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Retail Business Review | Thursday, April 21, 2022
While a robust digital transformation strategy will assist merchants in achieving success, it will require increased collaboration across technology ecosystems.
FREMONT, CA: Consumer expectations have been modified due to the pandemic's experience. They now desire autonomy—the ability to choose how they purchase, where they spend their time, and with whom they do business. While their expectations of retailers have increased, retailers' power to influence them has decreased.
These changes exacerbate the need for retailers to take on a new role in the shopper's life. Numerous businesses are already exploring novel ways to connect with consumers through new channels, storytelling, and innovative services. However, to succeed in the post-pandemic consumer landscape, retailers must transcend traditional customer-centricity and create new value through the proper combination of invisibility, indispensability, and intimacy. The appropriate technology will be critical to maximizing the value of these value propositions—previous approaches to technology deployment will no longer suffice. The speed and scope of the transformation that is currently required and the role that emerging technologies will play in an environment where skills are scarce, necessitate new approaches to solution and talent development. Retailers' success will require tight collaboration across their digital ecosystems, a substantial departure from previous more transactional ties.
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Retailers are not new to disruption—for years, they have been confronted with the entry of technology-enabled online competitors, start-ups, and marketplaces. However, many have been behind the curve, reacting to rather than anticipating these challenges. As retailers seek to reset and move forward, they must leverage efficiency and operational excellence to drive growth by accurately reflecting consumer preferences. While technology can assist businesses in accomplishing this, consumers' expectations have already pushed further ahead, creating a gap that retailers must close.
This imperative is occurring against a backdrop of industry borders collapsing and new opportunities emerging in every facet of retail—marketing, procurement, sales, planning, logistics, and cross-functional support functions like finance, human resources, and real estate. Simultaneously, COVID-19 has expedited the movement of lifestyles to online platforms. There is a growing acceptance of digital alternatives—whether for shopping, work, fitness, or pleasure.
Physical and digital retail will not be mutually exclusive. Given this, it's unsurprising that the EY Reimagining Industry Futures 2022 report reveals how external forces have accelerated the speed of retail's digital transformation. 71 percent of retailers report that their business is more interested than ever in 5G and internet of things (IoT) use cases that can help improve supply chain visibility and management. 75 percent report that the COVID-19 pandemic has hastened their efforts for digital transformation.
Retail investment in new technologies is increasing as a percentage of total IT spending. The present emphasis is unmistakably on building a data-driven company through analytics, artificial intelligence (AI), robotics, and automation. Additionally, investments are being made in IoT and edge computing. However, it will advance to 5G and quantum computing in the following years. Investment intentions in augmented reality, virtual reality, and blockchain continue to be largely subdued. If left unchecked, this could become a problem for shops in the future, as digital currencies and the metaverse gain popularity.
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