Ever-evolving customer expectations, advances in digital technologies, increased competition from new entrants and encroachment from other industries are all putting immense pressure on traditional, established retailers.
The retail industry is facing severe disruption. The end-to-end consumer value chain is changing beyond recognition. The retail industry is at the vanguard of a revolution that focuses more on solutions and services than products. The new relationship between retailer and consumer is one of individual engagement at scale, extending beyond transactions into customized interactions with retailers becoming essential in customers’ life stage and lifestyle.
To stay competitive, retail businesses will need to use emerging technologies such as cloud, artificial intelligence (AI), mobile and the Internet of Things (IoT) to create compelling customer experiences and drive new efficiencies, opportunities and innovations. In short, they must digitally reinvent themselves, according to a new study from the IBM Institute for Business Value.
Forward-thinking retailers are embracing the concept of Digital Reinvention® to fundamentally transform customer and partner relationships. Digital Reinvention® can help retailers evolve beyond selling products and build mutually beneficial relationships with customers based on cooperation, collaboration and co-creation. Focus has shifted to new priorities: encouraging consumers to take time to be with their families, live a healthier lifestyle and make positive contributions to their communities — all in partnership with the retailer.
How urgent is the need for change? Barriers to enter the retail market are falling and savvy consumers know their choices are increasing. The stark reality is that to survive, retailers will need to adapt, innovate and experiment like never before. Those that don’t risk being eliminated from the consumer value chain. Digital ReinventionTM is now recognized as being essential to the success of retail businesses in the post-channel era. We’ve identified four steps to help retailers start their Digital Reinvention® journey:
1. Envision possibilities
Retailers should develop a better understanding of customer needs, aspirations and desires. Using Design Thinking techniques, they should envision new strategies, technological innovations and customer-centric, omni-channel operating models. The result should be the optimal omni-channel shopping experience for each individual customer in the most profitable manner.
2. Create pilots
Develop prototypes using agile development, test them with customers and get them to market quickly to promote feedback and iteration. Retailers could engage with Millennials and the even younger Generation Z shoppers who crave involvement and collaborative relationships with brands.
3. Deepen capabilities
Adopt a continuous, iterative strategy to develop new or existing digital capabilities. This could include embracing technologies such as cloud to underpin broad ecosystems, blockchain to secure transactions and supply chains and AI, IoT and sophisticated analytics to understand consumers more deeply.
4. Orchestrate ecosystems
Focus on ecosystems to expand and align a broader set of capabilities and to help deliver on customer expectations. Retailers should leverage digital technologies and ecosystems of business partners to create compelling brand experiences, drive purchase behavior and deepen consumer advocacy.
To foster future success, retail leaders need to review and adapt their business strategies, operations and technological capabilities. A digitally reinvented organization will be able to offer customers a superior engagement experience in which their interests are at the heart of the business. To learn more about the benefits of Digital Reinvention®, read the full study.
