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4 Things You Should Consider Before Beginning Retail Digital Transformation

March 6, 2019

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Traditional retail has been affected by the rise of digital stores. To remain relevant and competitive, retailers need to find a balance between thinking like digitally native companies and delivering a differentiated in-store experience for a true retail digital transformation. Retailers must adopt a ‘customer first’ strategy along with a digital transformation framework that creates a highly targeted and personalized approach to cater to their customers’ need and buying preferences. With these radical changes in the business, retailers must reimagine their business models, create a digital transformation roadmap, and add innovative capabilities to create differentiation.

Retailers need to integrate assets comprising of businesses, divisions, people and technologies to remove the barriers between the physical and digital worlds. There will be several challenges that will be faced by retailers in their digital transformation journey. Many of those would be a technology issue such as retiring legacy applications and consolidation of siloed systems. However, the bigger challenge lies somewhere else. Change management and cultural shift become an important issue to tackle which often makes it difficult to convert digital transformation efforts into business opportunities that produce measurable results.

According to research by the World Economic Forum, there are four digital transformation themes that are expected to play an important role in the world of retail and consumer goods.

Consumer data flow and value capture: Growing digitization will create opportunities for companies to use consumer data to propel innovation and improve customer experiences. Developing successful data monetization models will be a critical challenge for consumer industries. The rising importance of consumer and enterprise data will draw increased scrutiny and activism from consumers and regulators, as society puts an even higher premium on data privacy and transparency.

The experience economy: Products will evolve into services, and services into experiences, with data serving as the backbone of their delivery. Creating new revenue models is an opportunity in an environment where revenue could potentially be decoupled from the output and more closely linked to outcomes for individuals and society.

Omni-channel retail: Traditional stores will undergo a metamorphosis to stay relevant when online purchases in most categories are growing. Omni-channel strategies will play an important role. Consumer products companies will also need to have effective strategies to compete in a ‘flatter world’ and identify ways to replicate and maintain the quality of consumer experience across channels.

Digital operating model: Smart supply chains and smart factories will be developed, enabling the mass customization of products and Omni-channel experiences. The ability of a firm’s operating model to manage consumer experiences will be central to gaining competitive advantage.

Retailers need to find the right balance between technology and people strategy to create a unique buying experience for their customers. But technology is an Achilles’ heel for the traditional retailers where legacy systems were just enough to make the cut. But to compete with the digital natives, retailers need to create a whole new digital operating model. They can rely on a digital transformation partner to help them navigate through this transformation journey. In our previous article, we had shared some ideas about choosing the right digital transformation partner because the field of digital transformation is an extremely crowded one. You have probably read about business strategy and digital transformation roadmaps from more experts than you care to remember.

Once you have found your digital transformation partner the next step is to create a digital operating model that suits the needs of the enterprise. Retailers need to find a common operating model that aligns all the major functional areas of the organization. Investing in digital technologies such as connected devices, sensors, and AI will give the organization an opportunity to revolutionize operation & functions that are crucial to the success of the business.

Case in point one of Sonata’s customer, a leading activewear brand operating in Australia and the US was struggling with legacy systems that were not scalable and did not support multi-country operations and localization. Sonata’s unique Platformation™ approach helped the customer by creating a platform that streamlined their business operation to increase productivity.  This platform now provides a base to grow organically and in-organically across geographies. The retailer has now seamless integration between 7 countries- US, Australia, NZ, China, Hong Kong, Singapore, & Netherlands that supports multi-channel presence with country specific localization and complying with statutory requirements.


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