If retailers want to compete in 2018 is digital transformation the answer or is the buzz phrase merely skin-deep jargon?
We hosted an executive lunch as part of Retail Week Tech on the topic of digital transformation and have five key takeaways to share:
1. Digital transformation is not just IT
Digital transformation is often seen as a ‘quick fix’ and is regularly too narrowly defined; seen as merely a ‘technology’ thing, rather than an enterprise change programme.
The reality is far more complex. Technology needs to widen its scope; it impacts key areas of the business from budgeting, to strategy, to people.
It belongs at the top of a board’s agenda. It should help businesses focus on flow efficiency, not just cost efficiency to drive responsiveness. Success should be measured in outcomes – value delivered to your customers.
2. The paradigm is shifting
The operating cycle for retailers has long been ‘plan, buy, move, sell’ – coinciding with fashion seasons and key events.
Product discoverability is now in the hands of the customer and retailers no longer own the full customer journey. Retailers need to pivot strategically to embed into this new paradigm and reinvent everything from annual capex cycles, lengthy technology projects and approved processes.
Crossing the divide requires a mind shift from all organisational levels – investing in new skills, taking control of technology and embedding new processes and culture.
3. Responsiveness is key
Barriers to entry are declining steeply and it’s significantly easier for smaller, independent brands to compete on search visibility on Google and Amazon.
Technology enabled this shift in power and allowed these brands to go direct to consumers at a fraction of the cost.
Traditional retailers need to think about their market proposition, it’s no longer good enough to compete on buying power and scale. Retailers must be able to respond quickly and develop products that matter to customers.
Zara’s masterful command of supply chain notoriously pushes products from concept to stores in 14 days. This responsiveness fuels frequent visits and leaves the retailer less reliant on markdowns.
4. Tech transcends IT
Companies with technology at their core often don’t have an IT department at all.
Retailers are restructuring their companies to focus on outcomes and responsiveness
Retailers are restructuring their companies to focus on outcomes and responsiveness. This involves cross-functional teams that blend IT, design, finance, marketing and more.
Retailers are also rethinking their ecosystem of partners, taking advantage of the start-up market, leveraging specialist partners and artificial intelligence (AI).
Al technology needs to be considered in terms of how it impacts business processes but ultimately the end customer, and how flexible the technology is to change.
5. Data is everywhere
GDPR requires companies to rethink how they operate and process data. Savvy retailers view this as an opportunity to transform how they see product, inventory, customer, trading and financial data.
Data often exists in silos, unable to be turned into insight. But silver bullet tools or building a lake without addressing and understanding controls and lineage is a sure-fire way to sink your investment.
Data holds the key to many operational and opportunistic decisions, but many feel hamstrung by legacy technology and those without restraints are set to take an early lead.