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Retail Digital Transformation: An Industry Undergoing Massive Change

Retail Digital Transformation: An Industry Undergoing Massive Change

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By Shoshana Friedman

COVID-19 has disrupted many industries, and retail is feeling its immediate impact. While pre-COVID-19 there were rumbles of retail digital transformation, the move to digital is now a must-have for retailers that want to stay on top.

Read on as we explore the current moves and future trends of retail digital transformation.

Buyer habits are evolving

An in-store experience gives customers the opportunity to physically interact with a product. Stores invest a lot in that face-to-face experience from the outside display window, the selected products on sale, their salespeople’s behavior to the choice of background music. These calculated decisions are made to increase the likelihood that a shopper will purchase more and return in the future.

But since COVID-19 struck, consumers’ buying habits have changed. According to a survey cited on Google Cloud Next ’20: OnAir, more than 50% of consumers are trying new shopping services for the first time; over 25% are buying things online that they normally would buy in-store, and more than half showed interest in curbside pickup.

Credit: McKinsey

Digital transformation is moving ahead

 The switch from physical to digital is significant. Health concerns are a major motivator for buyer behavior, and retailers have had to provide contactless shopping experiences to maintain their consumer-base.

A Fujitsu study found that in Europe, 34% of retailers now offer the majority of their products and services online – a trend accelerated by the global COVID-19 crisis. Additionally, many retailers are operating a hybrid online and physical model that relies on initiatives such as ‘buy online, pick-up in-store.’

The move towards retail digital transformation isn’t a luxury at this point. Since the onset of the pandemic, more retail companies are filing for bankruptcy, including one-time giants like Neiman Marcus, JC Penny & Brooks Brothers.

Credit: MGN

Moving to the cloud

The retailers that want to stay in business are plowing ahead to digitalize their offerings and maintain their businesses. A major aspect of tech modernization is moving to the cloud and leveraging data. As cited in WalkMe’s Next Normal white paper, when it comes to cloudification, the cloud is the only way to scale, ensure cost efficiencies, and be flexible when operations shift. A cloud infrastructure can be a way to minimize dependency on on-prem software and also help retailers better leverage their data to understand consumer experiences and optimize their offerings based on new trends.

Even with the changing times, the Fujitsu study discovered that there are still cloud skeptics within the retail community who remain committed to in-house processing and less adaptive technology. Time will tell how these retailers will fare as the economy changes and consumer demands evolve. 

Customer experience is more important than ever

McKinsey found that 36% of consumers are trying a new product brand and 25% incorporating a new private-label brand. Of consumers who have tried different brands, 73% intend to continue to incorporate the new brands into their routine, with Gen Z and high earners most prone to switching brands.

What this signals is that consumers are more experimental than ever before. They are open to new brands and services that will meet their exact needs at the moment, with brand loyalty taking a backseat.

Since the digital retail landscape is so vast, consumers are looking for the best value, easy online experiences, convenience, and seamless delivery. Retailers who have updated their digital software to make shopping easier for customers, as well as learned how to extract useful consumer patterns, will be able to capture and navigate their customers’ changing needs and desires.

Retail employees’ new role

As retail companies digitally transform, their employees will need to become proficient in newly introduced software. With the rapid introduction of the latest applications, employees from salespeople to customer service agents will have to ramp up and onboard to the software quickly. As explained previously, customers will have less patience to buy from a store that doesn’t provide immediate convenience, top-notch service, or product availability.

More companies are turning to a DAP (digital adoption platform) to train and onboard employees. WalkMe’s DAP can be applied to any app or cross-app as a customizable overlay, making for flexible implementation. The DAP is equipped with contextualized guidance and self-service functions to let employees learn and improve as they use new applications.

After Ulta the largest beauty retailer in the US started using WalkMe, they not only saved 40% in training costs, but their employees, “were learning while they were executing what they needed to. It was not only saving time for them, but creating consistency amongst all the users and boosting satisfaction.”

Meeting customers where they’re at

Today’s customers expect premium service, whether that be online, in-person, curbside or some combination of all of the above. In order to stay ahead in today’s ever-changing reality, retailers have to accelerate their digital transformation efforts to stay relevant and maintain their consumer base.

Customer experience still reigns supreme and through whichever portal a customer arrives, they need to have a positive and seamless experience. From the backend, retailers need to invest in new software and technologies, like cloud, to leverage data and best understand how they can adapt and give customers what they want. To best execute, retail employees need to be properly trained and ramped up on the latest technologies to provide a high level of service.

There are still many unknowns ahead, but from what we can see already, upgrading technology with a digital adoption platform can keep retailers relevant and in the game.

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Shoshana Friedman
Shoshana's background in product and user experience gives her writing a focus on the human aspect of the business and technology landscapes. Her unique UX angle allows her to assess the digital era in a way that is both practical and insightful.