Digital transformation and the power of “now”
Retailers that are closing physical storefronts may give off the perception that their business is suffering, when in reality they are actually adapting to new trends. By utilising customer data, a particular retailer may have decided to trim its brick-and-mortar operations and expand focus on their online storefront, which might make more financial sense.
In the digital age, there is this see-now-buy-now trend that is catching up and the need for instant gratification is compelling retailers to re-think their strategies and business models.
Millennials live for today and their “need it now” fashion syndrome is playing catch-up by the retail and fashion industry. Living in such a real time world with strong demand supply configuration, retail businesses will have to shake and shape up to deliver what customers want and when they want. TK Maxx for instance acquired Trade Secret in Australia and now is cashing on an opportunity as they see a huge demand from fashion struck consumers in Australia. Acquiring Trade Secret and scaling operations, they plan to open up 35 retail stores in Australia this year.
Retailers must reorganise to meet customers on their terms
If you get the inside right, the outside will fall into place. Today’s generation of customers, millennials as most consumer centric companies would call them, are more connected, to brands and each other than ever before. They’re more informed about what they want, where they want to get it from and how they want to get it. For example, last year brands including TopShop and Burberry launched a selection of designs which customers could buy immediately after their shows. TopShop enabled consumers to browse and buy TopShop Unique pieces in store, online and at the company’s London Fashion Week show. Burberry also offered a similar service.
This, instant gratification and buy-it now demands has changed the operational structure of most retailers, as they will have to embrace both physical and digital channels to drive sales and loyalty, rather than choosing one over the other.
Digital vs Physical
Organisations who don’t want to be left behind need to be able to adapt to disruptions even faster. Just over one-fifth (22 percent) of organisations are engaged in digital transformation initiatives. According to IDC, that figure will more than double to 50 percent by 2020. Big data, mobile apps, Internet of Things and social media data will be top priorities for most businesses. But when people think of digital transformation, their minds tend to hone in on just that first part: digital.
But, digital is just one part of a digital transformation. An essential one, but not the whole picture. You’d be remiss to think that digital transformation can or should neglect the physical side of your customer communications and engagement efforts, too. Digital transformation isn’t an invitation to drop the physical and go digital 100 percent. Just the opposite. It’s an opportunity to maximise the importance of the physical and leverage it to further heighten the value of the digital by weaving the two together.
The writing is on the wall
A recent report by GMSA outlines that digital technologies will influence 45 per cent of retail sales by 2025. The writing is on the wall, digital transformation is the future, and “now” is the time for retailers to jump on the bandwagon. If the retailers use the right technology, they can gain better business outcomes and it would benefit them as they could track more aspects of customer behavior from clicks to conversation rates to brand awareness. In addition, it helps to create demand for in-store campaigns and promotions.
Digital technologies can deliver powerful forms of contextual information to enhance existing business data, and location intelligence is one of the most powerful forms of contextual data available to businesses. Contextual data can add a layer of relevance to customer information, that can be used to drive more meaningful interactions and engagement. It covers both physical context [where is the customer or when are they contacting you?) and digital context [when are they most active on social media?]. One such use case that tech savvy retailers can use is the location for strategic site selection. Using this technology, retailers can determine if competitors have market share in certain areas, what intersections and routes are heavily travelled and if their core customer base matches with the demographics of a certain area when deciding where to open new brick-and-mortar stores.
Using geospatial solutions, retailers can inch closer to their customers by providing them with more personalised and targeted offerings. If businesses cannot understand their customers, they risk losing them. Loyalty has to be earned with every interaction, it is not guaranteed.
Location Intelligence enables hyper-local targeting so that retailers can present the right offer, at the right location at the right time on a digital device. Card Transactions have geotags, for example, that can help retailers figure out not only which of their physical stores are performing best, but also where geographically their buyers are more likely to shop online. Taking a step further, retailers can even decipher which online shopping portals customers are utilizing to align their marketing efforts alongside the most profitable channels.
Data drives loyalty
Digital has the power to influence business outcomes and can enable businesses to operate more efficiently in market segmentation and customer acquisition. Retailers who are using location data are on the edge as it empowers them to understand customer preferences. Good data overcomes limitations and ensures brands can woo their customers. Loyalty in this fiercely competitive marketplace governs sales and brand affinity. This is a win-win for consumers and brands, as it helps businesses stay ahead of the curve by engaging with customers. According to a McKinsey research, brands that make extensive use of customer data analytics across all business decisions see a 126 per cent profit improvement over companies that don’t.
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