Success Mantra: Need for retailers to develop tech mindedness
27 Apr 2018 Success Mantra: Need for retailers to develop tech mindedness
(This article was originally published in the ET Retail – link )
The largely mobile driven changes in consumer behaviour may sound to be the death nail for many traditional retailers. However, building new capabilities based on tech driven approach can play a critical role in helping retailers avoid this fate. Mobility is empowering consumers in many ways. Before the introduction of smartphones, consumers could sit at their home computers and compare the products and prices of different retailers. Today’s shoppers can do that inside the store with the device they carry in their pocket. As a result, the internet challenge to traditional retail has moved to the store – retailers no longer have an information monopoly inside their store.
Now the million-dollar question is how aware are modern retailers about the changing dynamics of retail? Data suggests that brick and mortar retailers have actioned upon introducing newer strategies in order to reach out to modern, omni-channel customers. The fact that almost all enterprise retailers primarily in the offline space are looking to enhance their online presence indicates that modern retailers are re-modelling themselves to include both offline and online strategy for business growth. However, the challenge lies elsewhere, and it’s definitely not in changing their sales strategy. It is more about developing a tech mindedness.
Why an efficient tech-orientation necessary for retailers? To understand this, let’s first deep dive into a typical business structure of a retail organization. Retailers generally have a very silo-ed approach in terms of how each department functions. They have different teams handling offline stores, warehouses, brand’s web store and recently added eCommerce function, thanks to the growing influence of Flipkart and Amazon in modern retail ecosystem. Typically, each function focusses primarily on their own sales target, trying to build tactics relevant to acquire customers for their own channel. This strategy may have worked few years back, where shoppers used to interact with the brand through one channel only. Not now, as shoppers generally interact with the brand through multiple channels. Hence, retailers need to develop a strategy where all the sales channels are integrated and develop a model which will allow brands to get an order from anywhere and fulfil from anywhere and this requires focus on technology.
It’s easier said than done. Traditional retailers are grappling with several challenges when it comes to implementation of technology. First and foremost, most retailers have to deal with a non-agile and silo-ed IT infrastructure with low level of integration between disparate system. Moreover, brands lack the expertise to create an agile and smart tech platform, that can continuously evolve with time to meet the need of the brands. Additionally, the ecosystem consisting of new channels, payment systems, fulfilment and delivery partners and customer support teams need to deliver a truly omni-channel experience. The brands also lack the competencies required across a slew of non-traditional functional areas such as site-design, user experience management, customer support journey mapping, advanced logistic supports, etc.
That’s not all. There are deeper challenges that the retailers have to take into account. The majority of retailers are now highly adept at collecting information from their consumers. The real challenge for retailers today is crunching this data. The high quantity of data derived from various sales channels and customer behaviour needs high degree of analytical strength and deep machine learning capabilities. This is absolutely important as most of the business decisions depends on how smartly a retailer analyses the data at hand and acts accordingly, with speed. One of the key use case in this regard is ‘dynamic pricing’. What is considered the ‘right price’ change over time, and an algorithm can take into account key pricing variables like seasonality, supply and demand. That gives retailers the flexibility to generate the right price at the right time which directly contributes to the retailer’s goals such as profit or revenue optimization. Once retailers are armed with the data and capability to act on that data they can even personalize their offers to create an experience that will drive sales.
Traditional retailers need to start thinking like technology companies and simultaneously be very customer centric in their approach. This requires a combination of more engineers and analytics talent, a commitment to new technology platforms, and a new mind-set focussed on designing and delivering customer centric digital experience. The fact that pace of change in retail has historically been comparatively slower, makes traditional retailers ill prepared for a very agile, fast changing business landscape driven by new technology and new tech-focused competitors. Unless, traditional retailers can adjust to that pace of change, they will always be at risk of falling behind the latest trends and development.
Looking for tech integration to go omni-channel. Learn more