The State of Digital Transformation in Retail [stats]

2018 has been one of the toughest years in retail for many businesses so it’s not surprising that new research, carried out in partnership with InternetRetailing, reveals that two thirds of the UK Top500 retailers see digital transformation as crucial to their business, while a further quarter rank it as important.

The report, Customer-centric commerce: how to align marketing and technology to better serve today’s customer, explores what customer-centric digital transformation actually means and in particular looks at the need to balance an increasingly complex front-end, customer-facing set of activities against the back-end – the engine room of technology. Both must focus on the needs of the customer now and years ahead.

So what do retailers need to consider to run an effective multi-channel business today and into the future? Here are some insights from the report.

The customer is driving change

Unsurprisingly, at the heart of digital transformation lies the consumer.  51% of retailers who responded to our survey stated that the customer is their primary driver for change. This central position means that digital transformation has to be customer-centric across both the front-end and back-end functions to meet the growing needs of an ever more complex and demanding consumer.

NOTE: 1 = biggest driver, 5 = least important

Customer experience has become more and more important as the consumer and how they interact with the world, online and offline has changed dramatically. Mobile visits have overtaken desktop visits for every retailer we we work with and shoppers expect personalisation, engaging interaction and they want to be entertained and they want all of these things precisely when they want them.

Changing in step with customer demand is hard

Consumer habits are changing rapidly as is the technologies they use that drive those habits, and so your digital transformation process needs to keep pace with this change. However, as our findings show, the majority – 26% and 28% take 6 to 12 months and 12 to 18 months respectively, with 14% taking even longer than that.

The two key reasons preventing retailers from delivering digital transformation in the time frames customer demands dictate are budget constraints (57%) and legacy technology (49%).

The real practicalities of digital transformation

Delivering the kind of experience consumers want can be costly, complex and slow and by the time it is in place, customer preferences have moved on again. Retailers are forever playing catch up. The speed of technology change – and the speed of change of what is demanded of back-end systems in digital transformation – pitted against changing demand from consumers moving at an accelerating pace combine to make this the biggest headache for retailers (49% of them).

Piecing this together with trying to work with disparate systems and the lack of a single customer view is also a large headache for 45% of retailers. Lack of integration and costs are also up there (33% and 39% respectively). Combined, these challenges aren’t inconsiderable but overcoming them is fundamental to digital transformation.

Keep it simple

The main goal for retailers should be to make shopping online as easy as possible for consumers. Your back-end business processes therefore need be kept far away from the front-end customer experience. For example, if over the years you’ve developed multiple purchase systems that your B2B customer has to log into, how can you consolidate these into a single system.

When Milk & More decided to revamp its website to make it more useful and more in tune with the ever-more digital consumer, they did a lot of research into how the site was used. From this they kept getting the same message again and again: keep it simple. As a result, they designed the pages to be as simple as possible with a minimal number of clicks to do anything.

To deliver a seamless customer experience across all channels means rethinking the very way in which all your back-end systems work. Digital transformation means putting the customer front and centre and making sure all your technology works together – rather than in silos – to enable you to have a single view of the customer. This single view is at the heart of digital transformation and is the crux of the challenge of making it happen.

These are challenging times for retailers and while addressing digital transformation isn’t the only panacea, it is the fundamental jumping-off point to align your business with where your customers are heading.

Download Customer-centric commerce: how to align marketing and technology to better serve today’s customer to access even more stats and insights about digital transformation.