Digital transformation presents a sea change for retail — but will smaller retailers be able to weather the waves?
Over the last several years, big-box retailers like Walmart, Ikea, and Best Buy have opted into digital transformation, knowing that such technology investments could unlock competition-critical operational efficiencies and experiential improvements. Mom and pop stores, however, have been more hesitant to embrace transformative change and its costs. Their hesitancy is as understandable as it is concerning; as consumer expectations rise, smaller retailers may find themselves left behind.
However, before beginning the digital transformation process, it’s imperative that business owners understand why such innovation investments have become mission-critical in retail.
Retailers are struggling to meet consumer needs amid infrastructural challenges
Having a digital presence used to be as little as establishing a company website. Even if companies didn’t do much with it, it was enough to have a readily accessible corner of the web where they could plant their flag. Today’s customers, however, expect more.
Nowadays, consumers are looking for brand-unique experiences across the platforms they use, wherever they use them. Moreover, customers also want retailers they shop with to translate a human element to the digital sphere. Recent studies have found that:
- 9 out of 10 consumers want an omnichannel experience from businesses they patronize, meaning that they want their experience to be seamless if they switch between online and in-person touchpoints.
- Today, customers use an average of six different touchpoints (in-person and online) to interact with companies, with around 50% using four and over.
- 73% of consumers report that brand experiences are important to them.
- 59% of consumers believe companies they shop with are disconnected from the human element of the consumer experience.
In addition to not meeting current customer demands, organizations that have not transformed may find that their process structures suffer from profit-impacting inefficiencies. Companies that use outdated, non-centralized tools to collect and organize data may inadvertently create data silos, thus separating the responsibility for data collection into isolated units that do not communicate well with one another.
Data siloization can lead to inaccurate inventory reporting and an inability to accurately predict customer demand, leaving management guessing how much product to order at any given time. The pandemic exposed how costly this consequence can be, as customer demand shifted rapidly and retailers struggled to fill it.
Without the infrastructure to track or predict these shifts, retailers overcorrected and submitted orders that left them with a surplus of unneeded goods — and a deficit of in-demand ones. In addition to the cost of these surplus goods remaining on shelves and taking up much-needed inventory space, rising shipping costs meant that these mistakes extracted a massive financial toll.
Digital transformation: a much-needed re-evaluation that reaps rewards
Digital transformation can empower retailers to meet changing consumer demands, eliminate costly process inefficiencies, and establish a foundation for success in a digitally-integrated future.
Transformation efforts often include expanding and optimizing retailers’ digital presence, allowing them to meet changing customer expectations. After developing an omnichannel, experience-centered infrastructure, retailers of all sizes will be able to provide customers with the experiences they desire in-store and online.
In addition, transforming hardware retailers’ process structures includes centralizing data gathering and analytics processes, which breaks down costly data silos. Using a single, cloud-based platform instead of disparate, outmoded tools can:
- Improve inventory reporting accuracy.
- Smooth interdepartmental communication by standardizing data and making it more accessible.
- Segment and market to retailers’ customer bases more effectively.
As an initiative, digital transformation is about re-evaluation — or, put another way, asking if the old means of conducting business are still working as circumstances change. Taking the initiative to pursue transformation allows retailers to establish a new foundation that will ensure they can survive and thrive among current and future challenges.
Beginning your own digital transformation journey
Once hardware retailers understand how they can benefit from digitally transforming, the next question is how to begin the process. Digital transformation involves working on several key growth areas, and companies looking to transform can take simple steps towards improvement.
If you’re interested in learning more about these growth areas, please check out our white paper, “A Hardware Retailer’s Guide to Delivering Customer-Centric, Digitally Integrated Experiences,” or give us a call to start a personalized journey with our consultants.