How Digital Transformation is Useful in Retail-A Definitive Guide

8 minutes read
on 06 February, 2020

How Digital Transformation is Useful in Retail -
A Definitive Guide


Digital transformation in retail has arrived for real and chances are you have already benefitted from it. If one needs any convincing of this it suffices to look at the bigger physical stores or shopping malls in the city. Retailers are experimenting with a myriad of ways to respond to shoppers expectations, bridging physical and digital shopping experiences and trying any number of ways to digitally transform the retail experience.

Digital transformation is about bringing together processes,  people and data to create value for customers.   It is a customer centric approach where customers benefit by gaining more information,  and more choices. With happy customers organizations are bound to profit and this fact is the biggest driver of digital transformation in retail.

Digital transformation in the retail sector aims at providing a technological platform to make a brand story, one which connects with the customer at an emotional level and engage with the customer in a fruitful manner.

Digital transformation services rely  heavily on changes to the front and back end processes and new technologies. This requires significant rewiring of existing systems and the integration of business functions, staff and cultures and most importantly technology itself



Key Drivers of Digital Transformation in Retail Sector



Transformation in Retail Sector



The key drivers  of digital transformation in retail sector are



●     Evolving expectations from the digital/omni-channel shopper



●     The need to blur physical and digital experience with the help of virtual and augmented reality



●     The crucial supply chain challenges. Speed time and transparency are of paramount importance in the supply chain



●     The impact and opportunities in areas such as data driven optimization and marketing, empowerment of staff and new technologies



●     Competition from digital and overall customer experience and increasing cost pressure



●     The shoppers appetite to have a personalized experience which can be pretty hard to achieve in terms of gauging exact needs of the customer



Shopping and Retail Behaviors that are Shaping Digital Transformation



Digital transformation in the retail sector has raised the customer expectation which in turn is driving further innovation. It is thus both the cause and effect, transforming the shopping experience in unimaginable ways. Listed below are both the cause and effect of digital transformation in retail.



●     Seamless and Immersive Retail Experiences



Customers display omnichannel(shopping across multiple touchpoints and channels) behavior whereby they seek experiences that are easy, fast and frictionless



●     Innovation as a New Expectation



The growing demands of customers for innovative shopping possibilities is growing from day to day and they seek customer service which is beyond excellent.



●     Channel Agnostic Shopping Experience



The use of digital tools and channels during every stage of shopping such as



❏      Seeking products or outlets, comparing or reading reviews before the actual purchase



❏       Main Transaction which involves the actual purchase in-store or digital



❏       Post Shopping such as reviews, word of mouth, future purchase.



●     Rapid Access to Information



The shopper needs access to information as quickly as the staff and the need to empower it with proper tools and resources becomes crucial to gaining market share.



●     Self Service



Shoppers today are getting accustomed to the self-service, self-checkout systems teamed with finding out product information such as availability of stock and product features on their own.



●     Mobility



Many customers today transact on the phone even when at a physical store thereby blurring the lines between physical and digital. The ability to transact on the phone gives them the power of conducting the transaction at their convenience and on the go and is a defining feature of digital transformation in retail.



Digital Transformation Services in Retail-Looking Ahead



Digital Transformation Services in Retail



Digital transformation in the retail sector is growing by leaps and bounds since consumers are looking for instantaneous, effortless and secure, round the clock shopping experience. The facilities that a traditional brick and mortar store cannot accommodate include personalized shopping experiences, one day shipping to a place of one’s choice, easy returns and such. Digital transformations in retail sector are highlighted through some of the following innovations:



●     Augmented Reality (AR)



2020 is slated to be the year where it will be totally unnecessary to see, feel or test a product in person before feeling confident enough to buy it-this is where augmented reality plays a part. Toyota has launched their new AR program wherein customers are allowed to test 10 of their cars without even picking up the keys. Companies such as Amazon, Target and Lowe’s have found that AR has been especially useful in lowering the number of returns. E-tailing is expected to hit $5 billion by 2021 of which 25% is estimated to be purchased stock which are returned. AR ensures that the customers have a better awareness of what they are signing on for.



●     Product Customization



Consumers today require not just the product they desire at a specified time but also information related to the product. They need to be able to go to websites, be able to compare prices, styles, availability, delivery dates, rebates if any,  related products and their features in one click. This information is as imperative for their purchase as it is for the Company since AI (Artificial Intelligence) is constantly gaining information about each of their customers and their choices. This kind of deep learning enables the company to provide a better shopping for its customers.



●     The Power of Now



Amazon Prime gave digital transformation in retail a new dimension by offering a 2 day delivery period. However consumers today are getting more and more impatient and several of them are willing to shell out a little more money in order to receive the product in 2 hours or less. The rise in popularity of the apps like Shipt and Instacart bear testimony to this fact.



●     Social Shopping



Digital transformation services is all about giving customers a seamless experience. Social shopping generates revenue not only from advertising and click throughs but also by sharing information about their users with retailers.  Beyond the obvious swapping of consumer stories  with people one knows, social shopping also means being able to project an image of the consumer wearing a particular item that the consumer has a picture of, perhaps a dress, handbag or such. Here again AI is making significant contribution.



●     Mix of Reality and Virtual on Spatial Web



Digital transformation in the retail sector is evolving towards newer concepts day by day, one of the most evolved being a mix of reality and virtual on the web to help make buying decisions easier. It involves consumers placing themselves in the ads or posters of their favorite brands to make more informed choices about the products they wish to buy.



●     Cloud Computing



It refers to the on-demand availability of the computer system resources especially data storage without direct active management by the user.



Cloud computing today forms an integral part of digital transformation in the retail sector wherein it improves channel operations, provides better supply chain visibility, and offers improved and personalized customer service while giving the company improved business insights.



Digital Transformation Success Stories



Retailers are under the most pressure compared to any other industry with respect to providing digital transformation services. Brands such as Woolworths, ToysRUs and HMV that have gone out of service or declared bankruptcy need to have transformed digitally and created hyper personalized customer experiences in order to have remained in the rat race.



According to Eli Finkelshteyn CEO and co-founder of Constructor, the first AI search and discovery platform focused on ecommerce and retail companies, Amazon and Walmart are the industry leaders while specialty retailers, such as Sephora (AR makeup app which allows users to try on makeup virtually before purchase), (they are infusing personalization throughout their shopping experience) and Kroger(are partnering with Microsoft to build smart shelves) are pursuing a range of digital technologies.



Dominos has today surpassed its old rival Pizza Hut to be the number one pizza company in the world purely by embracing digital transformation methods. Four fifths of Dominos sales come from digital channels today



Starbucks’ digital transformation strategy and innovative use of data analytics is paying off making them a success story today. They use data such as population density, average income and traffic patterns to ascertain where to open the next outlet. They are also currently testing digital menu boards which will allow them to customize the menu depending on the time of the day.



Lego through movies, mobile applications and games has managed to appeal to today’s digitally savvy groups of people. Lego’s online community allows fans to propose their own ideas for new sets and vote for the best suggestions. Lego then reviews the ideas, picks a winner and creates and sells the new set worldwide. Updated digital strategy has pulled Lego from the brink of disaster and put them back in the race.





Clearly it is a question of ‘When’ and not ‘If’. There is no doubt how useful digital transformation is in retail. You only need to find out when and how is your organization going to take the plunge to transform digitally.




How Digital Transformation is useful in Retail - A definitive guide



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