This article first appeared in CIO magazine
Read the article here: https://www.cio.com/article/3268127/digital-transformation/these-superheroes-of-digital-transformation-are-finally-earning-their-stripes.html
The theories are sound, the strategies are clear, the plans are robust – from a purely ideological perspective, CIOs in retail have all the evidence they need to round up their data and put it to work in the digital stores which are fast becoming the only way to ensure success in a tech-enabled industry.
But, as the saying goes, an ounce of practice is worth a ton of theory, and it can be tricky to clear the commitment hurdle without some pretty compelling evidence to prove your business case for transformation. As with all emerging business concepts, retailers who aren’t prepared to take the long view rely on those who are more forward-thinking to take the risks and make the case for them.
Fortunately for the more cautious CIOs, the early adopters and pioneers who saw what was happening to the industry and decided to take a leap of faith are now seeing some solid results coming from four fundamental initiatives:
Retailers that are weathering the current economic storm have embraced ‘omnichannel’ as a given. No longer something to aspire to or build into a five year plan, allowing customers to shop wherever and however they choose is fast becoming a standard strategic element which is making a significant difference to the bottom line. According to Forrester, retailers have seen omnichannel customers spending up to 22 times more than single-channel shoppers, with digital touchpoints driving all sales.
Colleagues empowered with tools to provide a cross-channel experience are also proving their worth – 35% of customers expect them to be able to check product availability, and 47% expect them to provide roaming checkout/payment facilities.
The message from Forrester is clear – omnichannel is not only worth it, it’s essential: ‘A truly omnichannel operation…will optimize revenue, deliver capital efficiencies, spawn operational efficiencies, and improve the customer experience overall. Leading retailers are building the supporting technology, skills, processes, and organizational structures to develop these capabilities, even if this journey is complex.’
2 On-demand fulfilment
According to Julio Hernandez, Global Customer Lead at KPMG International: ‘As part of an integrated customer-centric business model, customers expect that goods can be delivered or picked up wherever they are located. They want their orders consolidated, they want shipping bundled with service, and they want to be able to return things easily’.
Forrester backs this up – as much as 60% of online sales are now picked up in-store, with up to 40% of customers buying additional products when they arrive to collect their goods. And a number of retail groups have reaped the benefits of ‘flexible reverse logistics’ by building global returns policies, cutting costs by around 50% in the process. With each failed home delivery costing the retailer £151 on average according to Barclaycard, on-demand fulfilment is a true digital store enabler which has measurable value to customers and retailers alike.
Making customers feel special in an age of multiple touchpoints and rapidly-evolving expectations is always going to be challenging. It’s just not possible to provide great service – context-specific, personalised customer engagement matched to their individual needs – if there is no consistent way to identify a customer across channels. Forrester reports that around 50% of shoppers will spend more with retailers who have made the effort to engage with them as a single, unified organisation by streamlining customer service and combining customer data and digital tools, which is why 72% of leading retailers have committed to investing in a personalised in-store experience.
Research by data management professionals Segment reinforces the value of personalisation in-store – 40% of shoppers said they had bought something more expensive than they intended because of a personalised recommendation from a retailer, and 44% said they would become a repeat buyer after a personalised experience.
Personalisation pays – all the evidence suggests that customers are happy to trade their data for a tailored service, and pay more in-store for VIP treatment.
4 Core capabilities
Seasoned CIOs know that you can’t transform your business without making at least some adjustment to where your core capabilities are focused. None of the preceding three ‘superheroes’ have any power without, as Forrester puts it, ‘implementing enterprise inventory and order management systems, developing a single enterprise view of the customer, and breaking down internal operational silos’.
Each individual core capability has been proven to add to the bottom line, so it’s worth looking at the other side of the coin – what happens if retailers fail to invest in omnichannel and the digital store? A survey conducted by RIS News found that they stand to lose 4.5% of earnings if they have unsynchronized processes, technologies and corporate structures that cannot support omnichannel services and functions from inventory management to personalisation and pick from store. In cash terms, that means a billion-dollar retailer could leave $45 million on the table by choosing not to invest in digital store strategies. That’s a significant slice of revenue in a market where every penny counts.
There’s safety in numbers
The results are in, and they’re doing a lot to prove the point that digital stores are the only way forward for brick-and-mortar retailers. The facts and figures are undeniable – robust enough to persuade even the most risk-averse CIOs to support investment in the technologies and strategies needed to make the digital store a reality.