Sergey Kozhevnikov, VP of Product Development, Teamwork Commerce.
Retail has undergone a rapid change of pace over the last few years. With investment in technology expedited by the evolving consumer demands, a number of retailers are now focusing their efforts on making their digital transformation more effective and advanced. According to Statista, the retail automation market has been valued at approximately $14.9 billion in 2023. By 2029, this number is expected to have doubled—reaching $29 billion in only six years.
The next few years will be vital for the retail industry, with new solutions being developed on a seemingly weekly basis. Those who are not already investing in retail technology need to start soon or risk falling behind the competition.
Retailers Have To Want To Change
Disruptive innovation, by definition, replaces older technology investments with new solutions that deliver improved operational efficiencies, better customer experiences and, ultimately, higher profits. The issue for many organizations is that they often cling to past investments for too long, still expecting a continued return on investment (ROI) and shuddering at the thought of spending more financial resources on technology to replace older investments.
Different retailers will find themselves in unique positions. Some may have had legacy technology for years and might not know where to start. Others may have already made investments but haven’t been able to realize the value in them. The first step is recognizing exactly where the business stands.
Creating The Right Foundations
Structurally, retailers are typically set up in a way that does not facilitate effective digital transformation. Traditionally, retailers started with brick-and-mortar stores before e-commerce was introduced and heralded as the newer, cooler way of selling products. This created an inherent division between the two channels—fiercely competing with each other.
In many cases, in-store functions and e-commerce operations are conducted separately. However, in today’s omnichannel world, the two need to work together in real time, and this is the challenge facing many retailers over the last few years.
Fundamentally, retail businesses need to take a step back and look at their brand from the view of the consumer. Today’s consumer purchases through a range of channels; organizations need to embrace this, and they should be looking to restructure around this changing demand. The second step to any form of digital transformation lies in understanding what the customer wants. In the current landscape, the customer wants convenience. Online and in-store operations need to unify in order to deliver a frictionless experience for consumers.
Driving Internal Buy-In
It’s one thing knowing that change needs to happen; it’s another to get everyone on board with it. This is where internal challenges can arise.
Stakeholders can quite easily take one look at the associated costs of new technologies and shut down any suggestion of innovation. Meanwhile, store managers or associates might not be too enthused by the idea of training to use new devices in-store when they struggle to see the benefit. Buy-in is necessary across all levels of the retailer, and the most effective way to deliver it is from the top down.
It starts with the vision—showing board members the long-term benefits and, importantly, ROI. They need to understand and get on board with the way that the landscape is changing—driven by the consumer’s demands for convenience and personalization.
Another integral factor in creating buy-in comes from the understanding that this is not an overnight investment. Instead, it is the gradual evolution of the business. Much of today’s urgency in retailers is coming from the recognition that they needed to change years ago. However, they cannot go at break-neck speed immediately. There will be disruption, not everything will go completely seamlessly, and retailers will need to ramp up gradually.
Investing in technology relies heavily on well-oiled change management. Everyone is used to operating in a certain way, from the CEO right down to the latest trainee sales associate. Digital transformation changes everything, and it will be a challenge to come to terms with it.
The sooner that board members recognize this is a slow process and that it will not be without its challenges, the quicker there will be top-down buy-in.
Coming To Terms With The Tech
With an understanding of where the business sits and what its customers need, retailers can now focus their attention on the technology.
While buzzwords such as “omnichannel,” “frictionless commerce” and “seamless customer experience” have become the hot topic, many retailers cannot give a detailed explanation of what they actually mean.
Immediately, this causes significant issues. A lack of understanding eventually translates into a lack of strategy and direction. In such a highly competitive environment (primarily governed by the meandering expectations of consumers), retailers without guidance can quickly fall behind the rest of the pack. By blindly investing in technology they don’t understand, retailers are unable to optimize their use of the solutions they have purchased, failing to drive ROI and making unnecessary losses.
Finding The Right IT Partner
An IT provider should not be thought of as simply a vendor but, rather, a partner—an extension and the technology backbone of a retailer.
In such a fast-paced industry that is becoming increasingly reliant on technology, retailers should not be looking for a partner that will fill an order and forget about them. An IT provider should care about how the business performs. It should have deep industry-specific experience, have seen similar cases previously and have the ability to consult, provide insight and deliver the right solutions at the right time.
As the complex retail sector continues to evolve, it has never been more important to invest wisely in technology. Retailers cannot afford to get this decision wrong.
The right partner will be able to scale a retailer’s technology stack in line with its growth, providing new technologies that demonstrate new capabilities as and when they are required. This choice is imperative not just for the implementation of that technology but for long-term business sustainability and growth.
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