How digital transformation influences the retail industry
Retail Digital Transformation
Digital transformation is when a business adopts new technologies to update its business model and improve business processes. There's an abundance of digital tools that have been developed to aid just about any kind of business imaginable. When companies embrace these tools and update manual workflows with software and automation, they engage in digital retail transformation.
Digital transformation has left its mark on nearly every industry. Each industry has been affected differently since most industries use different digital tools, but every industry has felt the change to one degree or another. Digital transformation in retail industry is no different.
Retail digital transformation is how digital transformation influences the retail industry. Some specific ways we can see the impact of digitalization on retail industry include:
- Online shopping via mobile devices means consumers can make any kind of purchase instantly from almost anywhere.
- Consumers are being given more options than ever before when it comes to shopping and delivery methods.
- Retail advertisements on social media have become not only commonplace but the primary source of daily marketing interactions for many people.
- Businesses are collecting more data from customers than ever before and using it to inform everything from product ideas to marketing tactics.
- Automation and artificial intelligence have become a normal part of customers’ shopping experiences and retailers’ business processes.
Changes like these demonstrate just how far the retail industry has come in the past couple of decades or so because of digital transformation. Thanks to digital disruption in retail industry, retail best practices are practically unrecognizable from what they used to be. This fact speaks to the important role digital transformation plays in all kinds of business, but especially retail. It’s important to understand the importance of digital transformation in retail if you want to weather the evolution of the industry over the long term.
Digital Retail Trends
There are a lot of different changes happening in the retail industry that indicate the important role digital transformation is playing. However, not all businesses are paying attention. There’s plenty of evidence that embracing new technology and harnessing digital capabilities can help retail businesses make forward progress. Here are some examples of the digital retail trends that are currently shaping the way we approach retail.
Remote shopping options are now commonplace. More customers than ever are purchasing products from online stores. It’s also easier than ever for customers to find and compare different retailers online, sometimes all from one site. In response to the COVID pandemic, many retailers also now offer contactless shopping options like ordering via an app and picking up at the store.
One major side effect of the rise of retail digital transformation trends is the way they have impacted customer loyalty. Customers are able to get what they need from the online retailers they prefer in just a matter of clicks. This creates many new sales opportunities, but it also means customers have little reason not to shop around at every online store instead of remaining loyal to one.
A full digital transformation includes much more than just offering online shopping, though. Digital marketing trends in retail industry are driven by data. Marketers can use the latest data collection and analysis tools to inform business decisions. One of the most significant ways how technology is changing retail is the way it's making it so much easier to gather and utilize data at scale.
Digital Transformation Retail
There are many different benefits to digital transformation in retail sector. Here are a few examples of the ways digital transformation can alter how a retail business functions.
Improve business processes
One of the primary benefits of digital transformation is that it makes it possible for retail businesses to operate more efficiently. By implementing digital data tools that make it easier to collect and understand data, retailers can make smarter business decisions. Leveraging data to its full potential in order to improve productivity throughout the businesses is one of the key components of digital transformation. Better data tools also make it easier for retail businesses to manage multiple digital channels at once.
Meet customer expectations
Customers expect the kind of experiences that digital tools have made possible. Today, retail businesses use all kinds of different technologies to improve customer experience. One of the ways technology can help retailers is by providing ways for them to personalize customer experiences at scale. Thanks to machine learning and automation, customers can automatically be given personalized shopping experiences based on data analysis. AI can use data about the customer like their purchase history to offer relevant suggestions for marketing content or future purchases.
Keep up with competition
As technology advances, the retail industry continues to shift rapidly. The pace of technology means retail businesses need to keep up not only with customer expectations but also with competitors' tactics. If your competitors are adopting new digital tools to improve productivity and provide better shopping experiences for customers, it becomes easy for your business to fall behind. Retail industry best practices change quickly along with the technology that’s available.
Fully integrating digital tools into your business’s processes is one of the best ways to improve business processes, meet customer expectations, and keep up with the competition. However, these are just a few digital transformation in retail examples. There are many different ways a retail business can benefit from digital transformation.
Retail Digital Strategy
There is clearly an abundance of benefits of digital transformation in retail. However, retail digital marketing strategies are not always easy to come up with. The issue might not be recognizing the need for digital transformation, but rather the inability to successfully implement digital tools. Here are some tips you can use to make your retail digital strategy more successful.
Define an area of focus
First, you should make your strategy more manageable by choosing a single main area of focus to begin with. For example, do you want to impact customer experience? Improve growth? Something else? Digital transformation can help your business achieve many different outcomes. You can use data analysis tools to segment customers based on the most important metrics so you can target each group specifically.
Digital transformation can create all kinds of different positive impacts. But you will be less likely to achieve any of them if you don’t pick one to prioritize. Consider your area of focus and think about what your end goal for that area of focus is. Retail businesses can use digital data tools to align their goals with their audiences, helping to create a data-informed plan for each one. If your retail digital transformation strategy is not defined by an area of focus and a specific goal within that area of focus, it will probably be difficult to keep it on track.
Track your progress with KPIs
It’s not enough just to have goals for your digital transformation strategy — your goals need to be as specific as possible. If they aren’t measurable, it's hard to tell whether or not your strategy is successful. Maybe you want your digital transformation strategy to create a better shopping experience for customers in stores. That’s a good goal, but it isn’t very quantifiable. Choose a metric to attach to it that will indicate exactly how far you’ve come. For example, you could measure your progress toward your goal of improving customer experience by tracking customer retention. You could aim for a specific percent increase in your retention rate within a certain amount of time after implementing new digital tools.
How To Improve Customer Experience In Retail Stores
It’s hard to understate the importance of customer experience in retail industry. The kinds of experiences retailers provide their customers are just as important as the kinds of products they sell. If you want to know how to improve customer experience in retail stores, one of the best ways to do so is to learn from the best retail experience examples. Retail industry leaders like Target, Ikea, and Sephora are some of the brands that are embracing digital transformation and can serve as great retail experience examples.
One of the best kinds of tools you can implement to improve your retail business is a customer data platform (CDP). Customer data platforms combine data from disparate sources, organize the data on the level of the individual customer, and make it possible to fully utilize that data to inform other business systems.
By using a customer data platform, retailers can unlock the ability to offer personalized shopping experiences at scale. It’s difficult to make sense of the data your business collects when you have a large customer base. However, the right digital tools can make it easy to organize the data and use it to target specific customers with tailored experiences.
A full digital transformation requires the implementation of many different tools. Retailers that want to incorporate digital tools and technology into their business model should explore the different kinds of tools that would be best suited to meet their digital transformation goals. However, a customer data platform is a great tool to start with that can benefit nearly any kind of retail business.