Digital Transformation of Retail Industry
Digital Transformation In Retail Industry
Where Should You Focus Your Energies?
Every time people talk about digital transformation, they refer to brands like Uber or Netflix. In fact, the term uberization is often used as a synonym for digital transformation. Both these brands have redefined their respective markets and made the traditional business models irrelevant. However, we need to remember that the industry vertical for these brands is different and so is their audience. What worked for them may not work for retail brands.
Retail industry has its own challenges and operating model which need to be taken into consideration.
So, what does digital transformation mean for retail industry?
Digital Transformation In Retail Industry
Traditionally, the retail industry has focused on product. This is where digital transformation is making fundamental level changes. The focus is now shifting to customers and their experience. So much so that experience has emerged as a major differentiator in retail success.
What makes retail industry different from the others is the fact that there is a transfer of ownership and possession of goods. This unique characteristic of the industry gives a whole another demeanor to its digital transformation.
So where does the real transformation happen in retail industry? What kind of solutions business leaders should explore?
We believe that the 5 key areas that can be redefined by retail digital transformation are:
Let’s look at how each of these can be redefined.
For any retail brand, the out-of-stock scenario is probably the most embarrassing one. It is almost like telling a customer that you won’t be selling them what they want. But why do these happen? Inefficient Inventory management can be a reason for that. Digital transformation can help you rehash your entire inventory management system in place to make it more transparent and efficient.
We have developed and deployed a cloud-based inventory management solution for a leading retail brand to help them manage their stocks. The solution allowed them to track the movement of products from their warehouse to the store locations. We added analytical capabilities to the inventory management solution to generate insights like average shelf time of products. This helped our client identify the fast-moving products and even predict the out-of-stock scenario and avoid it completely.
The solution enabled our client to optimize the procurement of their products which in turn reduced their warehousing and storage costs.
Adding AI capabilities to inventory management can also be a smart move. AI powered devices can be attached to the shopping carts. So, when customers move around the aisles the devices can read the product quantity on the shelf and alert the store managers for refilling.
This way you don’t need to invest the more expensive human resources to do the mundane task of counting shelf quantities. Instead you can realign them to other more critical activities.
A good inventory management in the backend will in turn impact the shopping experience of the customers.
There are some brands that are hailed for their ability to deliver the same quality of product across all its store locations. Whether it is the crunch of their fries or the feel of their fabric, the quality remains consistent at global level. Their supply chains deserve the credit for this.
But if you ought to take it a step further, you can transform this supply chain and make it more transparent for the customers!
We have developed a supply chain transformation solution that lets the customers track the product from the start of its life to the shelf on the aisle. They can see where the product was produced, stored, and how it got to the shelf in front of them. This particularly works with the convenience store where customers are looking for fresh and organic produce. The farm-to-shelf tracking helps the brand earn customers’ trust and ensure that the best quality is served to them.
A transparent supply chain comes with obvious benefits. But what you also need in the backend is the upgraded infrastructure and redesigned processes. You just cannot mount transformative supply chain solutions over legacy architectures. You will also have to reengineer the backend processes to make sure you optimize the product movement and generate better ROI from the investments made in supply chain transformation.
This is probably one of the most significant aspects of retail digital transformation – something that gives many business leaders sleepless nights. Why? Because it deals with the most dynamic and yet most valuable asset of the business.
We have seen businesses close shop just because they were not able to keep up with the changing expectations of their customers. Now the expectations are not only limited to products but have extended to experience as well.
Does it sound daunting? Wait, there is more!
Customers don’t only expect a good experience at each transaction, but expect a consistent experience across all possible touchpoints. When they buy from you, they buy from the brand and not from the store. So, you cannot maintain a customer view that is fractured between departments and store locations.
The omni-channel customer experience solutions are helping brands address these broken customer journeys and create a single view across all touchpoints. You can also allow your customers to combine their online shopping experience with in store one. They can check a product in the app and then make a purchase from the nearest store location.
And while we are talking about improving customer experience, how can we not mention gamification! We developed a solution for a major retail brand to engage their customers in a game that introduced a promoted their products and also encouraged purchase. So, while it kept the customers engaged with the brand, it also boosted their sales!
Some of the most exciting solutions are coming up in the space of store check-out process. These AI based solutions are allowing customers to shop without having to go through the lengthy and extremely frustrating check-out lines.
It’s almost like the customers are shoplifting except they are not! The bill preparation and payment happen digitally using cloud and mobile technologies. These solutions are giving a welcome relief to customers by eliminating the check-out lines – one of the most notorious killers of in-store experience.
One of the most intriguing aspect of retail is to understand which products would be liked by the customers and which would fail. You don’t want to invest a lot of time and efforts in products which are not relevant for your customers.
There are solutions that help you understand the preferences of your customers and their unmet needs. They give you valuable insights on what your customers buy, when they buy, what triggers that purchase behavior, and what is their opinion about the product. They can help you identify the unmet needs of your target customers so that you can focus your energies on creating products for that particular niche.
You can also seek out solutions that recommend what products should be offered to which customers on a proactive basis.
Store layouts are a more recent area of focus for digital transformation experts. So far, the transformation efforts were focused on digital brand experience. But now the attention has also moved to the store designs and how they contribute to the customer’s shopping experience.
We have developed solutions that help our clients understand the aisle navigation behavior of the customers in store. The solutions study how customers move from one aisle to another and recommend design and aisle placement changes accordingly.
There are also solutions available that help brands understand which products need to be on what shelf and in which aisle. This way brands can make store shopping effortless.
Today, it’s the not the size and scale of the business that matters. What really determines your growth is your ability to self-disrupt and reinvent. If you are not transforming today, you are possibly pushing yourself towards existential crisis. This calls for a calm deliberation and not a panic reaction.
So rather than looking for any digital transformation company, look for a partner that understands the nuances of your industry and how it operates. Only somebody who understands retail industry will be able to help you transform in a seamless and uninterrupted manner.
To explore digital transformation solutions for retail industry, contact our team and we would be happy to engage with you.