{"id":86328,"date":"2022-03-23T07:51:30","date_gmt":"2022-03-23T14:51:30","guid":{"rendered":"https:\/\/oroinc.com\/b2b-ecommerce\/?p=86328"},"modified":"2023-04-13T05:05:51","modified_gmt":"2023-04-13T12:05:51","slug":"digital-transformation-in-the-retail-industry","status":"publish","type":"post","link":"https:\/\/oroinc.com\/b2b-ecommerce\/blog\/digital-transformation-in-the-retail-industry\/","title":{"rendered":"Retail Digital Transformation: Key Drivers and Technologies in Retail Sector | OroCommerce"},"content":{"rendered":"

Retail is how consumers and businesses purchase goods and services. Consumer spending is a crucial component of the economy, making up <\/span>almost 70% of total US economic output<\/span><\/a>. Businesses in manufacturing, education, healthcare, or transportation engage in retail sales, and while their specialties differ, they have one thing in common.<\/span><\/p>\n

These organizations must sell their products to customers – and to do that effectively, they have to improve their products, processes, facilities, and customer experience. The most effective way of doing that is through retail digital transformation.<\/span><\/p>\n

What Is Digital Transformation in the Retail Industry?<\/h2>\n

The digital revolution – namely, the rise of digital commerce – was always an innovation driver in the retail industry. When the coronavirus pandemic hit, it not only changed how we interact but pushed even more retail customers online.\u00a0<\/span><\/p>\n

According to Shawn Fitzgerald, research director of market research firm IDC, digital transformation is about applying \u201cthird-platform technologies to transform decision-making.” Retailers must use technology to unlock new sources of innovation rather than just upgrading or modernizing existing legacy systems.\u00a0<\/span><\/p>\n

Digital transformation for retail does not begin and end with a specific function, like a shopping cart website. In reality, organizations must make deep changes to their operations, supply chains, inventory management, and customer relationship processes. They must analyze data to accurately project demand, react to customer needs, and ship products quickly and efficiently.<\/span><\/p>\n

Here are some developments in retail and how they drive retail industry digital transformation:<\/span><\/p>\n

Trust is more important than ever<\/h3>\n

Over <\/span>81% of online shoppers feel anxious<\/span><\/a> when shopping on a website they are not familiar with. Online, trust must be built through informative product descriptions and accurate availability. One way of communicating real-time data around products, pricing, and shipping is through <\/span>ERP integration<\/span><\/a>.<\/span><\/p>\n

Everyone is on their phones<\/h3>\n

Close to 3.8 people billion, which is half of the world’s population, will use smartphones in 2021. <\/span>According to Smashing Ideas<\/span><\/a>, companies that switch to PWA (Progressive Web App technology) notice engagement increases from 20% to 250%.<\/span><\/p>\n

Automation is everywhere<\/h3>\n

Automated retail technologies such as robots, drones, and automated checkout are transforming retail. For example, drones can <\/span>cut delivery costs by 86%<\/span><\/a>, warehouse robots can <\/span>reduce manual labor costs by 70%<\/span><\/a>, and almost <\/span>50% of shoppers<\/span><\/a> would use unattended checkout due to speed improvements alone.<\/span><\/p>\n

Four Reasons Why Retail Digital Transformation Will Matter in 2021<\/h2>\n

According to Forrester, the global retail industry is expected to lose <\/span>$2.1 trillion in sales<\/span><\/a> this year. In addition, Moody\u2019s <\/span>downgraded five of the seven<\/span><\/a> largest shopping mall REITs<\/span>, and the outlook of others have been changed to negative. As higher vacancies lead to weaker incomes, investors are not hoping for physical stores to recover until at least 2022.<\/span><\/p>\n

The same trends can be seen in the much larger business sector. According to <\/span>Steve Forbes<\/span><\/a>, the editor-in-chief of the Forbes magazine, B2Bs are \u201cvastly more important than consumer or government\u201d when it comes to spending. Thus, B2B spending is the driver of the economy, which reflects how consumers spend.<\/span><\/p>\n

\"Economy<\/p>\n

While the pandemic has affected spending across the board, we\u2019ve seen an unprecedented spike in both B2C and <\/span>B2B online purchases<\/span><\/a>. As businesses prepare for the new digital era, digitization will happen at different rates in different domains. What’s for sure is we can expect changes in the customer experience and faster adoption of tools that allow retailers to survive in the years ahead.<\/span><\/p>\n

COVID-19 is changing retail<\/h3>\n

As customers get used to turning online for everything from food to clothes, retailers that depend on brick-and-mortar sales need to ask themselves some difficult questions.\u00a0<\/span><\/p>\n

Brick-and-mortars weigh down the industry as a whole, with an <\/span>expected drop of 14% in this year alone<\/span><\/a> with no recovery on the horizon. Before any talk of normalization, investors, landlords, and retailers themselves need to balance their interests and come to a consensus to bring confidence back to the industry.<\/span><\/p>\n

Besides the move to online, we’re also seeing changes in <\/span>consumer goods preferences<\/span><\/a>, spending patterns, and new purchase channels. Retailers are reacting to these changes but also look for ways to improve operational efficiency. They are introducing new or connecting existing business systems such as CRM, eCommerce, ERP, WHM or PIM solutions.<\/span><\/p>\n

\"b2b<\/a><\/p>\n

Other changes are more gradual. These include investments in data analytics, robotics, and augmented reality. These will take more time but are inevitable as brands seek to meet customer expectations, predict future demand, and seek to work more efficiently, particularly remotely.<\/span><\/p>\n

Customers expect easy shopping<\/h3>\n

Most of us communicate and perform research online, so it’s natural that we purchase on these channels, too. Accelerated mobile adoption is driving demand for frictionless shopping experiences. Customers look for quickly loading websites, responsive design, and personalized websites.<\/span><\/p>\n

They gravitate to brands that meet their needs with relevant product information, knowledgeable staff, and safety assurances. According to <\/span>data by Optinmonster<\/span><\/a>, personalization is central to purchase experiences, while irrelevant content has an opposite effect, leading to lost sales for retailers. These changes accelerate innovation, driving digital transformation initiatives throughout the retail sector.<\/span><\/p>\n

Retailers are going omnichannel<\/h3>\n

As competition increases, retailers will have to reevaluate their offerings in their markets and see where they can differentiate. For example, this could mean bringing more in-store experiences online, allowing online shoppers to have a video call with sales associates. Retailers can remove doubt and confusion during purchase decisions with augmented reality technology, helping customers visualize products with cameras on mobile devices.<\/span><\/p>\n

Consumers remain reluctant to enter public places, which drives demand for alternative delivery and pickup services. New delivery models are already gaining traction among the general public, with BOPIS (buy online, pick up in-store) expected to stay in demand long after the pandemic.<\/span><\/p>\n

\"next<\/p>\n

[Source<\/a>]<\/span><\/p>\n

Small, physical items such as groceries and FMCG are <\/span>perfectly positioned<\/span><\/a> to capitalize on these new purchasing needs. As customers warm up to the idea, it won’t be long until other retail sectors, including B2C and B2B, follow suit.<\/span><\/p>\n

Retail roles are getting redefined<\/h3>\n

Physical stores have long tracked shopper behavior and purchases to optimize store layouts. Recent research, however, revealed that physical stores could complement eCommerce sales: opening a new location <\/span>increases traffic to a retailer’s website by 37 percent<\/span><\/a> the following quarter. The effect works in the opposite direction, too: Amazon uses its physical stores, Whole Foods, and Amazon Go, <\/span>to blend in-person and digital<\/span><\/a> experience.<\/span><\/p>\n

The pandemic also made many businesses reevaluate their supply chains like never before. As demand fluctuated, many customers faced out-of-stocks and delays. Retailers are looking to protect their supply chains the next time around, and digitization initiatives help brands reach their resiliency and efficiency goals. <\/span>Supply chain improvements<\/span><\/a> like transparency, speed, and shortened delivery times are more important than ever.<\/span><\/p>\n

What Are the Key Trends of Digital Transformation Initiatives in Retail?<\/h2>\n

Systems integration<\/h3>\n

Data is essential for predicting demand and quickly reacting to new opportunities. As different ways of connecting software emerge and data transfer increases, there’s never been a better time to keep track of it all. Seamless integrations helps retail businesses understand all aspects of the retail process, from inventory management to staff productivity. <\/span><\/p>\n

\"data<\/p>\n

[Source]<\/span><\/a><\/p>\n

Connected systems help brands understand how customers are using their products: eCommerce data can identify best-selling products and offer the right, personalized suggestions to customers. CRM data is necessary to understand your best customers and create targeted marketing campaigns to attract more of them.<\/span><\/p>\n

Additionally, retailers need to maintain a single source of truth and ensure that data flows freely between systems. These can consist of ERP, PIM, 3PL, supplier databases, and other specialized software, streamlining processes like:<\/span><\/p>\n