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Digital transformation is one of the most important topics facing retail today.
A 2015 study calculated that more than £150bn of retail sales are now influenced by digital, and that retailers whose services don’t meet customers’ expectations could lose more than £12bn a year.
The digital consumer has changed the face of retail, putting pressure on brands to adapt to this transformation.
Our new Digital Transformation in the Retail Sector report looks at the opportunities and challenges faced by retailers to meet the increasing demands of customers who dictate everything and expect everything to be done in a more convenient way.
The research is based on interviews with senior executives across a range of retailers which included AO.com, Asda, The Body Shop, B&Q, Feelunique.com, Good Hair Day, Pandora, Schuh, Shop Direct, Tesco and Volcom, as well as a number of third parties.
It was also supplemented with data from our own research looking at digital trends for 2016 and beyond.
For more insight, Econsultancy subscribers can download the full report, but here are several key trends and recommendations emerging from the study.
Optimising the Customer Experience is the single most exciting opportunity
Retailers recognise there has been a massive power switch to the consumer and the need to deliver exceptional customer experience has become more important than ever.
This is backed up by Econsultancy’s survey which shows that nearly a third of retail respondents said that optimising customer experience represents the single most exciting opportunity for their organisation to deliver on their priorities for 2016.
Which one area is the single most exciting opportunity for your organisation in 2016?
A number of retailers highlighted the need to focus on meeting customers’ needs, looking at what is best for them and not having tech solutions dictate the overall strategy. Some advocated treating the customer as part of your business.
The importance of customer experience is further reinforced by Forrester, who said:
In 2016, CX will be among the top ten critical success factors determining who will win and who will fail in the age of the customer.
Clear ownership of omnichannel still a challenge
With multichannel management highlighted as the second digital priority for retailers in 2016, it comes as no surprise that seven in ten retailers consider optimising the customer journey across multiple touchpoints to be ‘very important’ in the context of their digital marketing efforts.
Ensuring consistency of message is very much a part of that and a prerequisite of good customer experience.
How important will the following be for your digital marketing over the next few years?
A number of retailers had moved away from separate profit and loss accounts by channel and were attributing sales revenue across channels as a start towards this.
Identifying who is going to have ownership of the customer experience and the customer journey is seen as key to achieving a seamless omnichannel shopping experience.
We can no longer be a little bit digital
It was highlighted that culture is not a one-off project, it evolves over many years, driven by changing leadership.
The ability to digitally reimagine the business is largely determined by a clear digital strategy supported by leaders who foster a culture able to change and drive innovation.
Many retailers feel it is no longer feasible to think about a one-size-fits-all digital skillset.
A key area of demand is around more analytical skills in marketing and customer data, as well as more specialist functions such as data scientists.
It is very much part of the culture to have the right people that care and to recognise the good things people do.
Allowing failure is transformational
A common theme highlighted by retailers was the need to change the perception of failure. With the pace of change and speed of new technology there needs to be the flexibility to operate in this way and a need to be able to fail quickly.
Real transformation was seen by a number of interviewees as the ability to pick up a trend no matter what and be open-minded when it comes to responding, analysing the impact and maximising what happens.
It is also about having the ability to abandon what you are doing if it is not right. As highlighted in a recent report:
What is unique to digital transformation is that risk-taking is becoming a cultural norm as more digitally advanced companies seek new levels of competitive advantage.
One way retailers were achieving this was to think like a startup in terms of being agile and having the flexibility to change.
A number of retailers also encouraged their staff to come forward with ideas and promoted new ways of thinking through cross-functional groups and hack days.
Customer expectations in any sector are being set by the best across every industry and it is clear that many of the retailers interviewed are ‘putting the customer at the heart of what they do’ as they continue their journey of transformation.
For more insight download our new Digital Transformation in Retail report.
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And to learn more about Digital Transformation, check out our DT Hub.