How ready is your company to meet the changing nature of consumer demands?
Global retailers are struggling to formulate profitable digital strategies to address changing consumer demands. An eMarketer study reports that fewer than half the retailers they surveyed have begun to develop a digital strategy, with third of these responses coming from retailers with revenues of over $5 billion. In an environment characterized by rising consumer expectations, retailers are losing confidence in their ability to meet these expectations— only 10 percent reported being able to make a profit while filling omnichannel demand due to supply chain challenges. Furthermore, the number of retailers planning to move forward with in-store pickup for online shoppers actually dropped slightly in 2017. In light of these discouraging figures, it’s worth asking what it takes to become digitally ready.
The Bar Is Higher for Retailers
Despite stiff competition and significant challenges in the age of ecommerce, the retail industry is farther along the path toward digital maturity than many others. According to a study by Forrester, retailers lead the pack overall: their level of digital readiness is higher on average than in less eCommerce-focused industries like healthcare, utilities, industrials, and financial services. While some retailers have adapted to counter new pure play ecommerce startups, several chains have struggled to adapt – and are falling behind.
A Growing Gap Between Digital-First eCommerce and Traditional Retailers
Brick and mortar retailers are being forced to rethink their traditional business models to compete with agile digital startups, which lack the overhead needed to maintain physical stores and are able to accelerate more quickly toward clearly defined objectives. With this, traditional brands will need to overcome structural obstacles to digitally transform with some of them requiring the building out of larger digitally-focused teams, increasing budgets, and developing coherent, well-defined digital strategies.
Mobile shopping, which has expanded the set of purchasing channels, has also squeezed retailers and increased pricing transparency pressures. Many retailers are having to reconsider pricing structures and operational budgets to account for these larger consumer shifts while simultaneously addressing channel integration.
Digital Pressures Occur Globally
An Australian study by Microsoft Australia and Queensland’s Chamber of Commerce found that while 90 percent of respondents have a web presence, many Queensland businesses struggle in several areas: 61 percent still have no digital marketing plan, and 38 percent say they do not have a business continuity plan. Despite the significant challenges of developing such plans and updating business models to succeed in the current “digital economy,” 90 percent of respondents remain optimistic.
Mobile is Key to Digital Maturity
Many retailers have focused on having a strong web presence, neglecting the equally urgent need to build native mobile apps. Adequate investment in mobile is no longer optional, as phones and tablets have become the preferred ecommerce channel for millennials. The shift to mobile has occurred at a stunning rate; for 92 percent of consumers, the smartphone is now the primary way of going online. The prioritization of mobile investment must also focus on the newest generation of apps because these apps are where the latest augmented reality features will be deployed. While three-dimensional AR experiences are currently only available on mobile devices that use Google’s Tango, the fact that digital giants are investing in mixed reality means that its widespread use is just around the corner.
Putting Your Customers’ Experience at the Center
The optimization of customer experience (CX) is a key area of transformation in retail, and bold improvements to CX represent a visible marker for maturity. True excellence in customer service can only result from deep innovations that touch every aspect of a company’s operations. Retailers must develop rich consumer profiles for each segment of their audience in order to deliver a consistent experience across all channels and skillfully manage inventory, distribution and all back-end processes. You need to clearly visualize your customer’s end-to-end experience, and your C-suite must strive for a personal sense of customer need by being passionate consumers of their own products.
Meet Customers Across Every Channel
If you do retain a brick-and-mortar existence, you have to leverage the information you’ve gathered about the customer journey and apply it to the in-person shopping experience. A company in this situation must work hard to merge online and offline channels. Customer journey mapping and user research should be the basis for these efforts because content deployment across channels must be consistent, connected and impactful in order to resonate with customers. You also have to continuously integrate new technologies into stores through the use of screens, smart mirrors, flexible mobile checkout, BLE light fixtures and other features as they emerge. A mature approach to customer experience will result in connecting your digital presence and physical stores to create a holistic, fluid shopping experience.
Develop Your Internal Readiness
The internal aspects of digital readiness cannot be ignored. As your staff begins to cope with change, they will encounter new platforms, solutions, suppliers and services — and these all must be embraced as part of your company’s digital framework. Digital progress revolves around how adeptly the organization can use all available tools to adapt to change. For ease of analysis, this organizational change can be broken down into two categories: company culture and operational agility.
A brand that seeks to identify itself as innovative and creative must foster an organizational culture that values these qualities. Workers must feel free to challenge the status quo and design new solutions for customers, to foster a company-wide culture based in being truly user-centric. This is more important than ever for retail ecommerce brands as they navigate a highly competitive, fragmented industry.
Some questions to ask yourself about whether your company culture can foster a sophisticated digital framework are:
- Does your company culture nurture innovation and creativity?
- Do you offer opportunities such as a creative outsourcing program or a prototyping sandbox?
- Does your workforce reflect the demographics of your customer base so that there’s an innate sense of empathy?
- Are your workspaces designed for collaboration and do they make employees feel excited about coming to work?
Today’s transparency means that you can’t generate a delightful customer experience unless your company operates with a positive employee atmosphere. The fact that everyone lives on social media means that there are no barriers between internal employee well-being and external customer appeal.
In the retail business, your digital readiness doesn’t begin and end with customer-facing operations. It’s not enough to revamp your internal company culture. In addition to these development zones, you may also find yourself introducing new efficiencies in product management, inventory logistics, order fulfillment, site management automation, or even redefining your entire organizational structure. The benchmarking process that underlies a robust digital strategy will evaluate your status in all these internal areas and compare your position with that of your competitors. Data and analytics will be the foundation of all the decision-making entailed in reaching a higher level of digital maturity.
Data and Analytics: Your Building Blocks
One important question that a strategic digital framework will raise is:
Do you run your operation on real-time data?
Digital transformation means that everything is happening now, in this moment, and your company’s responses must also happen in real time.
When physical locations are in the mix, gaining insights through data is always a challenge. You may need to integrate disparate legacy systems and move onto new platforms, connecting operations and support centers with points of sale, ransactional CRMs, fulfillment centers and payment gateways. Furthermore, your flood of digital data must also be integrated with external and offline data in order to produce the coherent insights you need.
Cross-channel marketing is also fueled by data, as analytics provide you with granular audience segmentation. Unprecedented quantities of data are now available regarding customer behavior and preferences, demographic characteristics, needs and pain points. More and more companies are looking at metrics like net promoter score (NPS) and retention rates to understand satisfaction, feedback and reasons for conversion or churn.
Using data effectively through cutting-edge analytics is key to creating successful campaigns and enhancing your brand reputation.
The Roadmap to Digital Strategy
The pathway to digital readiness is undeniably challenging in a competitive era when the eCommerce bar is being constantly raised by a few digital giants. Paradigms for success are shifting constantly, while customer-driven changes keep retail businesses racing to catch up. Using benchmarks to plot your company’s unique route requires a complex three-dimensional examination of your cultural, organizational and technical challenges.
A Digital strategy must begin with your basic business model, rely on digital as a core competency and focus on three functional activities: strategy, governance and operational excellence in execution. In this way, your retail business can leverage its unique identity to remain sustainable in a new digital ecosystem.