Reimagining retail for the digital age: The importance of an integrated approach

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The digital consumer has forever changed the contours of the retail industry. Traditional retailers and manufacturers have no choice but to embrace the e-commerce and the digital revolution. Those that resist are bound to fail as we have seen in retail segments hit first by the digital tsunami, such as music and books.

While awareness of the digital transformation is apparent and prominent, many retailers struggle to transition traditional business models to digital-driven, omnichannel business models. In order to remain profitable and thrive, retailers must adopt an integrated business approach with a solid digital strategy.

Strategic Forces Driving Digital Transformation of Retail

In order to understand the struggle between traditional and digital strategies in the retail industry, we need to understand the key forces driving the digital transformation, and how retailers are reacting to and adapting to these forces, as noted in the chart below.

chart 2

It is evident there are significant differences in adoption levels as well as the key organizational drivers of these digital transformational forces.

They key challenge today is that many retailers are not taking an integrated approach when it comes to harnessing the forces that drive digital transformation. While there are a number of factors contributing to the lack of action, the fundamental reason is that there are multiple owners for each of the eight strategic areas indicated above, and there is no real integrated digital strategy. Therefore, digital initiatives tend to be driven by departments, or even much narrower focus areas, as well as the individual initiatives and interests of the different drivers.

For example, cloud computing initiatives are typically driven by IT teams. In most cases, these cloud initiatives are not integrated with other related initiatives, such as mobile or analytics, which are usually driven by marketing or other departments within retail organizations. This disparity inevitably leads to less-than-optimal use of organizational resources and a lack of synergies. Cloud computing has the potential to provide much more to retailers than the obvious cost savings and reduction of capital expenditures. Speed and lower time-to-market are key benefits too, and these needs are becoming even more critical for retailers.

The need for integration across digital strategies will become even more critical as the Internet of Things and artificial intelligence become more accepted and prominent.

Providing a True Omnichannel Experience to Consumers

While it’s unlikely most customers have heard of or understood terms such as ‘omni-channel,’ they do expect a seamless experience across various retail formats and touch points. Increasingly, customers are opting for a wider variety of channel combinations, and enabling new channels can be challenging for many retailers when it comes to brand communication, supply chain, logistics and customer service. An integrated digital strategy becomes critical to address these challenges.

Digital Transformation Roadmap for Retailers

It’s not practical to integrate all seven digital transformation areas together, as each ranks at various levels of maturity, and numerous legacy systems and initiatives are already well underway in most retail organizations. Further, it’s not essential for successful digital transformation.

Integration of digital strategies can be executed in stages as long as there is a larger vision and a broad strategic framework for the overall digital strategy. This broader digital strategy has to be driven at the C-level, and the entire retail organization needs to be part of the transformation. Factors to consider include:

  • Enabling the digital cultural shift: Digital transformation is much more than opening an online store or launching a mobile app. Traditional hierarchies and departments that used to exist in siloes all need to change and become integrated through the digital.
  • Flexibility and adaptability: The digital world is highly dynamic and constantly evolving. The strategy needs to have a long-term vision that can be adapted as the needs of the organization change and new technologies emerge or become more mainstream.
  • Adopting an inclusive digital strategy: Retailers need to integrate the digital strategy with manufacturers, vendors and other partners by showcasing value and business benefits.
  • Obtaining an understanding of the new age “digital” customer: More and more, shoppers are becoming multi-channel, and their needs are evolving very rapidly. Understanding their needs and the whole digital engagement process is critical for retailers. Retailers that operate in multiple geographies need to understand there will be significant variations in consumer needs and behaviour. For instance, some regions offer cash on delivery for online sales.

The key areas where real integration can happen today (and are already happening among some of the leading retailers) include cloud computing, analytics, mobile, social and digital marketing. Retailers that have accomplished integration among these areas will reap the benefits for many years to come.

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Ajith Sankaran
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Ajith Sankaran

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