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Digital transformation is not just about technology; it's about transforming the way you do business.
Satya Nadella (CEO, Microsoft)
With the rise in eCommerce, the retail industry today finds itself in direct competition with this new emergent. According to a report by Digitopia, businesses in the retail sector are experiencing a push to reinvent and digitize their operations to gain an edge over their online counterparts.
The Digital Maturity Index (DMI) is steadily rising in retail businesses, even for late adopters, between 2021 and 2023. Even with this growth, a key question remains vague: how to start the digital transformation?
Let’s examine the benefits of retail digital transformation and how your business can initiate the process.
In the competitive world of today, it is important to adopt a dynamic approach towards serving customers – especially in the retail industry. Digital transformation puts businesses in a position to enjoy several advantages:
Digital technologies help retail stores understand customer buying behavior, which informs customer strategies and is crucial for enhancing customer retention.
For example, retail businesses can create customer cohorts based on frequent visitors to create customized marketing campaigns to boost retention.
Technologies such as POS systems help retailers gather crucial sales information. For example, retailers can use store analytics to optimize their inventories for seasons. Additionally, this data allows them to plan a store layout that helps them maximize sales. Understanding shopping patterns also helps retailers set the right pricing for items.
Retailers are constantly striving to improve their Inventory Turnover, which represents the number of times their inventory is sold and replenished over a period. A higher number signifies strong sales. Retail stores must plan inventory based on sales volumes, velocity, offers and discounts, stagnant items, seasonality, etc.. A robust sales intelligence practice will help retailers monitor and act on trends.
Store-level analytics allow retail owners to understand the flow and circulation of customers through their stores. It gives them an opportunity to work with visual merchandising to improve footfall and conversions by adjusting interiors, lighting, spatial arrangements, colors, and the focal points of the store.
The dynamism of today’s consumer and the market demand flexibility and versatility from retail businesses. Digital transformation allows retailers to stay competitive and provide exemplary services to customers.
Follow the steps detailed below to get started on your journey to digital transformation:
Evaluate your existing digital infrastructure to establish a starting point for your transformation efforts. To truly benefit from a digital transformation, your store may need multiple retail solutions, such as PoS, ERP, SCM, procure-to-pay, vendor management, inventory, warehousing, franchising, lease management, contracting, compliance tracking, financial reporting, etc.
This assessment helps you identify the state of your current IT, gaps, and which solutions have kept pace with current technology. This will help you figure out what needs an overhaul and what must be built ground up.
Knowing what you want to achieve through digital transformation helps you steer your efforts in the right direction and allocate resources smartly. Typical north star goals for a retailer may revolve around increasing sales, improving customer satisfaction, or increasing inventory turnover.
Ensure you have one goal and that the entire leadership team is aligned on that goal. Every decision your transformation team takes after that will depend on the north star retail transformation goal.
You should prioritize collecting firsthand data from shoppers who visit your stores in person or online. But to do that, you must be clear about the leading and lagging indicators of success for your north star metric. Ensure that your transformation plan accounts for ways in which you acquire, aggregate, analyze, and present critical data points.
The transformation plan must elaborate the data analysis approaches and tools you will be handed to measure the ongoing performance and effectiveness of your transformation roadmap. This will help you make data-driven decisions about investments across your enterprise.
Investment in technology may refer to a wide swathe of activities depending on your retail transformation goals, from improving your mobile app experience to establishing contact-free payments at POS, an ERP overhaul, operations automation, or any other.
For retail, a lot of performance optimization can happen behind the scenes, such as automating and streamlining supply chains, procurement operations, shipping and deliveries, etc. Explore no-code or low-code platforms that help you accomplish many of these without substantial in-house IT resources.
The key focus in most digital transformation initiatives is providing customers with exemplary brand experiences.
The goal must be to deliver personalized interactions at scale, at each touchpoint, based on data analytics. But, technology is only one part of the effort. Ensure that your staff are well trained so they can offer the best service to your customers and improve their experience.
Consider setting up digital feedback points at every store to gather real-time feedback from your customers so that their suggestions can be aggregated for analysis.
Retail software can help retailers completely transform their operations and automate work. For example, retailers can leverage no-code solutions to automate their financial operations, reconciliation, and accounting for more accurate results. It is possible to mobilize software to automate and streamline a number of operations and supply chain processes that typically involve multiple teams and hand-offs.
The final step in this loop of optimizing retail enterprise processes with automation is to regularly review the performance of your new digital tools and solutions stack. It helps to set performance benchmarks that you can expect from digital solutions before reviewing. Remember, though, that these are just leading indicators for your north star transformation metric.
For businesses that prioritize growth, digital transformation is a continuous and ongoing process. Retailers must raise the bar on performance and customer experience to match their eCommerce counterparts.
Low-code and no-code digital technologies make it possible for retail businesses to design their own custom solutions to automate internal operations, launch an eCommerce website, create personalized experiences, and much more.
1. How long does a typical retail digital transformation take?
The timeline for digital transformation can vary widely based on the scope of the project, but typically, it ranges from a few months to many quarters. However, using no-code platforms can significantly reduce that time by eliminating developer busywork. No-code platforms allow you to create custom software and apps in days.
2. What are the cost implications of retail digital transformation?
Costs can vary greatly as per the size of the business and the extent of the transformation, but investments in technology, training, and process changes are common. For small and mid-size retail businesses, the best option is to take a bottom-up approach to digital transformation. No-code platforms can enable quick wins with ready-made modules for instant deployment.
3. How do I assess the success of a digital transformation initiative?
You can assess the success by using key performance indicators (KPIs), including increased sales, improved customer satisfaction, and reduced operational costs. The metrics you choose depend on the goal of your transformation.
4. What role does employee training play in digital transformation?
Software is only as successful as its adoption. Employee training is crucial as it ensures that staff become familair with new technologies and processes and how they fit in to the larger picture and their context. It also helps employees derive better satisfaction from using all your shiny new tools.
Explore Hubler, a robust no-code platform that empowers you to configure your own processes and workflows for procurement, vendor management, new store opening, store operations, and much more.
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