The benefits and challenges of retail digital transformation
Digital transformation is accelerating and with this comes plenty of benefits, as well as some key challenges for the retail industry. Embracing new technology now involves a lot more than simply building an online store. So, we’ve pulled together key research and customer insights to show you what digital can really achieve and the challenges you need to overcome to stand out from the competition.
What is digital transformation and why does it matter for retailers?
The rise of ecommerce has been driving change in retail for a long time. When COVID-19 hit, the speed and scale of this digital transformation rapidly increased. Technology stepped in to help us to continue to live, work and interact during lockdowns. And, unsurprisingly, we saw a sharp shift in consumer shopping habits. In the US alone, online sales grew by 44%, as more than 76% of shoppers started buying online.
But this digital retail transformation isn’t just about moving the shopping cart online. Whether they’re shopping on the web, mobile apps, social media or in-person, customer expectations remain high. Speed, convenience, knowledgeable help and friendly service are essential to just under 80% of US consumers according to PwC Customer Experience Research.
If you’re going to meet these expectations, technology needs to play a part in all your business operations: your supply chain, inventory management, and customer relationship processes. Tech can help you capture and analyse accurate real-time customer data that’s critical for effective capabilities in all these areas. It doesn’t just help you project demand and react to changing needs, but it enables you to connect with customers in new ways and stand out from your competition.
Want to find out more about how retail is embracing technology? Read our blogs on our Top digital transformation trends in retail and How digital transformation in improving retail customer experience.
Digital transformation benefits in retail
The digital transformation has been starting to make an impact in the retail industry for many years now. As the pace of change has accelerated, new advantages have appeared. Here are our 6 top benefits of digital transformation in retail.
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Accessing a new audience
The pandemic prompted more people than ever to get familiar with shopping online. These online consumers quickly saw the benefits of digital shopping, and many of them aren’t going back.
Embracing digital transformation in your organisation helps to get in front of this new and increasing online audience. It means that you’re well-positioned for growth – both now and in the future.
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Creating a seamless experience
Customers are no longer restricted to one retail channel. As well as visiting physical stores, they’re using multiple other channels – websites, mobile apps and social media. In fact, since the pandemic more than one-third of Americans have made omnichannel purchases – buying online for in-store pickup.
Technology enables brands to be available and consistent across all of these channels at all times. And this creates a frictionless, personalized shopping experience.
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Producing better customer engagement
Digital technologies offer far more opportunities to engage your customers. Gone are the days of being limited to in-store interactions or having one-way conversations with customers through promotions.
From content marketing to social media influencers, you can engage your customers in multiple ways and at various touchpoints in their journey to purchase. Rather than waiting for them to come to you, you’re getting in front of customer where they like to spend their time and joining their conversation in real-time.
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Creating stronger connections
Embracing digital in spaces such as social media open up a whole new way to get to know your customers. By collecting customer data and analysing behaviour, you can identify the movement of purchasing power.
These insights can help you run more targeted marketing campaigns and personalise your offering to your customer preferences. This reduces the cost of acquiring new customers and creates stronger brand connections.
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Automated processes
Automation frees up time and streamlines your business operations. Going digital can automate your order fulfilment process, which can lead to a reduction in overhead costs and create better margins for all your sales.
With your team spending less time on manual tasks, they can focus on providing the best possible customer experience.
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Reinvigorating store sales
The digital in-store experience doesn’t have to stop with click and collect. New and existing technology can be expanded in stores to improve the customer experience.
For example, Radio Frequency Identification (RFID) systems can be used for much more than security. You can use it to offer a quicker and more personalized service that customers are now familiar with online.
Digital transformation challenges in retail
It’s clear that there are plenty of benefits of digitalization in business. But retail digital transformation also presents some key challenges.
We discussed some of them in our Digital Transformation Session event.
In general, the majority of challenges with digital transformation in retail fall into one of the 3 main categories.
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Managing change
Whatever size or sector, all organisations find change difficult. Although we all have the capacity to learn new skills and expand our competencies, not every employee will be open this immediately. From management to the shop floor, you’re likely to meet some level of resistance – especially if the business is relatively successful and the current business strategy seems to be working.
But remember, digital transformation presents lots of benefits for employees too. So, make sure they’re communicated and understood. And once the project is in motion and the transformation starts taking effect, you’ll see new practices adopted more easily.
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Securing budget
Finances are a key concern for most companies. Retail sales took a serious downward turn at the start of the pandemic, so finding the budget for a major change project isn’t easy.
Agreeing on the scope of your digital transformation can be also challenging due to several stakeholders being involved. Take the time to work through your options. Focus on your strategic and customer priorities to identify the right starting point to expand your digital capabilities.
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Undertaking a complex process
Faced with the possibility of an increasing number of channels where product ranges need to be carefully managed across various customer touchpoints, many people can get overwhelmed. A lot of detail needs to be considered to establish a digital transformation strategy. And it doesn’t end once your strategy is defined. Digital technologies are always changing so you need to continually review your plans.
Working closely with people from across the organisation will bring a variety of skills, knowledge and experience and make the process more manageable. If you don’t have the resources, reach out to third parties to access additional expertise, including social media, marketing and brand development.
Ready to overcome these challenges? Find out how to develop an effective Retail digital transformation strategy.
Final thoughts
Digital technologies are transforming the retail sector at pace. Embracing this transformation may involve change management, additional budget and complex processes but it will be worth it. The most successful retailers are the ones who have embraced technology to access new audiences and create engaging, effective, personalised and seamless customer experiences – online or in-store.
Whether you’re interested in social media and influencer campaigns or machine learning and Artificial Intelligence (AI), don’t just rush ahead with the latest digital trend. If you’re going to overcome these challenges of retail digital transformation and really see the benefits, you need to get focused by using robust business models and digital strategies. By getting a clear understanding of your key business and customer priorities, you can make sure you’re investing in the right digital capabilities.
Discover how to maximise the benefits of retail technology by attending our Digital Transformation Strategy conference. Register today!
