The retail sector faces a clear challenge when it comes to digital transformation, so should companies be seeing it as just a headache? No, because retail stands to benefit more than most says Alfrescos Christian Finzel
Firms in the retail sector are among the most likely see a negative impact to their business if they fail to embrace digital transformation in 2018, but retailers also have the most to gain of any sector if they do seize the opportunity.
The UK retail sector is facing a number of key challenges. The British Retail Consortium's latest report in May 2018 pointed to the biggest dip in confidence since it launched its survey in 1995.
House of Fraser
are among those who have engaged in company voluntary arrangements (CVAs) recently as they prepare to close stores and lay off staff. Estimates state that round 35,000 retail and hospitality jobs have been lost or are at risk in the UK, with many big brands impacted.
Online shopping continues to attract buyers while the high street struggles, but whether online or in-store, the retail sector is set to be hit by digital transformation. And retailers must disrupt or risk being disrupted themselves, which could prove terminal for many brands.
Along with our research partner, Dimensional Research, Alfresco surveyed more than 300 IT decision makers in the UK and US to gauge their thoughts on digital transformation, and who had the most to gain - and lose.
The research found that nearly three in ten (29%) believe that the retail sector will be negatively impacted if it does not digitally transform. This was the second-highest sector after Banking (40%). Conversely, this expert group of IT decision makers is fairly upbeat about the prospects for the retail sector, saying it is the industry most likely to see business improvements if it embraces digital transformation in 2018 (30%), ranking it above banking (24%) and healthcare (24%).
It's clear - IT decision makers believe there is huge scope for digital efficiencies and performance benefits within the retail sector. However, IT decision makers within the retail sector itself believe they are more likely to be disrupted by competitors (64%) than be a disruptor themselves (36%).
There is widespread concern across the board about perceived threats from competitors with nine in ten (87%) IT decision makers believing their organisation's results will be impacted if a more technically innovative competitor appeared.
It's also clear that there is a disconnect between IT decision makers and the board. While two-thirds (65%) of both technology and business executives believe digital transformation is a top concern, 70% think business executives are taking too long to adapt and want them to move faster, while just 38% believe the technology team is being overly cautious.
Lack of budget and people resource investment (61%) is cited as the key reason why firms are likely to be disrupted.
This data seems to imply that there is a genuine acknowledgement that digital transformation needs to happen, and there is a genuine fear of the consequences of what may happen should brands not transform digitally.
It's possible that many organisations fear that because they are not at stage that they would like to be and they perceive that everyone's ahead of them. The truth is probably more likely that most organisations are behind where their competitors may think they are.
According to our research, the key expected outcomes of digital transformation were to improve employee productivity (74%), decrease costs through increased efficiencies (71%) and increase customer satisfaction and loyalty (62%).
One of the other key challenges that retailers face is compliance, especially since the General Data Protection Regulation (GDPR) came into effect on 25 May 2018.
Regulatory requirements should act as a catalyst for retailers, as they face tougher responsibilities around personally identifiable data that they hold on their customers and staff.
The GDPR not only demands that data held by organisations is up to date, but that it can also be retrieved quickly upon request. Retailers therefore need to be find data they need much faster than before the GDPR came into effect, and marketers must stringently maintain their lists.
They may even need customers' permission to continue to market to them.
With digital transformation, marketing teams can strip paper out of the process, and deliver cost savings and better document management, for example.
Digital transformation can therefore help retailers meet their compliance obligations and improve operational efficiencies.
There is enormous potential for digital transformation in the retail sector. For example, the in-store experience could be completely revolutionised. Think about the potential of personalised push offers, and augmented reality (AR) and virtual reality (VR) in-store. The customer experience could be completely transformed.
Those retailers who are creating a cutting edge in-store and online experience for their customers fuel a wider rise in expectation among consumers.
Re-imagining the consumer experience is just part of the challenge for retailers because digital transformation impacts the back end too.
Simplifying and speeding up the purchase, pick-up and returns processes could really make a retailer stand out, plus being able to manage and predict stock and resourcing better would help retailers to reduce waste and maximise staff efficiency.
Digital transformation has the potential to impact every department within retail, from the way stock is managed and staff are resourced to how data and documents are stored and managed. It gives retailers license to re-imagine the in-store and online experience and could help retailers revamp the long-suffering UK high street.
So, if you're a retailer it's time to ask yourself if you are going to disrupt or be disrupted. What's it going to be?