Three principles to follow, curated from recent research published in MIT SMR.
When you think of digital agility, “retail” might not be the first sector that comes to mind. But, in fact, technology spending in the retail sector has ballooned in recent years, and according to Gartner, it is expected to reach $203.6 billion in 2019.
Companies such as Nordstrom, Best Buy, and Bonobos have strategically prioritized key digital capabilities — from analytics and e-commerce tools to mobile and emerging technologies such as AI and machine learning — in order to avoid displacement in the new digital economy and find new opportunities with customers.
The following three principles, curated from recent research and insights published in MIT SMR, demonstrate how successful retailers are responding to digital disruption and using insights to improve customer experience.
1. Leading with a small footprint and high experience. It should come as no shock that the age of customer experience is already upon us. Being competitive in the retail market today means being able to learn and adapt more quickly to the experiences that customers want. And while customers want great online experiences, this does not mean that brick-and-mortar will be a thing of the past any time soon.
As noted in the aptly titled article “The Store Is Dead — Long Live the Store,” while some aspects of the typical off-line or in-store experience are eroding, others are now thriving. The article highlights online-first companies such as Warby Parker and Amazon, which have already led successful efforts in the “showrooming” experience for customers.
As the authors point out, “Showroom experiences create better customers: Customers are exposed to the brand in a more meaningful and immersive way, and they are better able to resolve any uncertainty about the nondigital attributes of the retailer’s products. Likewise, showrooms create better retailers: When customers are physically present in the retail environment, observation of their behaviors can lead to meaningful insights. Salespeople can anticipate and respond to customer needs, provide exceptional service, recommend additional items, look for signs of customer discomfort, and so on.”
This shift in strategy for off-line efforts is backed up by the fact that despite digital disruption, people are still shopping at brick-and-mortar stores. In fact, according to the 2018 Global Consumer Insights Survey conducted by PWC, over the past three years, the percentage of weekly brick-and-mortar shoppers has risen “from 40% in 2015 to 44% in 2018,” and this increase may be attributed to consumers’ “desire for a more sensory and social experience.”
2. Embracing immersive technology. Voice technologies and AI are already starting to play a major role in the day-to-day life of consumers, and digital supply chains can also benefit from these emerging technologies. As the authors of “Can Your Supply Chain Hear Me Now?” wrote, “In the future, the conversational digital supply chain will use technologies such as machine learning and internet of things (IoT) sensors to improve market responsiveness and agility. Its implications will go far beyond the convenience of placing orders via voice commands.”
For customers, this enables faster shipments at reduced costs, and for retailers, this helps strengthen their resilience against disruption. As the authors noted, embracing immersive technologies in the supply chain involves “rethinking networking design, planning for information centralization, and building inventory and pricing into order-fulfillment decisions.”
While voice and AI strategies are still in their infancy for many in the retail sector, early adopters may gain key competitive advantages over laggards, given that by 2021 Gartner predicts that brands supporting voice search capabilities on their sites will increase digital commerce revenue by 30%.
3. Investing in digitally savvy talent. In an age where competing on digital is a chief priority, retailers must ensure their investments in talent are aligned. This certainly pertains to store associates, customer service teams, digital marketing, and other key contributors, who will need to gain fluency in technology and tools to delight their customers, but one of the most important talent questions for retailers in fact relates to management.
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Today’s digital environment means that the retail C-suite must complement traditional skill sets such as merchandising and store networking with technology savvy, in order to continue to meet the needs of customers when it comes to omnichannel, digital, and supply chain and operations strategies.
When it comes to hiring and engaging digital talent, organizations should recognize four talent management models. As Kristine Dery and Ina Sebastian wrote, when it comes to cultivating talent within companies, two design levers matter most: “(1) enabling employee connectivity and (2) facilitating a responsive, evidence-based leadership. High-performing companies focus on the digital capabilities to connect people with each other, with ideas, and with the broader world. At the same time, these companies are deploying very different leadership capabilities — actively building test-and-learn environments.”
While the current environment presents many risks for digital disruption, there are just as many opportunities for organizations to embrace digital platforms and tools for training talent, and identify key areas for growth.