Retail digital transformation is about making changes to the business operation without disrupting/altering the existing status quo too much. This transformation strategy refers to the trend of retailers creating new and creative business models that blur the physical and digital worlds. The concept of using technology to bridge the physical and virtual worlds is a recent development. Fuelling this is the technical advancements in the analytics field with predictive and prescriptive analytics.
How digital transformation is affecting retail is best gauged by the fact that retail organizations are looking for ways to get greater insights from a growing and diverse set of data sources. The business intelligence (BI) software market is forecast to grow to $27.87 billion by 2026 at a CAGR of 5.4%, this clearly indicates that organizations want to create business value through a deeper understanding and insight into their data.
Digital transformation is not a siloed process affecting only one department. It is a combined effort across the entire organization that involves data and analytics at its core. As per Gartner research study, by 2022, information will be an enterprise asset with analytics as an essential competency, by nearly 90% of corporate strategies.
The best way to highlight what retail analytics can do, is look at how Amazon, Walmart, Kohl’s, Target, Ikea or Sephora is doing it. Turning their immense data into valuable insights has enabled them to club the new digital age by transitioning from traditional efficiency oriented solutions to business outcome oriented conversations.
Effective roadmap for retail digital transformation
The roadmap steps are available for retailers. Following this path requires considerable adjustments to their business strategies. It builds on the building blocks of any retail organization for their digital transformation.
► Data: Data in its raw form is the input for the analytics solutions. Retail organizations must include a data strategy for managing, storing and analyzing the diverse, large and complex data sources in a variety of formats (images, video, texts, audio etc.)
► Technology tools: Retailers should focus on core technology tools and platforms that facilitates data ingestion, processing, preparation, and visualization. This is a long term investment based on the particular use cases and cannot be one-off implementations. They should focus on building integrated technology ecosystems
► Skill: Proactively acquire and retain the right talent in the data and analytics field to mitigate the huge demand/supply gap
► Infrastructure: Set up the right IT infrastructure to handle the 3V’s of data (volume, variety, and velocity) and the complexity of the analytics
Construct your digital transformation roadmap
Retail organizations will succeed when they view data, AI, ML and advanced analytics (predictive analytics or prescriptive analytics) as competitive strategies, operational accelerants and innovation catalysts. The roadmap for an effective retail digital transformation begins with a clear understanding of the analytics value chain which is an iterative process.
► Data collection & data cleaning: Process involves data collection, integration, segregation and categorization of data. It also involves processing of data for relevant extraction through data integration, validity checks, filtering and storage in data warehouses
► Data analysis & interpretation: Apply data contextualization through predictive and prescriptive analytics of the statistical algorithms. This uncovers patterns for deriving further insights
► Report generation & visualization: Output detailed visualization and customized reporting through interactive dashboards and scorecard developments
► Refine & enhance: Adjust and improve the data collection techniques. Leverage the AI capabilities for self-learning from outputs
► Implement & operationalize: Apply the learnings to business processes and business rules for effective decision making
Take action now
The retail industry is undergoing an overhaul in its operations as a whole to redefine the shopping experience of their digitally savvy customers. They are altering their in-store, online or digital strategies by embracing new technologies and analyzing consumer behavior. Combined with creativity and retail analytics, digital transformation creates value for their customers and have a competitive advantage in a digital-first world.
A quick highlight of what the future of digital transformation for retailers looks like:
► Focus on AI and predictive analytics usage, to improve in-store traffic analysis, better forecasting and inventory management etc.
► The application of next-gen technologies like Machine learning & AI frameworks to enhance automated product recommendations
► Enable push notifications about special offers and alerts based on customer geolocation when they are within the store’s proximity
► Facilitate an enhanced omnichannel experience for customers through real-time analysis of various data sets and Enhancing the omnichannel experience through more comprehensive data collection, analysis and accurate real-time inventory
► Transforming the fitting room experience through the use of AI, radio frequency identification (RFID), virtual reality (VR) and augmented reality (AR)
► Automated data collection throughout retail operations to simplify the reports creation
A highly secure digital solution can help retailers improve consumer engagement, increase productivity, and exceed shopper expectations. If you already haven’t start your retail digital transformation journey now with a clearly defined roadmap for your business!