In this chapter one of our three-part blog series, we are going to explore the key challenges faced by the physical retailers today and how to tackle these challenges and embark on the path of digital transformation.
Millennials and Generation X users expect digital, personalized, and in-the-moment retail experience irrespective of channel (web, social, mobile, and in-store etc.) and location. Are retail stores equipped to deliver on these lines to maximize opportunities?
“The technology in stores today is outdated and broken–it can’t support the real-time connection between the consumer, the associate, inventory and pricing essential to the omni-channel experience,” said Eric Olafson, SVP Store Solutions, Demandware. “It’s time for change.”
Retail stores are facing tough times as sales per square foot have declined in recent times. If we take the above quote from Eric in consideration, we can conclude that the store technology is one of the main key issue behind the decline in sales figures.
Traditional Technology Stack is Not Flexible
In past, retailers worked with disparate systems and processes orchestrated for each channel and business segment (Supply Chain, Product Management, Marketing, and Order Management etc.). It worked all fine till the evolution of smartphone, IoT devices and online commerce. More IoT devices like virtual reality handsets, wearables, drones, and many more are slowly becoming point of interactions for customers and blurring the lines between physical and digital retail business. As a end result, customers are finding more options and touchpoints to do real-time shopping. This calls for a flexible and scalable technology architecture which can accept integrations and help teams personalize content rapidly to maximize sales opportunities.
In a traditional and inflexible system architecture, adding a system for a new retail channel or touchpoint is time-consuming, expensive, and affects ongoing business activities. Retail architects have to “shake” the complete architecture which increases operational expenses, disturbs ongoing marketing and sales activities. The traditional technology stack was not designed to accept a huge number of channel, device integrations and work seamlessly with best-in-breed performance levels.
Outdated Legacy Systems do not provide Real-Time Visibility
As customers have many new touchpoints to buy products or services, data is growing exponentially and organizations are grappling with inaccurate, inconsistent, and siloed data sets.
Due to multiple versions of truth and legacy information management systems, retailers are unable to provide real-time, integrated and centralized visibility related to customers, products, prices, inventory, and order information to the concerned LOBs.
Running the entire retail technology ecosystem as one cohesive, flexible, and scalable unit can address these issues.
But, then, will it be enough to achieve end-to-end digital transformation of the store?
Traditional in-store technology is not fast to predict customer shopping sentiments as soon as they enter the store. Further, it cannot support store-specific customer and business processes like on-the-fly contextual experience personalization and delivery, manage automated inventory, anticipate demand, process automatic payments through mPos, and integrate newer form of checkout processes like store pick up or home delivery.
Planning and initiating digital transformation inside the store requires four important key subsystems working as one cohesive solution set complementing each other:
- IoT Driven Smart Retail Technology – Retail units requires a modernized technology system with IoT components like RFID sensors, smart mirrors, AR/VR components, face detection software, mPos, digital screen networks and smart shelves deployed inside store to facilitate the communication between customer, store, and other systems in the retail technology architecture.
- Digital Customer and Business Analytics System – Knowing the customer shopping sentiments is very important to tailor the customer experiences inside the store. The technology ecosystem needs a powerful analytics system to process huge amount of shopping and customer footprints data harvested through all IoT devices, physical, and digital channels to present a real-time 360-degree customer profile for on-floor support representatives, marketing, sales, and customer service teams to know shopping intents, previous issues etc.
- Intuitive Self-Service Business Tooling – Putting the business user in charge of the store operations is a critical component to achieve 100% customer satisfaction. The customer-facing teams should have access to simple and easy to use content management tools for creating target groups, personalizing the offerings per group (contextual posts, upload banners, coupons, and promotions), accessing live prices from competitors for same products and manage real-time pricing inside stores. There are several benefits of using self-service business tooling in the retail space.
- Robotic Process Automation (RPA) and Artificial Intelligence (AI) – Identifying and automating redundant in-store processes frees up considerable staff’s time which businesses can utilize in shaping up customer strategies, fill gaps, and increase sales per staff. Further, adding machine learning algorithms inside the processes gives the system power to “think” and help retailers seize new opportunities. As an example, RPA bots can help staff receive automatic notifications on inventory and fill redundant information while filling forms or pulling up previous purchase history of customers. Machine Learning algorithms can analyze customer footprints on scale and identify individualized monetization methods at scale for maximizing sales opportunities.
These four key subsystems must be weaved together in a very powerful, next-gen in-memory data platform to process real time and live data at scale.With an in-memory data platform, innovation and modernization can happen in parallel and scale.
Retail Disruptors are already on the move
- Home Shopping Europe is using a 360-degree customer engagement solution to influence buying behavior and reduce product return rates
- ULTA Beauty manages real-time inventory across 20,000 products and serve customers with in-depth, digital and personalized recommendations
- Chow Sang Sang, a Hong Kong based jewelry store came up with the idea of a Smart Magical Mirror. The mirror assists the users browse product assortment and use the virtual try-on feature (augmented reality) to visualize the selected jewelry item on their neck. If a customer is satisfied with the selected product and price, he or she can contact a store representative and arrange for a pick-up or delivery as per their convenience. The customer can also personalize their product (choose mix-and-match color and other options) and share it on social media. The app is a perfect example of IoT and AI working in alliance to provide human-centric shopping experience and also fulfilling the promise of delivering contextual experience right inside or near a physical store.
- Amazon, the biggest online retailer acquired Whole Foods (a brick-and-mortar food retail chain) for $13.7 billion. The company is also investing in a next-gen product delivery method known as Amazon Prime Air to deliver products in a 30-minutes time window.
During the SAP Hybris Summit concluded recently, retail industry leaders acknowledge the importance of adoption of AI and IoT as a core requirement in Physical Store Digital Transformation.
Images Source – SAP Hybris Summit
These case studies, facts, and statistics clearly demonstrate that physical retailing is not dead and presents great opportunities if retailers reimagine their shopper engagement, business processes, and work keeping above four subsystems in mind weaved together in a strong, flexible, scalable, and fast digital core engine.
Embrace Change To Avoid Disruption
New course of actions and next-gen technology enablements on top of your existing investments and systems requires an open acceptance for change. Retailers can start small and prioritize without breaking the wallet and interrupting current business continuity. They can initiate the digital transformation process by reimagining this key area first.
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