How Retailers are Turning to Digital Transformation Strategies to Revitalize the In-Store Experience

The retail industry has a major impact on the U.S. economy. According to the National Retail Federation (NRF), one in four American jobs are supported by the retail industry.

Despite the retail industry’s prominent position in the economy, traditional brick-and-mortal retailers are under a pressure unlike any other industry to digitally transform their businesses. With retailers that are “e-commerce only” already successfully disrupting this old-line industry, traditional retailers can no longer afford to do “business as usual.”

In the digital world, the physical store is just one of many channels through which goods, services and experiences are sold. Brands that hope to thrive must invest in new technologies and provide personalized shopping experiences that transcend consumers’ expectations.

To gain a better understanding of the impact of analytics across the full customer journey — and investigate how retailers will use data and prepare themselves to meet the changing retail landscape — DXC Technology recently sponsored the IDC InfoBrief “Digital Transformation Boosts Retail Customer Experience.”

The focused survey of 62 C-level respondents at leading North American retail companies suggests that while stores are strategic assets for digital transformation (DX), and support the critical path to purchase, they're no longer the final stop on the purchasing journey.

Due to new technologies and the changing buying behaviors of young consumers, the physical store is becoming a place where customers explore and experience products. Often, these experiences combine elements of "realtainment" — i.e., a fusion of retail and entertainment/lifestyle aspects that elevate the shopping experience. Retailers have been adjusting to the changes in customer behavior by focusing store strategy priorities on transforming how they support a superior customer experience, using tactics such as in-store-only promotions, classes and demonstrations. However, their efforts shouldn’t end there. Retailers must invest in a retail strategy that involves transforming both in-store and online experiences.

According to our survey, 56 percent of respondents see the breadth of store formats and chain brands as one of their top three assets for DX, tied with digital marketing.

I recently had the chance to attend NRF's Big Show in New York City, where I met with retail executives about the biggest obstacles and hurdles their companies face when it comes to achieving their digital transformation goals. Employee capabilities, data integration and integrity, and nonintegrated business processes were cited as key challenges.

That research aligned with IDC’s findings, where 43 percent of respondents listed employee capability and 41 percent listed data integration/integrity as key barriers to transformation success. Some additional key findings from the survey:

• Nearly 80 percent of respondents have a stated executive-level customer experience DX strategy underway.
• Ninety-eight percent report that more of their store traffic is at the beginning or middle of the path to purchase. Store traffic is up, according to 85 percent of retailers.
• U.S. retail third-quarter sales increased by $52 billion in 2017, compared to 2016. Stores accounted for 70 percent of that growth.

The physical store isn’t going away any time soon. In fact, Amazon opened its first checkout-free grocery store in Seattle earlier this year.

One of the keys to brick-and-mortar success is to ensure that the in-store experience matches and exceeds the online shopping experience. It’s about bringing the convenience and amenities of online shopping into stores and providing something extra to the consumer that they can’t get online. Retailers that make it a habit of applying and analyzing data at every point of the retail process — from supply chain to the consumer’s point of purchase — will outperform those that don’t.

Subroto Mukerji is the vice president and general manager of diversified industries, DXC Technology, an independent, end-to-end IT services and solutions company.