Digital transformation is a popular topic in the retail world these days. It is the ultimate retail solution in the modern business world.
Retailers increased funding to e-commerce in Q2 of 2020 because of the pandemic. Additionally, social commerce startups, resale platforms, and virtual shopping tools all received attention to improving the online shopping experience. Source
In many different ways, companies across the retail sector are making efforts to digitize their operations and provide better services to consumers. In a sense, it’s easy to look at this as gradual, inevitable evolution, and to some extent, that’s just what it is. However, there are also several reasons to take the idea seriously.
The simplest of these reasons is that greater digitization translates to increased revenue. Just two years ago, Forbes examined businesses’ digital transformation and found that startups could “increase revenue by 34% by relying on digital-first strategies,” while all enterprises could see an increase of 23%.
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So, while the idea of adopting digital transformation can sound like something of a “buzz” term or a vague strategy, it should actually be looked at as a revenue model.
Beyond pure revenue though, there are several more reasons to look at digital transformation as the ultimate retail solution – particularly in 2020.
Consumers Need Digital Solutions
In 2020, the retail sector is facing a new reality. Many stores have closed, and many more are still facing various restrictions, customers are looking to engage with brands and make purchases with as little in-person interaction as possible. This is likely to accelerate a preference for digital solutions (such as online marketing and shopping) that was already very much developing among modern consumers.
Total Retail’s article on digital transformation argued that companies that address these conditions quickly will be ahead of the curve.
As that piece put it, “digitally advanced and data-rich companies” can use this time to innovate and possibly even acquire new customers. While it may be a simplistic way to put it, this essentially means that the more companies can transform operations and offer remote, online services, the better they stand to do in uncertain times. More practically, it means that by developing reliable means of conducting outreach and generating sales through digital means, a company can set itself up to succeed even at a time when consumers may be visiting stores less frequently.
This is not an idea to brush off, either. While some are undoubtedly under the impression that things are close to returning to normal, the fact of the matter is that consumers may not readily accept “normal” again. NPR’s piece on businesses reopening quoted one Neil Saunders as being pessimistic in this regard. Saunders follows retail for the firm GlobalData, and believes that consumers “are very concerned about coming out.” He adds that some are “just not confident to go out to locations and shop like they used to.”
The hope, of course, remains that this might change at some point. For now, though, these data-driven analyses should be taken seriously by any businesses affected by the conditions of 2020. Consumers who are unwilling to interact in person need to be catered to via digital services.
In-Store Tech Has Come Along
Despite the above, in-store digital transformation is also going to be significant moving forward, particularly given that the relevant technology has emerged and continues to improve.
AI, IoT, AR/VE, and cloud are growing trends in retail, (maybe even accelerated as a result of the pandemic). Source
The technology that first comes to mind is the sort of point-of-sale system stores can now use to make it easier for customers to spend money as safely as possible.
According to CNBC’s report on MasterCard polling, more than half of Americans now use contactless payments. This sort of method minimizes physical contact and, going forward, will allow those customers who do venture out to stores to feel as safe as possible about doing so.
Beyond payments though, stores will also need to take advantage of other digital tools and technologies to offer benefits that make stores appealing. With more consumers migrating to online shopping options, it’s essential that in-person businesses do what they can to offer optimal service, and make stores worthwhile. Concerning this effort, there are now very small but very significant technological sensors to consider.
Simply put, the electronic design has actually improved more than it gets credit for in recent years. Altium looks at the design process that is a key part of making circuit boards and various internal electronic mechanisms and outlines that engineers can now collaborate and take advantage of advanced tools they might not have had a few years ago. This has inevitably produced better electronic mechanisms, which have helped to give rise to tiny devices with full wireless capability and substantial power.
In stores, devices of this sort — often known as “beacons” — can be used to effectively simulate the online shopping experience. Beacons can communicate wirelessly with customers’ devices and provide them with the information and perks they need to be incentivized to make purchases.
In time, it may well be true that stores not using this technology will fall behind, simply because they won’t be offering the same experience. And for now, the combination of these technologies may help stores bounce back more quickly. Contactless payment and service-related perks can combine to offer both safety and convenience at least somewhat similar to the online experience.
Internal Operations Can Be Streamlined
Digital transformation also isn’t just about expanding a consumer base or satisfying customers. There’s a component of in-house optimization as well. And this is where an investment in machine learning can come in handy.
Machine learning is a broad topic, but we can look at it essentially like a digital initiative with potentially limitless in-house benefits. Machine learning and AI applications can be used to organize data on consumers, analyze marketing effectiveness, handle accounting and inform budgeting decisions, and even help with recruiting efforts. All of these functions will be all the more important in the aftermath of 2020’s challenging business and consumer climate. In effect, various practices relating to these ideas can combine to completely streamline a business’s internal operations.
Additionally, again, companies that don’t explore this option may well start to fall behind in time.
As Harvard Business Review argues, companies that don’t move to adopt machine learning now might never catch up.
The process of setting up and integrating systems and training humans to work with them properly can be fairly intensive, and by the time it’s done, competitors that started sooner may have distinct advantages.
Digital Transformation Sets Up Further Innovation
In considering digital transformation, there is also future innovation to consider. In other words, a shift toward digital practices today can set up additional improvement down the line.
We have stated this in our ‘Benefits of Digital Transformation’ article by suggesting that transformation today sets the foundation for innovation and agility tomorrow. As that article put it, “digital transformation sets a culture of incubating new ideas.” It turns a business into an environment that will welcome new advancements moving forward.
Given this and all of the other benefits described above, digital transformation can rightly be viewed as the ultimate retail solution, both in general and with specific regard to 2020.