Opportunity vs. Necessity: Technology transformation that sticks in retail
In 1995, the internet opened its first shop doors as Amazon and eBay made their debut. Physical retailers worldwide cast a glance at this but continued to focus steadily on bringing footfall into their locations. Until a year later, when the world of retail saw Amazon grow its revenues by about 3,000% to $15 million. At an astonishing pace, ecommerce went from a side path to a main road for many major retailers.
Ecommerce is one of the most ground-breaking examples of transformation in the retail world in the last 50 years. The reason behind its proliferation was simply the open platform which the internet offered: a platform that was born out of necessity, but which many quickly found opportunity in. Ecommerce proves that permanent transformation can be triggered by opportunity, rather than necessity. But when it’s the other way around, and retailers are forced to change their intrinsic ways of working due to necessity (no need to highlight the situation driving this) rather than opportunity, will transformation stick?
Today technology has a role to play in each facet of retail – a natural outcome of the tech era we live in. It can be argued, though, that many retailers are “surface-level” adopters of technology. They are at varying points on the transformation curve, and those behind said curve suffer from a lack of agile practice across the business, low communication, poor and legacy system architecture and other ailments. In calmer times these problems can be brushed under the rug, but they became starkly apparent when the world suddenly turned tech-driven by default.
Traditional retailers, in the scenario of transforming against their will, must consider 3 pillars to a successful tech transformation: technology, people and processes. It can be easy to introduce new technology, slap the badge of digital transformation on it and when it fails it all but confirms their views that “transformation was never for them”. However, without considering the other 2 pillars for success it was a doomed project from the beginning. Mindset of the individuals using the technology, and processes to support successful operation are arguably more important than the tech itself.
“Tech-led” retail brands have been reaping the benefits that digital-first strategies offer for decades. It’s not all ecommerce; in-store transformations exist across the world such as hands-free “smart carts”, augmented reality changing rooms for clothing stores or the infamous Amazon Go automated checkouts. This shows that tech can make waves in offline experiences, too. However, for years now (Amazon Go was 2 years ago already!) it has seemed that these innovations are fringe, at best. Why? We’d argue that the necessity hasn’t been there to drive these changes into wider adoption, and the opportunities haven’t made a strong enough proposition. Well, they certainly have now.
One thing that hasn’t changed is the conceptual umbrella of “brand”. The way people perceive retail brands is a big factor in whether they buy, and continue to buy, from them. For example, for some retailers losing human interaction as part of their business model is a huge challenge – but technology (online video personal shopping is a fantastic recent innovation to point to) can be a route that helps rebuild at least some of this experience. If the brand – what they value in delivering for their customers – is kept front-and-centre of mind when it comes to strategy, retailers can apply the right tech to the right places and deliver an experience that balances modern innovation and traditional values.
The necessity for retailers to know where their weak points are and invest in technology to overcome them – because those retailers that currently benchmark success in the industry have done exactly this. Then, once the issues are addressed (we say that like it’s easy!), there lies the opportunity for retailers to deliver a new tech-led strategy that doesn’t just resolve issues but adds incredible new value to their customers’ experience. For retailers out there – not just the tech team, but the CEO and everybody else involved in your brand’s future: putting technology first at the most core level is essential right now.
The key points to take away from this article are:
- Technology adoption is a necessity to evolve with the industry and remain relevant, otherwise companies risk becoming the BlockBusters of the industry
- Retailers must consider all 3 pillars to a successful transformation: tech, people and processes
- Regularly come back to the tech strategy, revise it and benchmark against what others are doing in the market
- Consider your brand before implementing change
- Build a culture to find, fix and accept technology