In recent years, digitization has fundamentally changed the world of business. Online retail has become strong competition for in-store retailing. Customers are increasingly preferring to order online and are going into physical shops less often. How can high-street retailers remain successful in the future?
In traditional stores, products can be experienced first-hand and customers can be provided with personal advice. These are two key advantages of high-street retail. But these benefits alone are no longer enough. Customers’ shopping experiences now begin at home and usually online, such as by looking for products on Google or Amazon, or by finding inspiration on Instagram or Pinterest. To keep up, high-street retailers need to become more digitally focused. The challenge is to match the advantages of a physical outlet with the digital world. This cannot be done without a digital transformation. Ultimately, customers are the beneficiaries of the changes, as they can use additional services such as Click & Collect or mobile payments in stores.
Why is digital transformation needed in retail?
With increasing digitization, customer loyalty has also changed. It is now fairly common to change vendors quickly, in order to take advantage of lower prices or to follow the latest trends. The barriers to changing suppliers are becoming lower and lock-in effects are diminishing as switching becomes easier due to increasing connectivity.
Developments in information technology provide companies and customers with new options. Product information and price comparisons can be obtained quickly and regardless of one’s location. This reduces the power of retailers.
Both customers and companies are becoming more aware of the value of data. The interplay between the digital and analogue worlds offers retailers new ways to obtain data, forming the basis for better understanding of customers’ needs, interests and habits.
Challenges for high-street retailers in the digital transformation
If companies are to continue to remain competitive, they need to develop a digital strategy now. By doing so, their business model can be altered to take into account dynamic market trends and changing customer needs. The business model should show who the customers are, what is sold, how the service is performed and why the business is operating successfully.
Digital technologies help to shape the customer experience in as positive a way as possible. Data analyses help companies to get to know and understand their customers better and can be used to develop personalized measures. The sales process can be expanded to include digital components. These include the use of social networks (e.g. Facebook, Instagram, LinkedIn, etc.) or new technologies in customer communication (chatbots, live chat, etc.).
From a process point of view, digitization can improve economic efficiency and create new features. Digitization can shorten turnaround times, reduce costs and increase quality. The potential here is wide-ranging and covers the entire customer journey.
What should high-street retailers consider in the digital transformation?
Technological fitness is becoming more and more significant to the continued success of high-street retailers. Along with industry-specific changes, it is becoming increasingly important to follow developments in other sectors to identify potential for your own business.
The use of digital technologies is making a significant contribution to the optimization and automation of processes. To ensure that the potential of digitization measures can be harnessed to the greatest extent possible, all existing business processes need to be collated, presented and then analyzed.
Trends are coming and going more and more quickly, with innovation cycles becoming shorter and shorter and the corporate and industry environment developing in a more dynamic way. For this reason, it is important to identify and evaluate new trends early on and to decide whether these should be pursued further.
Source: Swiss Post