Put simply, digital is the latest enabler of change in retail. The history of retail is punctuated with major trends that evolved the way people shop. These include: the birth of the bar code, shopping malls to big box supercentres, online orders, e-commerce and omni channel.
Retailers are natural innovators because they are often the first in line to get it wrong as they test and learn with their customers. They sit on a wealth of data (both offline and online) providing up to the minute information on what people want and how they want it.
Although digital is just the latest form of re-invention on the retail journey, most experts accept that this phase of change is different. Twenty-five years ago, Amazon initiated this consumer shift, followed ten years later by the launch of the iPhone. Amazon Web Services (AWS) was also launched. This began a significant period of consumer and business ‘tech’ acceleration. The scale and convenience achieved has paved the way for a very different connected world in the years ahead. The ‘Internet of Things’, the convergence of physical and digital, is forming a network of devices interacting and exchanging data. It’s a connected world on a whole other level!
It’s likely that 2019 will see artificial intelligence become the new ‘mobile’ i.e. the platform around which we begin to live our lives. The reality is possibly beyond our imagination – think of Alexa on steroids!
Some businesses are still struggling with what ‘digital re-invention’ actually means. Adding ‘click n collect’ to your business and stating you are now ‘digitally re-invented’ is not the answer. Digital re-invention is underpinned by both front and back end technology that creates an ecosystem where customers interact seamlessly with their chosen businesses and brands. It’s often very hard to figure out and can require difficult conversations. Driving this re-invention must be in the company’s culture and leadership. For retailers this means teams must be empowered with tools and technology and work in a different way that will challenge traditional organisational structures. For example, an Online Product Manager responsible for defining what a new online checkout might look like will lead a cross-functional team from a conception all the way through to its launch. This team will require expertise from the commercial, supply chain & delivery, brand marketing, social media in addition to IT web development: a different way of working.
What, in your experience, are the best examples of digital retail transformation and why?
I’ve been incredibly lucky to work for the two pioneers of retail in their respective eras: Wal-Mart and Amazon. Both were born out of a laser focus on the customer and a business model clearly understood throughout the organisation.
Amazon’s ‘day 1’ philosophy is one of the prime reasons that digital transformation is underway; constantly reinvent, constantly understand what you’re trying to achieve and never get complacent. Wal-Mart, contrary to perception, lives for change and their current period of re-invention is probably their most impressive.
Walmart is a business steeped in ‘bricks and mortar’ culture. So, their CEO claiming “we are becoming a digital company” clearly demonstrates a business recognising the scope of change required to remain relevant and create value in different ways. They are stepping up their digital grocery game and buying trendy digital brands. The Flipkart India acquisition was (and remains) a big bet. They could see that Flipkart have an impressive ecosystem (technology, payments, cloud). Selling Asda to Sainsbury signified they had bigger fish to fry. The business is redesigning its stores and training associates how to use technology to both reduce inventory and serve customers better.
What are your top tips for digital retailers looking to reinvent for growth?
Technology by itself is not the real disruptor, it’s just the enabler. Not being customer-centric is the biggest threat to any business. The biggest mistake companies can make is to assume that the market segment they operate in is immune from disruption. My top tips for business looking to re-invent from a digital perspective are:
- Understand the technology that your customers use. Ensure your business is having more and more technical conversations. Understand Mobile Payments and artificial intelligence.
- Obsess, obsess and obsess over the customer detail!
- Understand digital marketing and social media more than you need to.
- Follow Amazon, China-based Alibaba and Google. Understand their platforms and read about them in the media.
- Let the data do the talking – the insights provided are worth their weight in gold and should be driving force in business innovation and development.
What will digital retailers of the future look like?
The big picture is an emerging retail business model that operates as an ecosystem. Take Amazon for example where prime, logistics, advertising, market place, cloud etc all work seamlessly together. They have spent 20 years building everything for the customer.
Technology, especially cloud, data and analytics will drive the stores and supply chain of the future, including getting products in the hands of customers.
Retailers will need to embrace all ways to market their business via their digital capability. The way that Google looks (and ultimately scores) retailer’s websites is significantly different from 10 years ago.
A prime example would be moving social media from being a ‘nice to have’ communications platform to being an intrinsic part of their web and product offer. Primark are a great example of this having generated an impressive 5.7m followers on Facebook and 6.7m on Instagram. They don’t trade online.
In summary, technology is simply the latest chapter of change. But it’s a big chapter. If you don’t believe it will impact your market you are putting yourself at significant risk! It’s important to make technology inclusive in your organisation by understanding the technology (and social media) your employees, customers and clients use. It will make a big difference.
James Leeson is part of SpeakersHub and one of our most sought after speakers on digital disruption in retail, innovation and leadership. To view his full biography and to book him to speak at your own event please click here.