today, the touchless experience offers safe, physical-contact-free interactions across the entire shopping process. The touchless interactions are beyond mere contactless payments. They offer personalization for the end consumers. We are talking about the overall shopping experience with capabilities across the major customer process, from the scan and go to virtual experiences.
• Inventory Tracking & Management Soars to New Heights
  Retailers with an eCommerce presence analyze a vast amount of data to improve the customer experience at every touchpoint. You need to innovate at every stage to increase sales. Otherwise, what’s the point? That’s why operational efficiency is critical to creating an omnichannel experience. New delivery models are picking up quickly like purchase online and in-store pick up that is sure to stay above & beyond the pandemic.
• Algorithmic product & pricing optimization
  Inventory is usually considered as a retailer’s largest single expense. It is driven by a renewed focus on merchandise assortment with pricing accuracy. They are leveraging algorithmic approaches driven by Machine Learning and Data Science. This is enabling retailers to precisely determine items how they must be displayed and stocked, as well as how they should be priced and promoted to maximize sales, margins while improving inventory planning and achieving customer satisfaction across touchpoints.
• The Rise of Social Media & Internet Users
  Social media users have shot by 13% over the past year. That takes the global count to 4.2 billion today. In addition to this, the increase in wireless devices powered by 4G, 5G and Wi-Fi put more emphasis on mobility. Social commerce has also become a big source of inspiration for shoppers who keep up with the latest trends. The line between shopping channels & communities is blurring as access to products becomes easier.

• Impact of the pandemic on shopping habits and buying channels
  We are witnessing a multifold surge in buying digital and having online interaction with brands to continue social distance. This makes a perfect reason why business leaders should pursue their plans of transformation. It will help their brands to improve their customer experience through establishing digital channels and improving their presence. By investing in data enrichment and better models to address customer demands, the retailers will be better placed to monitor supply chains.
• Deeper insights about their supply chains
  Many retailers take a hit because of their inability to predict and meet consumer demand for products and services. A transparent view of inventory would enable easy planning of their supply networks towards a seamless online and offline customer experience.
• Strong digital presence is a “must-have”
  Digitally advanced and data-rich companies have doubled their efforts to capture market share by utilizing the pandemic as an opportunity for innovation and customer acquisition. And even otherwise retail businesses with a digital presence are already ahead of the curve.

Retail businesses with digital transformation programs have achieved a medium level of agility, flexibility and responsiveness. Going forward, we foresee retailers in different stages of their digital transformation journey:

• Enabling operational data to deliver effective insights regarding the supply chain, IT, and customer demands;
• Introducing full-scale automation and digitization of their existing systems;
• Cloud migration with use of everything as a service (XaaS); and
• DevOps adoption for better application delivery, modernization and sustenance

Let’s now understand the technologies that support digital transformation in the retail industry. These advanced tools and applications help companies make better decisions and be more responsive to changing market demands.

• Data Analytics
  As the retail landscape becomes more competitive, optimizing business processes becomes even more critical. With the help of data analytics, businesses can track sales forecasts, emerging products and predict future demand. It also helps them with effective product placement by heat-mapping customers.
• Artificial Intelligence
  AI is taking center stage in the world of retail. In an age where consumers demand more personalized offers & products, artificial intelligence givers retailers the power to deliver on customer expectations. It leverages customer intelligence and behavior analytics to study market demographics to improve service.
• IoT
  In a report by Grand View Research, the global spend of IoT in retail is expected to touch $ 94.4 billion by 2025. It will cover every aspect of retail possible. This includes supply chain, manufacturing, field service monitoring and inventory management. Smart retailers are embracing this technology to make store experiences more interactive. Mobile devices are powered by Bluetooth Low Energy that helps with product promotions. These trends have accelerated spend on connected technologies that monitor customer behavior, products and supply chain.

A significant transformation was brought forth by Big data analytics, location-based services & mobile apps in the way retailers conduct business today. However, the path to digital transformation would have to face certain challenges.

• Change Management
  Many organizations function in a certain way and engage with customers differently. Transformation for them could mean disrupting traditional ways of working in a way to resist change. However, in such situations, ROI can take a hit.
• Commitment
  In a lot of cases, while projects are in progress, they are not ready for the new age. However, the apps and websites that are developed do not completely meet customer demands. But for a business to thrive, digital transformation means more than just an idea. It requires resources, leadership level guidance and a budget.
• Technology
  A successful digital transformation is based on a solution that empowers you to do more. For instance, it could mean a single view of products, orders and inventory that help you scale. This requires several technologies that put common challenges to rest and at the same, help add value to your business.

While these challenges seem difficult to overcome, retailers must take the digital route to drive growth & sustain in an ever-evolving market. So, what should be your digital transformation strategy? Let’s take a look.

• Build a Digital-First Business
  Striking a balance between online and offline processes will help you understand consumer preferences better. It will also help to deliver the same experience whether customers prefer to shop online or in-store. Make sure you have your eye on inventory stock levels. Check if your store supports in-store pickup, online shipping and curbside pickup. These services play a huge role in your success. If your budget allows, you can can also consider partnering with third-party home delivery providers.
• Review Your Physical Store Portfolio & Define Roles for Each Location
  Under unforeseen circumstances, some of your stores may have to stay shut or completely closed. Make sure you have other stores available that divert customers so that your sales do not take a hit. Analytics will help you understand customer preferences in the shut store & can help you serve shoppers better at other stores.
• A Mobile-First Approach for a Holistic Customer Journey
  For a change, treat yourself like a customer and understand how shoppers would engage. Customers like being informed about product offers, details of a shipped product or if a product is ready for pick-up. A mobile app gives you the power to engage with shoppers at every stage.

Now that you understand the strategy to implement, let’s look at some examples of digital transformation in retail. These insights will help you understand how the biggest of brands have leveraged leading-edge technologies to take their business to new heights. The adoption of these technologies has been taking place well before the pandemic. Especially since they accelerate the experiential shopping experience.

Here are some ways you can plan your digital-first journey:

The door of digital transformation is knocking and it wants retailers to answer. It is the only way that companies explore new ways to serve customers, tap on business opportunities and thrive in an ever-evolving market. However, that does not mean shunning physical stores. The idea is to provide a seamless online and offline experience that helps you emerge as an even stronger player.

We hope after reading the above technologies and their use cases the obvious question must be how to get started.  As a retailer, you will require an effective digital transformation strategy that meets the changing demands of consumers and the marketplace. The easiest and fastest way to initiate and conclude that is to find the right technology partner. A partner with the right technical understanding, infrastructure and industry know-how can assist in transforming the business inside and out.

Over the years, we have developed our knowledge by associating with retail companies of all sizes. That’s why we understand the retail landscape from the ground up and have supported the growth of businesses. Our seasoned developers understand what machine learning, data analytics, IoT & other technologies can do for your businesses.