7 imperatives of digital retail

7 imperatives of digital retail

Retail

STOrai Magazine

STOrai Magazine

23 Sep 2016, 11:33 — 13 min read

Google predicts that in just four years 50% of modern retail will be influenced by digital. Gartner envisions large organisa­tions to steer a quarter of the enterprise costs towards digital transformation. Dig­ital retail is here. And it asks a lot from the retailers. Here’s a look at the seven most important demands of digital retail.

1. Collaboration with startups

“New disruptions are coming from startups. Retailers have to adapt to this new ecosystem where startups dominate,” declared NASSCOM President CP Gur­nani, who is also the MD & CEO of Tech Mahindra. While startups bring in radically fresh ideas or fun­damentally new ways of doing things, which may be intimidating, experts feel that this is more an oppor­tunity than a threat.


Startups offer great solutions that retailers can leverage to substantially boost their capabilities. For instance, startups like GreyOrange can help retailers turn their warehouses into efficient fulfilment centres. In the UK, both John Lewis and Tesco have collabo­rated with startups to uncover great ideas and add to their digital capabilities. Some of the areas they are working on are smart labelling and 3D room planning.

US-based retailer Target has achieved huge savings by partnering with a startup that helped it discover money lost in overpayment to vendors. The partnerships need not always be between solu­tion providers and retailers. They could be between retail startups offering niche products and established retailers. US retailer Whole Foods, for instance, stocks hottest new brands by startups. Considering the speed at which new solutions are popping up, it’s counterproductive and extremely ex­pensive trying to do everything by oneself. Partner­ship with the new-age startups and other disruptors is really the only way retailers will be able to give customers a wholesome experience.


Action point:
“Big-company executives must choose to become personally more aware of new, growing companies,” advise experts Eddie Yoon and Steve Hughes in an HBR article. Although it may seem like effort, a KMPG report found that 84% of the times, it is worth it.

 

2. Judicious use of hyperlocal

Hyperlocal really fine-tunes a retailer’s offering to the consumer based on her precise location. It affords brick and mortar retail easy discoverability while driv­ing impulse purchases through lucrative deals pushed at the right time. Imagine a customer standing next to a brand’s retail outlet and knowing her profile, the re­tail outlet pushes a customised offer! Retailers across US and UK have adopted hyperlocal technology to serve contextual communication to shoppers within the store. Throughout the USA, top national retailers including Best Buy, Sports Authority, J.C.Penney and Target have use hyperlocal to capitalise on an offline data-driven retail experience.

“Considering the tremendous cut-throat compe­tition, it is paramount for the retailers to be found by the search engines and hence getting themselves updated by being hyperlocal is important,” said K Ganesh, Serial Entrepreneur, Partner – GrowthStory.in and Chairman, Portea Medical.

Abey Zachariah, CEO, Goodbox said, “For a busi­ness like ours, it creates lots of opportunities.”  

Action point: Do a complete cost-benefit analysis before jumping onto the hyperlocal bandwagon to ascertain if your business will really benefit from it. “One needs to take the unit economies into consideration,” advised Damodar Mall, CEO - Grocery Retail, Reli­ance Retail Limited. While most retail stalwarts agreed that hyper­local is a powerful customer en­gagement and enticement tool, do not just jump into it because eve­ryone else is doing so.

3. Varied, seamless payment options

Payments may be the last in the process of shopping, but they are slowly becoming the most impor­tant. There are enough examples of carts being abandoned due to friction at this crucial juncture.

Today, paying for a single trans­action may involve several modes of payment — part of it by card, part by points/vouchers and the re­maining through a mobile-wallet.

Worldpay’s 2014 guide to Glo­bal Payments states that by 2017, 59% of all global transactions will be made with alternative payment methods. It may well be true as Indians are warming up to using alternative payment systems. According to the report ‘Top 10 Trends in Payments in 2016,’ by Capgemini, implementation of immediate payment systems will continue to accelerate globally as retail customers demand for services providing immediacy of transactions. Immediate payments can drive the growth of non-cash payments. The report further predicts that hidden payments volume growth will further accelerate, driven by four key categories of payment instruments:

  • Closed-loop cards and mobile apps
  • Digital Wallets (non-banks)
  • Mobile money (non-banks)
  • Virtual currencies

 

Customers will shop with those who make payments, hassle-free, easy, secure and flexible.

Action point: Explore all options available today, including pay­ments through chat and whatsapp. Focus on seamless integration of different payment systems, mak­ing it a breeze for customers to pay using as many options as they wish. “Your payment gateway, if online, should be user-friendly with minimum typing to avoid errors,” suggested Sumit Kumar Singh, Associate Director, Head of Digital Payments and Personaliza­tion Services, MakeMyTrip.

Meheriar Patel, CTO & VP-IT, The MobileStore advises creating awareness among customers about the different payment options you provide so they know they have multiple options.

4. Supply chain transformation

“It is absolutely imperative to have good supply chain management to reduce costs, increase bottom line and delight customers,” said Bruce Harryman who is responsible for the National Distribution Network Planning at John Lewis, UK.

Today, the lines between re­plenishment and fulfilment have blurred. “Unless there is transfor­mation in the existing supply chains, fulfilment of customer needs is not possible,” said Dhruvil Sanghvi, CEO & Cofounder, LogiNext.

Nitin Agarwal, Head - Strategy & Planning, Arvind Lifestyle Brands observed that if customers do not find a product, instead of walking away, they ask if it is available at an­other store or location or whether it can be shipped to them. This re­quires supply chains to not just be agile, but also transparent.

Peter Sondergaard, global head of research at Gartner predicts that in leading organisations, about 20 percent of the investment in digital will be allocated directly to supply chain transformation.

Consumers are increasingly mov­ing towards omni-channel demand fulfillment.

Action point: Invest in digitally-driven supply chain transforma­tion. Focus on meeting the goals of speed improvement, cost improve­ment and quality improvement. Ensure transparency at all costs.

5. Thinking beyond mobile/e-commerce

Digital retail is often used syn­onymously with m-commerce or e-commerce capabilities. “Dig­ital retail is about mobile and web both, bringing both B2B and B2C on the same platform. I would categorise all cyber trans­actional activity as digital retailing, whether done by customer directly or through assisted mode,” Alok Jha, MD, CyberPlat India.

However, digital retail is much bigger than just what can be done with online and mobile. Further­more, it involves a lot more than digitalisation of established proc­esses.

“Broadband, the cloud, AI [ar­tificial intelligence], big data are all coming together at the same time. …It (digital) is moving business away from automating the business to rethinking it,” according to UK-based management consultant Roger Trapp.

“It’s about exploiting digital’s im­mense potential to do things smarter, faster, easier and cheaper, for the cus­tomer and the business (but it has to be in that order!),” said customer ex­perience evangelist Annie Turner.

Retailers who focus on the nar­row view of digital and only focus on mobile or e-commerce will end up with lopsided capabilities, fall­ing short of delivering a truly dig­ital experience in store.

Action point: Get a 360 degree view of digital retail. Consider bringing in digital capabilities in business processes, in-store expe­rience, supply chain and more are­as other than mobile. Think simu­lation, 3D, virtual reality, artificial intelligence, machine learning, internet of things.

6. Digital-savvy staff

“We need to think about how digital evolution can actually be capitalised by the front end staff to enhance sales,” said BS Nagesh (BSN), Chairman RAI; Founder TRRAIN, while speaking about digital retail.

Ultimately, it’s the front-end staff that translates the brand promise into a brand experience. It is therefore critical that every per­son on the floor is comfortable in a digital environment using digital tools. It will help bridge the gap between what the brand promises and what’s been delivered. “which is what good customer experience is all about,” as per Rachna Nath, Partner, KPMG.

“Today, even people in the back office/head office connect directly and with consumers be it through social media or other digital plat­forms,” said BSN. True digital re­tail demands that the entire work­force is digitally savvy.

Action point: Make digital the DNA of the organisation. Right from the directors to the front end staff, everyone should be able to derive and deliver value from digital tools. In addition, retail­ers may develop an innovative business model which helps them better adapt towards developing a digital culture and hire a team of individuals with digital skills to help with the journey.

7. It’s about a mindset change

Digital retail is more about atti­tude and a transformation in the company’s thought process than it is about technology. “It’s easy to buy technology, but managing the change it brings is what’s difficult,” said BSN.

“There is a need for change in attitudes by the CXOs. The envi­ronment is changing and in ad­dition  to learning about the latest in technology, we need to learn change management and bring in a digital mindset,” he added.

So what does a digital mindset entail?

“The digital mindset looks at digital opportunity through a much wider lens that also includes strategy, culture, processes and the ways to engage with humans and “things,” according to Smit Gupta is Marketing Director at Unisys.

According to authors of the book What ‘Digital’ Really Means Karel Dorner and Dave Edelman, a digital mind set is about being more externally focused, to con­nect with outside organizations, outside vendors, outside talent. An external orientation is also ul­timately customer orientation.

“It’s a question of changing the way you operate and then us­ing digital technology to give you the low-cost flexibility to get that done—and then measure it,” said the authors.

Action point: Journey to digital maturity requires a whole-hearted commitment from a company’s leadership and a sustained invest­ment in people, capabilities, tech­nology, and cultural change, ac­cording to Tanguy Catlin, leader of McKinsey’s Digital Quotient initiative.

To get started, an organisation must be honest about its current digital quotient, clear about its long-term strategic opportunity, and open to iterating and refining solutions along the way.

Article & image source: STOrai Magazine

 

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views, official policy or position of GlobalLinker.

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