Digital Transformation in Retail: It's got to be tech-enabled, but consumer led

Published 26 August 2019 by Caroline Koktvedgaard

If you’re operating at the sharp, customer-facing end of retail, you’ll know that you don’t only selling your product, you also sell the experience that surrounds the entire transaction. We explore how digital can help create customer experiences that are tech-enabled, but consumer-led.

 

Two years ago, Marc Benioff, CEO of Salesforce, told CNBC: “loyalty is dead”.

Since that irrefutable statement was uttered, it has only become more true. The proliferation of tech means today’s consumers are more demanding – and they’re willing and able to shift to competitors that better meet their immediate needs. 

Never fear: loyalty can be brought back to life. But to do so, retailers must start understanding their customers like they understand the technology they buy. 

Digital transformation is a necessary process for most retailers. At every turn, we are being told that they must focus on “reducing friction throughout the customer’s purchase journey” and “delighting their customers at every touchpoint”. Many see digital transformation as the best and easiest way of doing this. However, digital should only be considered a step in the right direction – not the ultimate solution. 

 

Complete the experience 

Almost every major retailer is experimenting with new customer experiences. Few companies, however, are viewing digital transformation as a way of better understanding the nuances of new technologies, and using them to enable a customer-centric business solving  real-world customer problems. 

Without complimenting an experience with a call to action that moves the customer journey onward, your transformation efforts will be pointless. 

For example, Samsung opened a new type of store in New York’s Meatpacking district – Samsung 837. It’s a space that offers customers virtual reality experiences, art installations, music screenings and more. The goal is to deliver a new customer experience that enhances brand loyalty, enabled by new tech. 

Another example is the online makeup company Sephora, who created an augmented reality-enabled smartphone app allowing customers to “try on” various looks and shades in seconds, and have personalised tutorials. It’s a continuation of its original store concept of allowing customers to walk in and test and try on their own before buying, enabled by tech. 

What retailers like Samsung and Sephora have in common is that they know that it is not enough to invest in VR or AR alone – they know that they need to chart a clear direction for their customers. They understand that you can attract curious eyes with new experiences, but the hearts and minds required to build and sustain loyalty needs to speak to a higher purpose in customers. 

Samsung and Sephora know there needs to be a thread connecting their in-store experiences and their online offer that intrigues, inspires, encourages and convert customers. So how can we learn from their experiences, and apply these learnings to our own businesses?

 

Embrace the challenge 

In an interview with CMO.com, digital transformation consultant Craig Gorsline said: “speed, scope, and impact are all operating at a different velocity than it [sic] did 10 years ago or 20 years ago. Companies face the stark reality that they can’t just augment legacy technology, there’s actually a need to work to rewire their entire enterprise.” 

According to Adobe and Econsultancy’s Digital Trends in Retail Report, retailers looking to truly digitally transform must meet no fewer than eight core requirements:

  • Collaboration
  • Culture
  • Data
  • Process
  • Skills
  • Strategy
  • Technology
  • UX design

For any organisation, the sheer scale of the task at hand will be daunting. A survey from Gartner agrees, listing the complexity of change as one of the top six barriers to becoming a digital business. 

Introducing new tech isn’t easy – but success is borne from embracing challenges, not running away and ignoring them. 

 

Ignorance is not bliss 

While retailers need to adopt digital at the core and rebuild their services around emerging technologies, many retailers are being side-tracked by glitz and glamour. The most successful retailers understand technology isn’t the be all and end all of digital transformation. They’re also the ones you’d hold up as having gained the most from digital transformation.

As reported in ZDNet, only 35% of companies study how technology is impacting consumer shopping behaviours when implementing their digital transformations. According to Brian Solis, a principal analyst at Altimeter Group, this underscores the fact that many organisations appear to be implementing technology without understanding why. 

Tech enables that basic fundamental of retail – customer service, but without a proper plan in place to utilise it to its full extent, it could create more problems than it solves. 

 

Data enables great customer service 

Harry Selfridge was among the retail legends at the beginning of the last century to holistically embrace the age-old maxim “the customer is always right”. The fundamental meaning behind the statement remains a retail constant even in this digital age: always put your customer’s needs first. 

One of Amazon’s latest initiatives, Amazon Go, is a prime example of this (excuse the pun). It’s a cashier-free store where shoppers log into a smartphone app, load up on groceries and walk out. Cameras and sensors around the store record what customers take and are automatically billed online. 

Amazon Go offers a great experience, but as Forbes point out, its real value lies in the reams of data gathered in the process. Every element of consumer behaviour is mapped and crunched to help Amazon further improve its services and become more relevant to its customers. It may be tech-enabled, but it’s really all about understanding the customer – the same as it’s always been. 

 

People are still key 

In a PWC study, 43 per cent of shoppers said they don’t believe digital experiences will remove the need for humans employed by retailers. For PWC, retailers that set out to achieve digital transformation are “asking the wrong question” – they should be pursuing a wider transformation which combines technology and people. 

According to a McKinsey report on Skill Shift, Automation and The Future of The Workforce, demand for technological skills will rise 55 percent by 2030. With digital skills gaps noted as a major concern for all businesses, retraining existing employees is a critically important element of successful transformations. 

A survey of major retail brands from Retail Week and PWC noted that retailers should focus on existing employees in order to maintain loyalty and utilise their experience. As the publication says: “while passion can’t be taught, new skills can.” 

However, training must extend beyond the technical to reinforce the ultimate goal of digital transformation: being customer- centric. 

Writing for Forbes, Nikki Baird provides sound advice for how retailers can do just that: “The value of innovation projects comes from how quickly… data can be turned into insights, and how quickly those insights can be turned into actions. It’s those actions that ultimately drive the return on investment, by creating new services for customers, new kinds of engagement, or capitalising on insights into what customers want by more closely meeting their needs”. 

Retailers need to keep in mind that digital transformation is only a change in method. The aim remains the same: providing customers with better experiences than your competitors.

While technology choices will be important in achieving this goal, so too will be training your employees and empowering them to excel in their work. Tech will only enable better customer service, employees are imperative in delivering it. 

 

Ready to get cracking?

Digital transformation is indeed a daunting task – but only if you don’t understand how to get started. 

Circus Street can help you identify the correct first step for your business. For example, it could be upgrading the capability of your employees, both in terms of digital skills, but also in building their confidence to engage with your customers, not just as data, but as human beings with needs. In short, it’s got to be tech-enabled, but consumer-led.

To find out how Circus Street has empowered other companies to start their digital transformation process, see our testimonials page. Or sign up to a free trial of our lessons to see how we can help drive the digital capability of your own team.


To find out more, visit www.circusstreet.com.

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