Updated: Nov 14
In today's cut-throat competition, the retailers' pressure is to deliver an intelligent, friction-free, data-driven user experience to meet individual customer needs.
Digital transformation in retail fits the bill in order to enhance customer experience that drives the overall company growth.
It enables retailers to embrace digital technology to ensure fast and secure services. Hence, it will meet the constantly changing demands of the customers.
How are retailers evolving with digital technology? How's it impacting their business? Let's find the answer.
What is Digital Transformation in Retail?
This refers to incorporating digital technologies into every aspect of a retail business. From inventory management to customer service, digital transformation infuses its power to foster the efficacy of mobile apps, e-commerce platforms, social media, and other digital tools.
According to Statista, investments and funding of 100 billion U.S. dollars went into the retail sector in 2021, which suffices the objective of providing a seamless shopping experience. Consequently, digital transformation helps retailers with insights and data to make informed decisions.
Importance of Digital Transformation Towards Better Customer Engagement and Sales in Retail
Sales and customer engagement are the two critical aspects of retail businesses. Engaging with the customers is essential to fostering a strong relationship, resulting in customer loyalty and repeat business. With the help of digital transformation, relationships with customers have already reached new heights as retailers can now use various aspects of digital technologies. For example, they can use and incorporate the data to increase existing customers' purchase frequency. Moving forward, it will help to target high-value customers too.
On the other hand, sales generate revenue while allowing businesses to invest in new products. Here, digital transformation also plays a pivotal role in orchestrating successful sales strategies by addressing customer needs efficiently and offering them personalized recommendations. Therefore, it will improve the overall customer service.
This is just the tip of the iceberg. The detailed benefits of digital transformation in retail will overwhelm you once you read the following paragraphs.
Benefits of Digital Transformation in Retail
Digital transformation has already revolutionized various industries and their related sectors. Of late, it has revolutionized the retail industry with its supreme benefits leveraging by the retailers. Here are some of the benefits-
1- Increased Efficiency
Digital transformation has enabled retail businesses to streamline their operations, including inventory management, supply chain management, and checkout processes. Automating these procedures has resulted in enhanced efficiency while reducing costs for retailers.
2- Enhanced Customer Experience
Digital transformation has enabled retailers to provide a seamless and personalized customer experience. They can use data analytics and buyer persona to understand the customers' preferences and behavior. Based on that, the marketing team can tailor their target audience and messages meaningfully to offer the product/services.
3- Improved Omnichannel Marketing
In this ever-increasingly crowded marketplace, omnichannel marketing plays a pivotal role in reaching the target audience efficiently. It includes e-commerce websites, mobile apps, social media, and brick-and-mortar stores. Hence, omnichannel marketing enables the retailers to position themselves in a better place.
4- Better Data Analysis
Digital transformation has enabled retailers to gather and analyze vast amounts of data in a stipulated time. It provides them with insights into customer behavior and buying trends. Marketers can optimize the campaigns and related product pricing strategies based on the accumulated data.
5- Increased Agility
Retailers who have already embraced digital transformation can respond quickly to market conditions. By leveraging digital technology, retailers can quickly adapt to the business models to stay ahead of their competitors.
6- Upselling Opportunities
Digital transformation in retail fosters upselling opportunities, boosting sales by 3X. Digital tools will help to increase revenue without any extra work. For instance, if a customer adds an item to the cart, you can showcase "similar" or "recommended" items that complement the chosen product.
According to data, upselling may increase revenue by 10-30%. With the help of the Internet of Things and application programming interfaces, cross-selling and upselling opportunities are more accessible. 7- Access to Broader Target Market
Being a digitally advancer retailer, you can now capitalize on online shoppers as most are bending towards online shopping. It will enable you to access a broader target market. In turn, customers can access your store from anywhere by using a mobile device or desktop.
8- Leveraging the Power of Automation
Automation processes have reduced manual human effort, processing times, and operational costs. For instance, automating the inventory management, supply chain, pricing, and billing will help your business grow exponentially.
Key Technologies for Digital Transformation in Retail
Digital transformation and digital technologies go hand-in-hand in the retail industry. Advanced tools and technologies help companies to make informed decisions to thrive in this changing market. Here are some of the top technologies-
1- Artificial Intelligence & Machine Learning
These technologies will help you to understand customer preferences and behavior better. Additionally, you can optimize inventory management and personalize marketing campaigns to cater to your target audience.
2- Augmented Reality & Virtual Reality
These advanced technologies can be used to develop an immersive shopping experience. It enables the customers to visualize products in real-world settings before purchasing.
3- Internet of Things (IoT)
You can use IoT devices like beacons, sensors, and RFID tags to track inventory levels and monitor store traffic to provide real-time insights to the team members. Based on that, they'll take the necessary action.
4- Facial Recognition
One of the effective digital transformations in retail aids retailers in understanding customer patterns better. Additionally, it can analyze customer demographics, prevent thefts, and track the buyers gravitating to the store.
5- Contactless Payments
Payment methods like one-tap pay credit cards and mobile payment options like Apple Pay are prevalent nowadays. It enables customers to pay their bills conveniently and securely.
6- Cloud Computing
Cloud computing helps retail stores manage and access data from anywhere, which provides greater flexibility and scalability.
Things You Need to Consider for a Successful Retail Digital Transformation Strategy
A robust digital transformation strategy is crucial to thrive in this competitive market. Here are a few key considerations that will fuel the overall process:
1- Develop a Digital First Business
Balancing between online and offline processes will help you to understand consumer preferences effectively. Accordingly, you can deliver to the customers.
Check the inventory stock levels. Also, ensure your store offers online shipping, in-store pickup, and curbside pickup options. If you have the budget, you can collaborate with third-party home delivery providers to deliver the products on time.
2- Customer-Centric Approach
The rise of e-commerce leads to demanding customers needing a specific product/service. It would be best to focus on providing customers with a personalized and seamless experience across all channels.
3- Data-driven Decision Making
Accumulate more data to gain insights into customer behavior and buying patterns. This will enable you to make informed decisions about product pricing, offerings, and marketing strategies.
With the meteoric of online shopping, the chances of scams and phishing attacks are also increasing. You must invest in robust cybersecurity measures to protect customer data while preventing cyber-attacks.
Few Examples of Digital Transformation in Retail
Let's see how some major brands have incorporated advanced technologies to take the business to new heights.
1-Nike's Speed Shop
In 2018, Nike introduced "Nike House of Innovation 000" in New York City. This store uses the latest tools and technologies to create an immersive experience for the shoppers. This store has customization studios and checkout points. This enables the customers to reserve shoes online to try in-store. Also, mobile checkout is available in this shop. This means that the customers don't need to speak with anyone if they want to buy shoes.
2- Audi's VR Showroom
In 2017, Audi launched its VR-enabled showroom to let customers thoroughly explore its interior and exterior. Also, the customers can check how their car will look after modification. Through cutting-edge technology, Audi offers customers interactive and dynamic buying experiences.
3- Amazon Automated Checkout
Amazon uses a combination of deep learning, computer vision, and sensor fusion technology in their go stores to automate the checkout process. It means that the customers will enter the store, pick up the item, and leave without queuing to make the payment. It will be done automatically through the Amazon Go app.
Choose Danip Technologies as a Trusted Partner in Digital Transformation in Retail?
If you need a helping hand who can understand your queries and incorporate digital technologies to take your brand to new heights, we're here to help you. From robust mobile applications to omnichannel commerce, our team of experts will serve you with custom retail software development solutions. Schedule a free consultation call today to learn more about how we can help you.