Retailers, How to Analyze the State of Your Digital Transformation!

During my career, I have been lucky enough to work with a number of great innovators across both the Retail and Distribution spaces. A great inspiration to me was working with Charlie Larkin, Sr Director of GameStop Technology Institute, helping his team bring to life various projects to create and promote exciting new experiences for our customers in store.

More recently, I have been working in distribution space leading Digital Innovation & Mobile for one of the world’s largest distributors, creating a framework for innovation and driving projects to enhance customer experience and build digital brand equity.

Countless discussions with colleagues and peers within both the distribution and retail industries, have provided me with a perspective to the commonalities of certain challenges and opportunities that face these businesses in creating environments that can foster digital transformation and innovation, and also nuances that are specific for each market.

Across businesses, there are a few common forces that most strongly impact their ability to enact digital transformation and leverage the benefits. These common forces are:

  • Systems Architecture (legacy systems, complex logic & heavy customization)
  • Inertia to Change (Ignoring threats & focusing on protection over development)
  • Lack of Leadership Buy In (Knowing the importance of Digital Transformation)
  • Near-Sighted Digital Vision (Failing to ask the “what if in 5 years?” questions)

I believe that these are common blockers, not only for Retail and Distribution, but for ALLindustries. Technology is evolving at a break-neck pace. If businesses fail to be proactive in addressing the common challenges that inhibit their ability to bring about Digital Transformation, the gap will grow between native digital players and legacy incumbents.

Spanning Retail and Distribution, there is a lot to cover, so today’s article will primarily focus on the retail space, but I’ll create a similar article addressing the Distribution market, so please watch out for that one coming soon!

The Key Drivers of Digital Transformation in Retail

The biggest internal opportunities for digital disruption for retailers over the last five years have been seen across the following areas:

  • Presentation of accurate real-time in-store inventory.
  • Deep integration of loyalty programs tied to digital connectivity.
  • Creating the ‘Phygital’ experience, enabling customers to transition between digital engagement to in-store purchase seamlessly.
  • Staff embracement and advocacy of integrated digital practices, both in internal tools and driving digital engagement for customers.

Smart retailers have been working hard to address these areas, and many have implemented tools and practices that serve to remove friction in store through use of technology.

Three Key Indicators of the State of a Retailer’s Digital Evolution

1.      The Point of Sale / Register

Historically, stock and transactional data was ‘Pooled’ nightly for retailers, enabling them to manage daily updates, reporting and warehouse shipping requirements through this nightly series of data merging activities. The primary in-store system that manages and transmits this information to the corporate business is the Point of Sale / Register. If a retailer has an old looking/legacy point of sale system, this is a big warning flag regarding the state of their ability to accurately manage real-time data, and associated, the state of their digital transformation. Usually a legacy/poor P.O.S. is a big indicator that investments may not be taking place to adequately adjust to the changing market and position themselves with strength digitally.

Key enablers created by upgraded P.O.S Systems include:

  • Real Time Stock Availability across all channels
  • Integrated Loyalty Programs
  • Improved digital communication capabilities to store staff
  • Rapid responsiveness and upgrade/updates to systems

2.      Staff Tools & Equipment

More evolved retailers have started to equip staff members with App-equipped mobile devices and tablets to assist customers as they navigate the store

Key enablers created by equipping staff with digital tools include:

  • Improvements in customer service.
  • Evolution from Associate to Solution Provider
  • Leveraging of AI / Big Data to enhance recommendations and expertise
  • More accurate & rapid administrative tasks (Cycle counting, planogram adherence, stock receiving, etc.)

3.      Immersive Digital Customer Engagement

Leading retailers look at the opportunities around their stores to drive digital customer engagement. This is a new area for many, and leading retailers such as Neimen Marcus have done a superb job of integrating leading edge technologies such as Augmented Reality to the customer shopping experience. Some of the larger manufacturers are also piloting interactive ‘Phygital’ engagements through their in-store signage and product placements as a way to drive engagement themselves and gain the valuable insights that a digital footprint can provide.

Key Enablers created by immersive digital customer experiences include:

  • Loyalty Engagement
  • Social Brand Equity
  • Increased opportunities for marketing channel engagement

The best in the industry are putting focus on these areas to drive digital enablement through their physical stores. Here’s some examples of these innovations in practice across the retail landscape

Digital Transformation in Retail – Who is leading the pack?

  • Creating ‘Click & Collect’ Store services to encourage the ‘Phygital’ experienceWalmart has been an interesting study in this space. In a few short years, their Click & Collect has moved from the back of the store, to the front of the store, to curbside with dedicated parking, showing the rapidly growing importance of being competitive in the digital space. Walmart are also now piloting a fully automated click & collect service (Pictured above) that looks suspiciously like it is intended to be integrated to the outside wall of a building, rather than residing as an in-store fixture.
  • Providing real-time inventory. Home Depot & Lowes are two of the best examples of bringing real-time inventory availability forward across all channels, enabling accurate stock availability across all stores, across all digital channels, as well as for in-store associates via their digital devices.
  • Providing Mobile Devices & Apps to staff – Facilitating improved customer experience (product details, stock check & on-the-spot transactions) throughout the in-store experience. Target was an early adopter in this space, and it has served them very well.
  • Integration of digital to loyalty programs. This has been seen across the industry, but most frequently and best executed in loyalty focused retailers. GameStop has been a leader in this space, providing customers with bonus loyalty points for digitally checking in, and driving multi-channel campaigns, focused around, and rewarding engagement with their digital App.

To stay relevant in the changing landscape, embracing new methods of shopping and interacting is key for retailers, but for many, the heart of fixing the inhibitors to Digital Transformation is still the biggest hurdle. Despite this, consumer expectations will continue to rise, and adapt as the best in class digital players continue to evolve their proposition. The importance of building and maintaining strong systems, a strong corporate culture that embraces and champions Digital Transformation, and a keen eye on the horizon to be able to continue to adapt is going to be key for Retailers to stay profitable and relevant in the future.

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