.png){kind=small}
Digital transformation: Its importance in Retail
Today, there’s a strong imperative for retailers to implement new technologies and operate digital transformation. Between 2016 and 2020, Mckinsey found that retailers who were digital leaders generated 3.3x the Total Shareholder Return (TSR) of retailers lagging behind in tech. The potential benefits are enormous, and a compelling reason to invest in tech.
However, the prospect can be daunting. With some estimates predicting that global spending on technologies for digital transformation will reach $2.3 trillion by 2023, initial investment is undeniably high.
In reality, achieving total digital transformation is more than possible for retailers. It’s all about embracing a step-by-step journey and reaping incremental benefits along the way. Here’s why instant digital transformation is a myth, and how adopting a pragmatic approach can lead to meaningful progress.
Daunting Challenges vs. Pragmatic Progress
Most papers on digital transformation in retail cite the need for a holistic approach. There is usually a need to invest in several pillars of digital transformation, including:
- Customer engagement
- IoT capabilities for products
- Employee empowerment
- Operational efficiency
Investing in all of these things at once is understandably daunting. Retailers may have concerns about resource allocation, prolonged timelines, and evolving leadership.
However, instead of viewing digital transformation as an insurmountable feat, retailers must recognize that it begins by addressing core challenges one at a time.
For example, Home Depot selected customer engagement as its core focus. By implementing technologies that focused on personalized omnichannel experiences like click-and-collect, the store has become an expert in multi-channel retail. The change for the customer is enormous, but Home Depot has crafted success by focusing on just this one aspect of retail operations.
Incremental Improvements
There is a common misconception that digital transformation only yields value upon full completion. However, this myth is easily dispelled when approaching the transformation strategically.
Rather than waiting years for a holistic transformation, retailers can focus on deploying targeted solutions to bring about incremental benefits.
Each step you implement contributes to enhancing customer experiences, streamlining processes, and elevating the overall retail ecosystem. Plus, rather than striving for immediate perfection, gradual implementation ensures that you have the freedom to adapt as you go, resulting in an end product that is even more effective.
Leveraging IoT to Work Toward a Digital Future
Retailers that want to work toward a digital future can do so in many ways. One way to forge a digital transformation is to become a VUSION 360 store, a retail store that creates synergies between processes and generates insights for optimization while improving customer experiences.
The journey is as follows:
- Pricing automation: Implement technologies like Electronic Shelf Labels and inventory software to automatically update prices and improve fulfillment.
- Store-level analytics: Optimize the store’s performance through data-driven analytics, including Retail Intelligence software that improves replenishment and forecasting systems and optimizes product assortment and store layout.
- Camera shelf: Eliminate manual gap scans with technology that streamlines the replenishment process, improving customer experience through better shelf availability.
- Retail media: Implementing new technologies to deploy digital promotions, personalized marketing, and interactive experiences through Retail Marketing Solutions, all while reducing use of paper, plastic, and cardboard.
By considering a strategic step-by-step plan early, retailers can implement IoT platforms, like VUSION, that ensure the process runs seamlessly. It facilitates a practical start to the transformation journey, allowing for tangible improvements that will eventually lead to a cohesive, interoperable digital transformation.
Embracing the Step-by-Step Mindset
Embracing digital transformation as a step-by-step journey requires a mindset shift. Retailers must acknowledge that each incremental change contributes positively to the whole.
However, with proper planning, retailers can become technological leaders. A strategic step-by-step plan can minimize disruption and empower retail teams to adapt, learn, and innovate. Plus, it fosters a culture of continuous improvement, ensuring the retail revolution aligns with ever-changing business dynamics.
By embracing the incremental mindset, retailers not only reshape their present, but sculpt a future where innovation and success thrive.
