Digital Transformations have become an integral process for all businesses and those within the retail sector are no exception. But as with most things, there are right and wrong ways to implement such a major change. We recently chatted with Business Transformation expert, Bilyana Georgieva to get her stance on how retailers can enhance their digital footprint successfully and why it’s become so important.
The retail industry is the fastest changing amongst all industries, with consumers demanding new products from retailers every 3 to 6 months. If the retailers aren’t dynamic enough to provide what the market is looking for, they lose positions and profit extremely quickly. Up until four years ago, retailers could easily offer a product or set of products in one season or year. Nowadays, this time slot is every four to six weeks or at least two new products per year.
The only way to be that dynamic is to have an environment which is able to change within a few weeks or maximum a few months. So, every retailer’s number one goal for their digital transformation needs to be the basis of a fast-changing environment. Most of the innovations and applications created in the last four to five years open up the potential to save time and money once implemented, such as AWS, Shopify, Microservices based integrations, or technologies like NFC or the new generations of RFID.
The key is not to focus on what is used in the retail industry, but to look at the process you are changing and the problem you are solving and then find a solution regardless of the industry. Do you remember when Apple created the first iPhone, which merged three main functionalities in one – music, phone and the internet? They reinvented the phone as a product, but if you look behind the scenes, Apple wouldn’t be able to turn the idea into a product if they were not digitally ready.
Twelve years later, we can take any smartphone and use it as a replacement of sorts for so many devices in-store, from scanning bar codes to taking payments, to click and collect orders, stock finder, stock inventory, stock allocation and so on.
Change the perception and you can use the same smartphone in-store to send promotional or marketing data to your customers. Change perception again and you can use it for internal communication between stores. The possibilities are endless. The game today is how fast retailers are implementing the “digital enablers” and how quickly the IT team will move to more flexible cloud-based, Microservices-based, and so on platforms to enable the enablers.
The traditional digital transformation has three focus areas: people, processes and technology. The problem is that most of the people doing digital transformations have those three elements so embedded in their brain that everything they do is now almost automatic. They are like machines producing the same type of screws every day – perfectly shaped and shiny. There is nothing wrong with this, as every industry need specialists. But the issues start when C level people come to us and ask for something different, something their industry has never seen.
This is why a successful digital transformation model should have four elements: people, processes, peripherals and positioning. Processes and, what I call, peripherals, for example, technology, systems, competencies, methodologies, and so on, are two elements from the traditional business transformation. Companies will always need to analyse the gaps in their processes and understand if their technology is fit for purpose for current and new processes, as well as understanding the vision of their company and its new requirements. Implementing the people element within a transformation helps companies to make internal communication a priority, so they get the right message across their departments and can manage resistance quickly. Key for success is the engagement to be top down
The people element in the digital transformation model I use is based on intuition and inspiration. How many people, either friends or colleagues, do you know who go to their Monday to Friday, 9 to 5 job and are bored to death and only doing it because of the money? For a very long time, I thought, it was their personal responsibility to change their job and find something more inspiring if they aren’t happy.
But after working with teams who have lost all motivation and communication with each other, I now feel that it should be the senior management who take on the responsibility of inspiring their team. They should get to know them, find out what they’re good at and give them the freedom to create. This will encourage a state of inspired action, instead of forcing the team to do things they don’t want to do.
The fourth element of the business transformation model is positioning. I strongly believe that the future of all companies is to make their results visible to the people on the outside. There is so much to share – the digital innovations you’ve implemented, the way you improved a certain process or the way you inspire the people around you to have fast actions. When I’ve encouraged C level people to share, I was met with a lot of anxiety. Yes, you should never share figures or sensitive data outside your company! But what I’m saying is that, by breaking down your success into small chunks and sharing the experience with others, you’ll get more back from others in return.
I strongly believe that working from a state of intuition and inspiration and sharing your success can make every digital transformation successful. In fact, it makes any kind of work successful. You asked who is excelling at digital in the retail market right now? I think it’s those who can bring successful implementations from any industry into the retail one.
In 2014, figures showed that 6.3% of all retail sales were completed online. However, this is predicted to double by 2021. Now that almost half of the world’s population uses the internet, retailers will need to take into account the jump in mobile devices technology usage, particularly for shoppers in the 18-29 age bracket as they are the biggest frequent shoppers.
In 2017 the biggest online retail sales were made in the UK, Germany and the US, followed by France, Sweden and the Netherlands. My personal opinion is that the online shopping will slowly tie with the in-store sales in West Europe, North America and South & South East Asia in the next three to four years, where East Europe, South America, North Asia, Australia and New Zealand will still prefer in-store shopping for another seven to ten years. After that online sales will definitely be more than those in-stores.
The biggest challenge for e-com is still to analyse the human habits of their customers and use this knowledge to convert their online traffic into a sale. When it comes to digital transformations, it can take around three years to create a fully functional e-com platform, hire a team of experienced e-com, marketing and IT professionals and implement it fully. However, knowing the speed of approving budgets in big corporate companies I would actually give four years minimum. Taking in account the prediction in retail sales for 2021 the companies which currently don’t have any online presence must start now, otherwise, they will not be ready on time for the big online retail sales jump.
One more thing, currently, one of the biggest problems for retailers with large numbers of international stores is keeping an up-to-date digital assets database. It takes a considerable amount of time and effort to make this right but in all cases, it’s the first step towards developing a strong online presence and sales. If your in-store digital transformation has already done it and your database is fully synchronised with your SKU database, hierarchies, design catalogues and so on, then I would say moving from in-store to online sales will be a relatively fast job.
In essence, if your company has international stores across the areas I mentioned above you will have to be very flexible and run two parallel digital transformations. My advice is to see what overlaps, like the asset database I mentioned above, and start from there.
Well, I think those two are actually closely linked. The customers are the ones who create market trends; we see evidence of this every day on social media. Thanks to the popularity of social media platforms now, customers can learn more about products before they purchase, whether it’s through photos or reviews from other customers. However, if a retailer's social messaging doesn’t highlight the company vision and the benefit of using a product or show it in an appealing light, customers can easily disassociate themselves.
If enough of their customers take this stance, the retailers will understandably start to generate a loss and lose customers to competitors who do this more successfully. So really, the retailers need to go digital to highlight their company message and the advantage of their products to their customers, which in turn is of huge benefit to themselves.
The retailer’s transformation team must keep a very close eye on digital trends whilst also being open-minded. I remember speaking with an IT director about the benefits of AWS technology and the reaction he received from his company was a lot of disapproval. Instead of seeing its benefits, they simply saw it as a waste of money and just a trendy gadget.
I’ve found that when companies aren’t open-minded to new things, they limit themselves considerably. I’m a fan of Proof of Concepts, as within a few weeks or months, the benefits for the customer and the company can be proven, which can help to encourage company-wide acceptance and an understanding of the real value of the initial investment.
Your starting point is to speak with the companies who are already where you want to be. Never think that, just because they are competitors, whether directly or indirectly, they won’t talk to you. You might be surprised at just how open other companies are in sharing details about the trials and tribulations they’ve faced during their own digital transformation. This can be invaluable insight that can aid your planning process and steer your focus towards which aspects are most important.
Your second step in enhancing your digital footprint should be hiring a good team, of course. There are so many experts with relevant knowledge and experience who can help to shape your digital future and increase your chances of successful implementation. Once you’ve done the two steps above, make your final destination clear from the get-go and allow your team to help you get there as quick as possible.
If you’d like to hear more of Bilyana’s thoughts on digital transformations within the retail industry, you can contact her at https://www.linkedin.com/in/bilyanag/