In the December edition of our Digital Transformation Digest, we shared about Amazon and 7-Eleven delivering their first orders by drones. And that was make us wonder how far retailers might go in their digital transformation process? What other crazy ideas could they turn into reality?
And what is really important — which one of those ideas is already working for their businesses?
At the end of 2016 CIO magazine published its own review of companies that have been successful with their digital transformations. 4 out of the 8 companies featured in the article were retail businesses.
For example, Dominos Pizza has incorporated capabilities enabling consumers to place orders from any computing device. The company's AnyWhere platform allows you to place orders through smartphones, smartwatches and smart TVs, by entering orders on the Dominos website, and by tweeting and texting emojis. Millennials love that! Domino's current challenge? Making certain its voice-activated virtual assistant can understand and facilitate all of the different ways people order food through speech.
Dominos Pizza on Xbox
Digital transformation is also very important for back office operations. Target's digital journey has suffered through its fits and starts; a devastating data breach in 2013 didn't help matters. To help jumpstart its digital transformation, the retailer hired CIO Mike McNamara from Tesco. McNamara spent much of 2016 flipping the software development model from outsourced to insourced and spearheading custom software development, including new supply chain applications to better align inventory availability with consumer demands.
Like Target, Walmart has been converting its software stack to a custom platform, which includes a new search engine and several cloud applications. Based on OpenStack, Walmart's new ecommerce platform is designed to help the retailer compete even better. In fact, open source is a huge part of Walmart's digital transformation.
Walgreens’ app has prescription advice and live doctor consultations
Walgreens is another exciting example of digitalization, which its CIO Abhi Dhar describes as a “maniacal focus on customers”. Dhar has directed a redesign of the company’s mobile app to enable consumers to manage their medication schedules from their Apple Watches and make it possible for Balance Rewards members to earn and redeem points using Apple Pay.
And while Subway’s transformation is only in its infancy, so far the company has hired more than 150 technology, marketing and operational professionals to help overhaul the company’s mobile app and redesign the sandwich chain’s stores for the future, including self-service kiosks and other capabilities.
For many retail companies today apps are not just information channels for clients but also full value sales channels. Let’s look at fashion retailer John Lewis. 56% of its orders are now placed via mobile devices and mobile is now the first point of entry when consumers are researching their fashion line. That is why John Lewis added loyalty functionality to its app in August 2015. The loyalty program had 1.6 million members in September 2015. There has been an increase of 1.5 million purchases during the loyalty program's two-year history.
Another example is Lululemon. Lululemon Athletica’s sports apparel business has expanded from a single store to a global business with more than 400 brick-and-mortar locations. The company began focusing on digital transformation in early 2016, partnering with customer engagement firm AgilOne to develop a customer relationship management (CRM) platform.
The growth of omni-channel in the retail space has led to stores becoming more like product showrooms than places to make purchases. Lululemon uses its stores as “community hubs” where customers can explore healthy living. Lululemon’s data is then combined with third-party data to help identify patterns, giving store employees a better idea of who their customers are and how they behave across all channels.
There are other solutions for learning more about clients while they are shopping in stores. For example, at Burberry Group PLC a sales associate can ask for a customer’s name and type it into an app when the person walks in, giving them access to personal data, including his or her last purchase and whether the person prefers still or sparkling water. Potentially the sales associate would also be able to view some of the shopper’s public social media presence. This is becoming the norm for premium brands.
Overall, retailers are not digitally transforming their businesses quickly enough. A new report from Cisco stated that companies still in the early phases of digital transformation are missing out on a $187 billion opportunity by not deploying technologies to improve employee productivity. The report stated that improving the customer experience can deliver an estimated $91 billion. But if retailers invest too much into the end-user experience before upgrading business functions and productivity, the efforts could prove futile.
Retailers are grappling with a myriad of challenges in 2017, from shifting consumer behaviors to the explosive impact of digital transformation. To remain competitive this year and beyond, they'll need to embrace many new realities. CMSWire covered realities retailers will face in 2017, including the use of artificial intelligence. Retailers must also extract and apply key insights from their data, become more agile so they can react quickly to changing consumer behavior, create compelling customer experiences, and be more innovative with elements of their physical store locations.
We will continue to follow and share breaking digital news; so stay tuned for our next edition of the Digital Transformation Digest!