March 20, 2023 By: Tanuj Singh
Despite digitalization becoming a core element of many businesses, the retail industry is facing several challenges that have propelled it to the forefront. There have been a number of factors, many of which have been exacerbated by the pandemic, that have altered the sector, including the advent of e-commerce and omnichannel marketing, changing consumer behavior and hyper-personalization, and increasing supply chain complexity. As margins declined by 2% – 3% annually, or possibly by 5% – 6 %, depending on the vertical, during the previous five years, retailers’ bottom lines have been under increased pressure.
With a strong digital foundation, retailers can improve performance across the board, but most companies have not advanced far enough and are missing out on transformation opportunities. Retailers scrambled to comply with 200% higher in-store or curbside pickup demands than pre-pandemic levels. Few retailers have created real multichannel products, exploited data at scale, and incorporated agile practices throughout their entire companies. However, in order to reverse the downward trend of recent years, bold action on retail transformation is needed. It is imperative that retailers need to restructure their entire IT function, including how the system operates and how it is designed, to achieve the needed business prospects through robust retail transformation.
Retail Transformation – Definition
Retail transformation involves modeling a chain of operations to boost sales, boost customer satisfaction, and minimize operational costs. The customer journey to success can be identified and understood through extensive digital transformation. Even as businesses begin to rebuild their physical storefronts, customer demand for retail digitalization is growing. According to a survey, 87% respondents prefer to shop in stores with touchless or robust self-checkout options.
Retailers might better foresee, connect to, and communicate with customers if they comprehended the way the consumers behaved, bought from, and engaged with brands. The culture of the retail company and the data points intersect to provide comprehensive insights.
The 4 key pillars of Retail Transformation are:
- Customer Engagement – The retail sector places a strong emphasis on customer involvement, and companies rely on happy customers to boost their bottom lines. Innovations in technology like mobile computing and data analytics have made it easier than ever for businesses to interact with and understand their customers.
- Employee Empowerment – Employee empowerment is developing confidence in workers by providing them with the information, skills, and resources they need to execute their tasks successfully. Staff may access a variety of specific client information through a single, user-friendly management interface, which employees can use to upsell, make educated consumer suggestions, and more. A Customer Relationship Management (CRM) system also gives employees insight into the demographics and behavior of customers.
- Optimize Operations – Optimizing operations, the third pillar of retail transformation, places a focus on quick, data-driven decisions, improved processes, and increased operational visibility across channels. Integration is crucial once more: Organizations today compete on a multi-channel playing field thanks to e-commerce. Operational consistency is necessary for a company to deliver the smooth omnichannel experience that customers want.
- Reimagine the Products – Rethink the products, last but not least. A retailer needs to actively look for methods to incorporate the newest developments into their offers if they want to keep up with the speed of innovation. Like the other three pillars of retail transformation, this procedure is simpler than it seems and only calls for the appropriate software and tools.
Importance of Retail Transformation
Owning to the constant changes in retail transformation digitally, the retail sector is undergoing a major upheaval to keep it competitive in the long run. As per a recent McKinsey study, the demand for digital technology in the retail transformation was estimated at 24% by 2024, but due to constant increased demand, the growth jumped from 17% to 33% in just two months, post-pandemic. To entice and retain customers, modern retail businesses combine automation with personalized service. To stay relevant and establish new standards of success, the modern retailer needs to concentrate on long-term digital transformation strategies.
The importance of retail transformation lies in:
- Omnichannel Digitalisation – Properly implemented digital transformation makes way for an innovative omnichannel module which in turn drives retail sales to a holistic approach. Omnichannel digitalization is a key driver in the retail transformation journey for the past iterations.
- Data-driven inventory – Data-driven inventory paves the way to robust fulfillment optimization and helps in developing a fast, transparent and timely order fulfillment process. Through integrated retail transformation, companies can leverage different automation strategies to provide a seamless yet immersive retail experience.
- Unified Digital Platforms – A unified retail platform empowers seamless integration to both online and offline channels to increase operational efficiency. It helps retailers to provide transparent inventory management and efficient delivery to maximize sales and store commissions. Retail transformation helps in detailed planning for maximizing revenue and improving customer service.
Retail Transformation and Digitalization
In order to revolutionize retail, one must look beyond incremental gains. As consumers utilize online channels to fulfill their everyday demands while being at home, retailers will need to increase their digital sales. Research suggests retail sales in certain sections like apparel, beauty stores, and departmental stores have increased 10% on average since the pandemic, which is an 8%-10% gain before the crisis.
Certain tools for digital retail transformation include:
- Machine Learning and Predictive Analytics – By assisting the store in better understanding and anticipating the needs of the client, machine learning is essential in fostering a relationship between the two parties. Machine learning is a branch of data science that gathers information from one or more sources before feeding it into models that use it to predict future events. Retailers may recognize purchasing patterns, comprehend consumer behavior, modify promotions and special offers, customize product suggestions, make on-the-fly price adjustments, and produce projections using machine learning data.
- Artificial Intelligence – An essential new method for providing the attentive 24/7 service that consumers increasingly demand is artificial intelligence (AI). AI-powered chatbots, for instance, may serve as virtual retail employees by rapidly replying to consumer SMS or chatbot messages. Based on the customer’s participation, chatbots may also cross-sell or upsell products, directing them toward goods they might be interested in. Chatbots are a quick-response support solution that can assist close transactions and increasing conversions.
- Unified Commerce – Customers use a variety of channels, including social, mobile, and digital media, and they count on you to be available on all of them at all times. To do this, many retailers adopt a unified commerce approach, which entails using a single, fully integrated software platform to control all of the many technologies they employ to run their operations.
Real Life Practices and Benefits of Retail Transformation
Since the epidemic, the retail industry has never been stronger. It is clear that e-commerce is expanding and has grown to be a trillion-dollar business. Retailers may swiftly react to changing client needs and requirements and maintain a competitive advantage in the market by following the most recent trends in digital transformation. In turn, this aids them in maintaining an advantage over their rivals.
Popular transformations in retail practices include:
- Mobile Commerce for a Better Customer Experience – For both customers and enterprises, mobile commerce has several benefits. It gives businesses a fresh sales channel and enables them to connect with more people. Customers may now shop more easily and purchase items from any location thanks to this.
- Big Data for Improved Decision Making – Another significant development in retail’s digital revolution is big data. Large, complicated datasets that might be challenging to analyze using conventional techniques are referred to as “big data. Businesses may obtain insights into consumer behavior, trends, and patterns by utilizing the power of big data. Decision-making may then be enhanced, operations can be optimized, and sales can be increased.
- Artificial Intelligence for Smarter Business Decisions – AI may assist organizations in making wiser decisions by rapidly and correctly evaluating vast volumes of data. Following that, this data may be used to enhance customer service, better target marketing initiatives, and establish more accurate pricing and inventory policies.
- Augmented Reality for Enhanced Customer Engagement – Customers may now see things in a real 3D environment before making a purchase owing to augmented reality. This helps people understand what they’re buying and lowers the number of returns. Additionally, dynamic and interesting consumer experiences may be produced with augmented reality. Customers may, for instance, use their smartphones to inspect products in their homes before making a purchase. Sales and consumer engagement are both boosted as a result.
- Personalization for Improved Customer Experiences – Personalization can be utilized in the retail industry to provide unique shopping experiences. Online shops, for instance, can utilize client information to promote items and provide individualized recommendations. It enhances client satisfaction and loyalty.
- Business Intelligence for Data-Driven Decision Making – In the retail industry, BI is being utilized to enhance the purchase behavior of consumers, target marketing, and product selection. Additionally, supply chain management is enhanced. Businesses may pinpoint components of the supply chain which need improvement by examining data. Operations are optimized, and productivity is raised.
- Blockchain for Improved Security and Transparency – The decentralized technology that powers cryptocurrencies like Bitcoin are called a blockchain. It is a distributed database that enables transactions that are open, safe, and unbreakable. This decentralized technology is now being utilized in the retail industry for a number of purposes, including supply chain management, loyalty schemes, and product tracing.
Conclusion
Over the past ten years, the retail sector has seen tectonic upheavals. Many of these tendencies were accelerated by the COVID-19 epidemic, making it difficult for shops to keep up. Since the majority of conventional stores have struggled to upgrade their technical capabilities, consumer activity has been migrating from offline to online. Retailers may use technology as a key enabler in a number of areas of next-generation retail to adapt more quickly to these changes.
With various connections for integration, claims ML models, iBPMS, and data management, JK Tech is a market leader in creating and deploying transformation solutions. This platform supports workers’ compensation claims with enterprise-grade security and scalability. Through the coordinated use of several automation techniques, our strategy strives to maximize automation and transformation.
