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Engineering and innovation practices that will redefine the future of GCCs in a phygital world
Engineering and innovation practices that will redefine the future of GCCs in a phygital world

September 10, 2021

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Context on retail evolution into phygital world of consumers:

The retail environment is changing rapidly. That is reflective of more aware customers looking for higher convenience, specific products, faster access, and in the current context, a safer environment. Thus, retailers need to continue to evolve, keeping ‘Customer Centricity’ as the core of the transformation to develop unique and innovative solutions, creating seamless, frictionless, and personalized experiences for the customers across varied channels.

The COVID-19 crisis has accelerated engineering and product innovation, and the adoption of technology-enabled interventions has moved from being good to have to a must-have. A mix of strong internal engineering, data and product talent pool, and external innovation is perhaps the best way forward. Acquiring and developing capabilities externally helps companies rapidly mix and match from several sources to meet their needs until cutting-edge technologies can be de-risked enough to operate internally. Those businesses which shy away from innovating today will most probably not survive another black swan event such as this pandemic or even the world after Covid-19 in worst cases. An exciting tech adoption change to observe is that Retail businesses now accept both the value and inevitability of artificial intelligence and other deep tech tools to maintain a competitive edge. A recent IBM survey says as many as 91% of retail executives with knowledge of cognitive computing believe it will play a disruptive role in the industry and are willing to experiment with it. The reality is that with millions of metrics being collected, AI systems can examine more data – and in real-time – than any human could manage, and mass adoption of AI is the logical next step.

Context on innovation practices in the phygital world:

The infusion of innovative technology with strong engineering prowess is no longer a thing of the future. Instead, it is considered an essential tool in retail to help retailers create the best experience for the customers, associates, and other stakeholders with a clear positive financial impact. Technologies need to be applied across the value chain of retail, making the solutions faster, better, and scalable, thereby providing personalized solutions to customers and driving stronger business impact across the phygital world. Omnichannel purchasing is indeed the new normal, with customers looking at purchases not just in stores or online but a mix of those across channels, including social commerce and avenues that they spend time daily.

The next wave of technological changes will also be from a fulfillment point of view, with contactless delivery and payments becoming mainstream. Retailers ensuring zero friction omnichannel transition to their consumers stand to gain massively. An example would be brick-and-mortar stores leveraging technologies such as AR to help consumers visualize and trust products with non-digital attributes. Other areas would include touchless mechanisms like voice commerce, Digital Twins for the stores, (buy-online-Pickup-In-Store) BOPIS, Curbside pickups to drones, Autonomous Vehicle based deliveries powered by blockchain with a strong flavor of AI and IoT.

Impact on GCCs in a phygital world:

System integration and privacy concerns have proven to be the top technology-related challenges facing retailers today. The demands on retailers and brands to offer immersive customer experiences and frictionless purchasing journeys leave no room for data silos. Systems must be integrated to provide the quick, seamless data flow required to provide a personalized customer experience.

Artificial intelligence poses a daunting learning curve for many retailers. With new technology comes a need for radically new skill sets and a level of data literacy and foundational readiness that has been a challenge. And, as with all technological changes, there has been apprehension about ROI on costs to innovate and how AI might affect management roles and workplace security.

From a cost-revenue point of view, personalized offerings, optimized assortments, and technology-enabled opportunities to upsell and cross-sell will raise sales, cut waste and increase basket sizes & conversion rates.

a. Talent Availability:

The pandemic has proven that many job roles can function normally even in a decentralized, remote environment digital enablement of the workspace has taken precedence. India offers tremendous talent availability across the latest technologies, engineering, and AI focus. GCCs have also moved away from a cost arbitrage model to a more capability focus. Thus the skills required are available for GCCs to create a significant impact on the business. 

Initial investments in retooling and reskilling for technology will drive costs. The profile of the workforce will change as well: skilled and knowledgeable associates will expect to earn more, pushing hourly rates up by about 20 percent. According to a McKinsey report, Retail Tech will enable stores to achieve EBIT margins twice today, with the added benefits of improved customer experience, better employee engagement, and an easier-to-run store.

b. Cultural aspects:

Culture plays a prominent role in shaping the best practices in every sector, and the innovation function of large multinationals has experienced it too. India, known for its diverse cultural values, adds not just the nuances to the build-up of a corporate innovation function but rather is one of the strongest flavors in the innovation khichdi that stews in an ever-increasing number of corporate innovation entities in India.

The early adopters leading GCCs realized the need for the cultural shift within the organization to ensure the application of the new and more agile learnings, apart from the classic 'Seat at the table' thought process to leapfrogging ahead. Culture is a fundamental building block in an environment conducive to innovative thinking. The right culture can lead to the strong germination of innovation and become the birthplace of innovators.

Conclusion

GCCs have so far scripted a great story on resiliency, innovation, and transformation amid shifting customer preferences and changing market dynamics on the backdrop of the ongoing pandemic. The hybrid workplace reality has solved for the distance from the consumers, however it will demand GCCs to fundamentally rethink their approach towards engaging talent and creating a stronger brand recall to add value to their parent organizations.

This blog is co-authored by Mayur Purandar, VP - Enterprise Architecture, Lowe's India and Abhay Tandon, Director - Innovation & Head - Lowe's Innovation Labs India


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