The traditional concept of brick-and-mortar purchase amongst consumers has transformed drastically over the period into hybrid experiences. With the rising of mobile shopping, e-commerce, the introduction of smart technologies and business models for the consumer is imperative to drive the digital world. A race has started towards digital intimacy to stay ahead in the evolving retail industry. In this customer-obsessed world, the momentum shift from store-based formats to digital channels is expanding the realm of interactions, driving engagement and conversions. Digital merchandising, demand sensing, vigilant replenishments, manufacturer online operation platforms are helping to move fast and stay ahead of the competition. Additionally, the traditional store labels have introduced multichannel strategies to influence customer buying behavior to sustain business in the changing market scenario.
What is Digital Transformation in the Retail Industry?
Digital transformation is not a new concept, with every industry going digital to improve their services and facilities to stay ahead of the curve. In the retail industry, digital transformation is a propelling omnichannel experience, which caters to the customer need and expectation through shorter attention spans with instant gratification, personalized push notification, customized recommendation by forecasting market trends, strategic analysis, location-based marketing and anticipatory shipping for fulfillment conveniences with an integrated view of consumer behaviors. All this and the need to discover innovative ways to drive revenue and create groundbreaking business models are factors to introduce emerging technologies in the digital transformation journey for an enterprise. Data-driven AI fuels insights and decisions. It is about thinking beyond marginal improvements, where establishing engaging facilities using technology is brought to the forefront.
Digital transformation includes the usage of data intelligence, working towards customer centricity, being agile, adding new value propositions, and being innovative. Let’s not forget that it is also about cost reduction, streamlining processes, and enhancing efficiencies. Technologies such as big data, smart algorithms, analytics, mobile apps, location-based services, the internet of things, blockchain have brought a significant transformation. Every aspect of the business such as strategic sourcing and procurement, supply chain and logistics, employee management, training, and customer experience management has an important role in assisting retailers to increase profitability and keep up with demand.
Challenges in the Transformation of the Retail Industry?
Digital Disruption: As multiple choices at the fingertip of a customer before making a purchase decision, revolutionizing consumer behavior due to the explosive growth of e-commerce. Last year Indian e-commerce order volume increased 36% in wellness and personal care. While Indian e-commerce sees a 27% growth and is expected to reach $99 billion by 2024. A common habit of a customer is to research products be it online or offline. Many factors come into play such as price, availability, user-friendly technology, and most important brand/product recall. Corporates not only have to compete for visibility in the market but also keep the customer hooked on their products and services.
Technology Solutions: Moving to the cloud/online is no more an option for organizations. However, building a strong technology foundation that will help maintain orders, products, inventory, customers, or a scalable architecture to support dynamic changes in the business. A complex software platform can result in increased costs. Therefore, continuous software ramping up and come up with personalized innovative solutions can keep the organization on their toes
Evolving Customer Expectations: As mentioned earlier, customers are king. Hence retailers need to keep up with the fast changes in what customers want and expect, which could be challenging, for eg: change in shopping behavior and seasonal changes. This is where Analytics comes into play. With the use of Analytics, retailers can understand the need and expectations of customers and provide solutions accordingly
Supply Chain Management: Due to the pandemic, the organization had to rethink its supply chain/delivery model to meet the demand of the customers. It is imperative for retailers to monitor the supply chain to ensure that the products are defect-free and are always on the move to ensure a low cycle time.
Technologies Digitizing the Retail Industry
Data Analytics: In a competitive market of retail, it's crucial for corporates to gain the ability to optimize business processes to meet customer expectations and demands. Predicting demands and customer purchasing patterns, tracking emerging products, anticipating sales are all part of data analytics. It helps in growing their business around – predict future performance, price optimization, demand prediction, trends forecasting, picking out the highest return on investment opportunities, and customer identification. Thus, providing hyper-personalized products or services.
Artificial Intelligence: From enabling online shopping, to promoting products basis customer behavior and purchasing history, AI helps in making customer service effective and better. Recently, virtual trial rooms have allowed the customer to have an immersive experience without stepping out of their homes. Common, yet effective chatbots have minimized the query answering time drastically, keeping the customer happy and satisfied. The use of AI has improved retailers provide speedy and personalized attention to their customers which replicates deeper brand engagement, enabling improved customer loyalty.
Internet of Things: Retailers are making smart moves when it comes to improving their sales and marketing strategies. Time has come to utilize smart technologies such as robotics, smart selves, automated check-outs, and in-store layout optimization to improve customers services, boost sales, increase customer loyalty, personalized experience, and enhance inventory management.
Personalization and engaging customer experience through the help of technological disruptions have helped the retail sector adapt to the sudden change in the market. Organizations need to synchronize loyalty programs with user expectations, to collect pointed data and effectively leverage it to deliver the personalized experiences. With competition rapidly increasing, the need of the hour is for the retailer to build a strong network, stay connected to the network of vendors, employees, and customers on a real-time basis. Digitization is key in making this happen.