Digital Transformation: Ushering in a New Era of Retail Relevance
The term “digital transformation” is a bit of a misnomer. We are not going to transform the digital world; it is transforming us — everything from our smartphone-centric activity to the huge influence of social media on almost everything we do. We can complain about the technology tsunami all we want (and we do) but it is NOT going to slow down. If anything, there is every indication that it will continue to accelerate.
Digital Transformation 101
1. Customer Experience
Let’s face it, the customer experience at most retailers is below poor. Retailers have cut deeply into sales help and tend to hire the least costly options, not the best. When business gets tough, store operations teams are further pressured into cutting associate payroll to fit into a budget parameter. Additionally, retail sales associates have little product knowledge and little to no training in the selling process. At best, a good experience in a retail store amounts to not having to wait in a long line, and being able to complete a sales transaction quickly. It’s a pretty low bar.
2. Culture & Leadership
Leadership must recognize and react to a fundamental shift in retailing: the customer is setting the new rules of engagement. They must commit to adapting to a changing world, or perish as we’ve seen occurring at record rates.
A siloed organization is an uncompetitive organization. Everyone in the sustainable retail organization must work together, not just pay lip service to it. Goals and incentives for senior leaders must be revamped to reflect this new thinking, because organizational goals (delighted customers) must trump divisional results.
3. Operational Agility
Operational agility isn’t simply about merchandise. It’s about rethinking our expectations regarding how fundamental processes get done. For example, many retailers don’t have a readily accessible 360-degree view of the customer.
4. Workforce Enablement
For retailers, typically the largest group of employees is frontline sales associates (this also includes customer service reps in call centers). As a result, ongoing training and education is an expensive proposition — meaning that employees tasked with the majority of customer interaction are typically unprepared and unsupported.
5. Digital Technology Integration
Legacy retail organizations have legacy information systems, typically function-specific — core merchandising, POS, finance, loyalty, webstore, warehouse management — and connected by structured, highly controlled, interfaces.
Today, customers demand the ability to look up product information, make a purchase, track an order/delivery or pick up at the local store, make a return, and see the credit — all from their smartphone. Legacy retailers have been slow to respond, mostly because of their clunky, unintegrated application infrastructure.
Digital transformation 201: All paths intersect
Each of these digital transformation components is complex unto itself. What further complicates the issue is that they’re all interrelated. As an example, simply having a 360-degree view of the customer, necessitates tackling these issues:
- Accessing all customer data from a single location (technology integration)
- Having leadership that understands the urgency of the project (leadership & culture)
- Identifying a customer-focused champion to facilitate the project (customer experience)
- Allowing the customer data to be used by associates to enhance customer interaction (workforce empowerment)
Many challenges have multiple dimensions. What is needed here is a strategy to consider them all together, and the tactical plan to execute. There is no magic wand that will miraculously make addressing these challenges fall together perfectly. If tackling these issues are challenging with a current management team, leadership should consider outside assistance to act as a Sherpa on the transformation journey.