Ask yourself: “What is retail management?”
Merchandising. Inventory management. Employee scheduling and training. Security and loss prevention strategies. Customer rewards and loyalty programs.
All of these answers are right—but what about for digital retail?
More and more consumers are turning to digital channels to discover, shop and engage with retailers. Small and midsize businesses looking to gain a competitive edge and grow their business need retail operators, managers and even employees to be driving digitalization.
Digitalization is now a core competency of today’s retail management.
By looking at enterprise retail studies on digitalization, we’ll be drawing parallels and making recommendations for SMB retailers like you to succeed at digitalization.
Here’s what we’ll cover:
Retailers Are Turning to Digitalization
The consumer-driven nature of retail requires that businesses keep up with their general consumer customer base. Retailers must be where they are, and in this case, consumer presence on digital channels is ever-growing.
It’s no surprise that digitalization initiatives by retailers are outpacing digitalization by all businesses.
Over 10 percent more enterprise retailers are in the “Post-implementation” stage (54 percent) than with general enterprise businesses (44 percent).
While the status of retail digitalization is further along than that of general businesses, there’s still tons of room for growth, at both the enterprise and small business level.
It’s important to note, however, that nearly all of the respondents from Gartner’s March 2017 survey indicated their digital initiatives still need time to mature into business fruition.
What exactly does this “fruition” look like?
Well, the same Gartner research found that the top three business drivers of digital initiatives for retail CIOs’ are:
- Generating more revenue/customer/citizen value through better operations
- Greater portion of business through digital channels
- Improving/automating current operations
But what does this all mean for SMB retailers without bottomless stockpiles of resources to throw at digitalization?
SMB Success Hinges On Data
SMB retailers that want to stay on top of their game have a couple reasons to dive into digitalization:
Social engagement: Retailers must meet customers where they are, and social channels offer new opportunities to connect with customers.
Online shopping: Physical stores are falling by the wayside—retail research by Rhian Davies at GetApp says 66 percent of small business retailers are likely to close their physical stores in the next 10 years.
Offering social engagement and online shopping is crucial for SMBs to sustain and grow a customer base. This is much easier said than done, and SMBs should plan on this taking their time. But it’s important to get started on formalizing digital efforts ASAP, because:
Digitalization offers a flood of highly valuable customer data that retailers can use to continuously improve their digitalization strategies and business at large.
Data is central to all business components these days. It’s also the lifeblood of future business endeavors and innovations. Need proof? Just look at its importance for your SMB peers adopting retail software:
As integral as data is to the modern retail business, it is only going to grow in importance—it’s the lifeblood of future business endeavors and innovations. In fact, data is central to most of 2017 Top Five SMB Retail Disruptors.
70 percent of retail CIOs believe digitalization initiatives will have the most impact on customer experience. That’s over three times more than the next closest impact (distribution, sales and marketing).
Source: “2017 CIO Agenda: A Retail Perspective“ (Content available to Gartner clients)
How Can SMB Retailers Achieve Digitalization?
A couple of easy steps SMB retailers can take to get their digital initiatives off the ground include:
Identify what stage in your digitalization you are at. Once this is established, you can set realistic goals for where you’d like to be and how you can get there.
These are Gartner’s five stages of digital business growth that have been adjusted for SMBs:
- Desire. Managers and/or other employees research existing digital strategies and present conceptual digital strategy ideas.
- Design. Teams come up with an actionable proof of concept that doesn’t require too many resources or create too much risk.
- Deliver. Steps are being taken and ownership is given to put a digital business strategy into place.
- Scale. Digital strategy plans are being repeated ramped up across different social channels, different business units etc.
- Harvest. The digital transformation is delivering ROI.
Keep coming back to focus on improving customer experience, both in-store and digitally.
While you certainly need to establish/expand your digital footprint, you must keep in mind that the impetus for your digital transformation is rooted in improving the customer experience.
“Retailers have realized that a focus on the customer is the key to growing market share. All other strategic business areas of investment will be done in the context of reinventing the customer experience — vendor selection, feature/function evaluation, cost-benefit analysis and business process change. If the technology doesn’t somehow benefit the customer, even indirectly, it is not in line with retailers’ 2017 objectives.”
Molly Beams, Research Director, Gartner from Market Insight: What Retailers Want From Technology and Service Providers in 2017 (content available to Gartner clients).
Use this roadmap to formalize a plan for affecting positive changes in your customer experience (The rest of the article offers actionable advice as well!)
Small businesses need to be smart about how they wade into the waters of digitalization. Here are a couple of concrete steps to take in order to move forward.
Dive into our series on leveraging digital channels to create retail benefits. Key takeaways from the series include:
- Make the most of your current business by optimizing customer experience
- Develop a social strategy and goal for each social post
- Constantly measure success of digitalization and adjust accordingly
Ensure you have the right software in place to execute on your digitalization goals:
- A POS system with some sort of reporting/data analysis
- An ecommerce platform will eventually be needed to grow exposure with online shopping
- And advanced customer data collecting and analysis will likely positively impact major decisions