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A digital first approach is essential to retail success
Through a special arrangement, what follows is a summary of an article from WayfinD, a quarterly e-magazine filled with insights, trends and predictions from the retail and foodservice experts at WD Partners.
Modern shopping keeps getting better, easier, faster, cheaper and smarter — for the consumer, that is.
And because of newish shopping tools and their ease of use for everything, shopping has become intertwined with everyday life. Pick up the kid, buy a sweater, check the weather, ship the Cheerios next-day all in one fell swoop. Shopping is no longer an “event”, it’s just another thing we have to do today, another button to push.
Given the recent past, “digital first” has become an edict. It’s how the customer thinks and, subsequently, it must also be how we think.
As we see it, digital first is asking us to be:
Empathetic: You are the consumer! How do you “work” your life today? How do your kids, your partner, your friends live their lives? Why do you use your phone/anything engine as a first step for … everything? How do you think about buying something? What are your expectations? The key to modern business today lies within the walls of the empathy castle so, to better understand this landscape, take notice.
Organized to the consumer: Are we still in classic 1980’s silos and kingdoms? The consumer does not care about our HR dept or our development group or how we’re organized at all. All they care about is that they get what they want, how and when they want it — fast. To meet that demand, we have to organize across silos to what the consumer is asking for. Why is the 900-lb gorilla in Seattle able to out-innovate all retailers all the time? Fundamentally, it’s due to digital first thinking. Are we also organized around consumer driven “projects” and their swift implementation?
Fast: Fast to empathy. Fast to understand the consumer. Fast to change our culture. Fast to try new things. Fast to organize for speed. Fast to dump the old. It’s no longer “fail fast,” it’s just plain “fast.” When planning the next consumer driven program, like turning stores into fulfillment centers, think of how long something like that used to take and cut it in half. That — is a digital first plan.
Discussion Questions
DISCUSSION QUESTIONS: How has the definition of being digital first morphed in recent years? What steps are many retailers still missing? Does retail know enough to move past “fail fast” to just plain “fast”?
Poll
BrainTrust
The digital first approach has been accelerated by the pandemic, as consumers quickly increased their online/mobile shopping and with that have come higher expectations for speed of service. I told my wife our coffee grinder failed and she quickly found options online. The first option had free delivery, but would take a week to arrive. The next option was $5 more with free deliver but would arrive in two days. It was an easy decision that was made in less than 5 minutes. Our phones and computers have become the the beginning and end of our shopping journey and we expect everything to be easy and fast. Retailers that deliver on this promise the best will thrive.
Exactly. The day before yesterday I realized I need razor blades. (The last one in the razor did everything but give me a good shave.) I went to my computer and order the refills. Yesterday I had them … that is shopping life today.
Although I totally agree that “digital first” is an edict in today’s fast-moving retail world shaped by changing consumer behavior (and the term has morphed to mean a ubiquitous anytime, anywhere mentality), retailers who focus entirely around digital will lose sight of the importance of their brick-and-mortar roots. This is an AND proposition rather than an OR decision.
You are making a great point Dave! One of the most expensive assets to build online is brand awareness — for which brick-and-mortar retailers are naturally ahead, thanks to their physical branded stores. Retailers that make the transition to online-only soon realize how valuable their brick-and-mortar roots were — and how expensive the life of a pure online player is.
There is no doubt that digital is a critical part of retail and almost all retailers need to be investing and enhancing their online propositions. However, I find the “digital first” mantra too glib. Retailers should actually put customers first and organize their propositions according to what shoppers want. For most consumers, shopping is a multichannel experience meaning that stores and online are equally important. Target has shown the wisdom of this approach as has Walmart.
In terms of the raw numbers and consumer behavior, some categories are not digital first. In grocery, the vast majority of sales are still driven by physical stores and will be for the foreseeable future. There are also individual retail exceptions such as Primark and Trader Joe’s. Both are incredibly customer-centric, popular retailers focused on physical rather than digital.
Successful retail is still focusing on prioritizing the consumer first. Digital is a response to shopper’s behavior change. Digital, especially mobile technology, has become part of modern consumers’ day-to-day life and the most popular communication form. Like in the early 2000s when many retailers developed their own branded website or in 2010s when many retailers launched their own branded mobile application, digital-first will not generate the expected ROI if retailers literally focus on digital-first.
A successful website, mobile app, or any other digital implementation still places consumers first. Retail technology is not the primary business. An excellent digital implementation should feel like a “digital last.” The digital experience should be so seamless that it’s just a background tool. The shopper’s experience that’s the background tool help highlight should be the actual shopping experience.
Whether digital “first” or digital “also” is debatable in my mind. To borrow from King Solomon, Ecclesiastes and Pete Seeger, there is a time for everything, a time for digital, a time for store. A time to browse, a time to buy fast.
There are so many layers of meaning to “digital first” — especially in the context of retail. I think it’s important to sort those out. There’s digital first in your engagement with consumers. I 100% agree that this should be a top priority. Especially today, you aren’t going to “meet” a customer for the first time by having them wander in your store and browse. You are going to meet them online, and most likely in social spaces first.
There’s digital first in terms of business transformation. Retailers do need to digitize their business — data is the fuel that runs the engine of growth. If your processes aren’t digitized, then you have no data, and many challenges in trying to grow without it. I 100% agree that this should be a top priority.
There’s digital in the literal sense of eCom, and here digital first would mean that you are prioritizing your business based on what it means for eCom first. Completely disagree with that one. It should be consumer first. And the bang for the buck still lives in stores, not online — while eCom is growing and has grown and retailers should make sure they’re not screwing up that growth, the bulk of sales will still happen in stores (once they can fully reopen), the bulk of capital is caught up in stores, the bulk of operating expenses is in store labor — your business’s future will be won or lost not online, but with what you can do with your stores.
I have to agree with Neil’s comment about “customer first.” And then digital becomes shorthand for access, speed and accuracy. Which might translate into Di Di’s comment about “digital last.” So is it “digital first”, or “digital required”…?
Digital first is an absolute. And I agree fast is the new norm. During 2020, successful retailers learned how, (or were forced) to make decisions in one-quarter the time they used to. A key advantage that 900-lbs gorilla in Seattle has is that it is organized for digital first. Many retailers are still struggling because they are thinking digital first, but they have not changed their organizational and operational structure to enable “fast” and digital first. This is essential for long-term success.
Rather than digital first, it should be customer first. Shoppers don’t think in terms of access points — they want choice and the ability to engage when and how they want. Somedays will be digital first, some will be brick & mortar first. It’s customer first — always.
Lee nails it. “…because of newish shopping tools and their ease of use for everything, shopping has become intertwined with everyday life. Pick up the kid, buy a sweater, check the weather, ship the Cheerios next-day all in one fell swoop. Shopping is no longer an ‘event,’ it’s just another thing we have to do today, another button to push.”
The biggest understanding retailers are missing is that shopping has become more and more of a function and less and less of an event. The trend will not reverse and technology will just move forward, providing more and more digital access to everything.
“…another button to push.”
Digital First, Mobile First or “Anything First” tend to be technology-driven, or fad of the season. And it is an incorrect way to think, in my opinion. Those things that are first today, will change, morph and evolve with time. Secondly, what is first would be different things to different departments. The engineering team would be thinking API first. Can we blame them?
The simplest way to align from corporate strategy to field execution is to think “Customer First.” That encompasses everything and it is evergreen. Any initiative that is planned should be thought through from an end-customer perspective. Unless that linkage could be established, it is impossible to get alignment, sponsorship, and investments.
This looks like digital first trying to take the clothes off all retail. The three statements: Empathetic, Organized to the consumer and Fast, relate to all retail and always have. The columns of this site have long preached that retailers need to be customer centric, flexible and quick to evolve and understand the customer — this is not new. Yes, the increase in online shopping has accelerated massively during the pandemic out of necessity and it is tough for any retailer to remain relevant today without having some form of online presence. But it can happen as long as they stay true to the three elements above which are not solely the domain of online.
I suggest a “customer-first” approach, where digital, physical and everything in between exists for the sole reason of building customer loyalty. Retailers should be weary of falling into a “digital for the sake of digital” spiral that doesn’t relate back to their customer strategy.
This whole concept of digital first is a bit glorified. Digital is still a tool, not the end state for consumers. The best digital solutions are invisible — it’s the outcomes that matter. Per the authors thoughts of organized to the customer, the digital component has shifted so that it really needs to be under the table. It’s not “buying the sweater” anymore for the customer, but having the right sweater for the holiday party that evening. This turns the transaction process on its head and the retailers that can shift from the actions of shopping to the actions of fulfillment have the advantage. Don’t get me wrong, shopping is still critical, especially for digital, but the mode of shopping has become a niche, and consumers need both the shopping experience and the having experience.
“Digital First” is a salute the flag phrase, but you have to dig deep to really understand. First of all, digital FIRST is not necessarily right, especially if you have tremendous physical footprint. Digital “RIGHT” might be better. Secondly, getting digital right is so much more than selling. It is the collection of first party data signals that can be used for personalized and targeted advertising. Targeting the right consumers with ad impressions will generate 5 TIMES the ROAS (my latest white paper) so that is essential to getting digital RIGHT.
Digital First? Do we yet know the unintended consequences of the digital-first mantra? A sky of drones, truck deliveries day and night, the environmental effects of consistent emissions from trucks powered by diesel fuel. And this is only the short term. Long term, while electric, solar, and wind may replace fossil fuel, we as human beings may end up remorsefully turning our thoughts to the loss of human experiences outside of our homes. Months of COVID surely has desensitized many to remember how much we enjoyed being out and about. The micro activities, day to day, we humans used to enjoy and look forward to. As a steady diet, digital-first strips humans of untold sensory experiences we humans use in our day to day lives to stay in touch with our happiness and humanness.
Interviewing many retail brands over the past year, I learned the emphasis on “digital” was preexisting the pandemic. What took place during 2020 caused many projects to simply accelerate their timelines. For example, many restaurants had been considering online order and delivery. Once the pandemic struck, the move to actually launch this service was put on the fast track. As the dust settles, execs are revisiting assumptions, fine-tuning offers, and looking hard at relationships with third-party delivery companies.
How a brand adopts a digital approach has to be consumer-driven in order to be successful. And evidence of digital strategy is showing up in brick and mortar stores as much as online. Just this week I noticed newly installed self check-out stations at CVS and Whole Foods.
Lee says that “Shopping is no longer an ‘event,’ it’s just another thing we have to do today, another button to push.” I think we will find that people are still looking for enhanced experiences in their shopping interactions. The more digital becomes the norm, the more the need to differentiate, even online, with experiential elements will be in demand.
Digital is the way business is done today. It was becoming a primary channel for many retail businesses, and those who were lagging were compelled to catch up as a result of the pandemic. It’s important though, that being digital first doesn’t merely mean taking your existing analog processes and digitizing them. It means rethinking the interaction with the consumer along their discovery and purchase process — from home page to checkout — and optimizing it. Thinking about the interaction between online and in-person — or omnichannel — will also be key.
Perhaps most importantly, digital first means understanding that risks are different — the digital world can be quickly upset by automated attacks and malicious code that are not present in the analog world — and planning for it ahead of time. To move quickly, it’s going to be important for retailers to find and embrace different talent — people that are familiar with agile processes and digital thinking. This may mean looking for talent in new venues, and even teaching new skills to senior team members who rose through the in-store ranks, so they can effectively lead in the new digital normal.
I think the level of digital’s pervasiveness is what has morphed in recent years. The challenge is how marketers capture information from those touchpoints with respect to privacy and authenticity. As retailers, we can strive for plain “fast” but only by providing enough value to the customer for them to proactively provide total insight into their wants and needs. We’re farther along that path than most would like to admit.
In early 2020, reports showed that mobile commerce would see almost a 68% increase in use by 2022. After the pandemic hit, those numbers looked more likely, as consumers relied heavily on e-commerce to help them buy the items they needed while socially distancing. Digital-first became a necessity for survival.
But while they may have adapted and released digital solutions, some retailers are still missing the foundational truth lesson that the customer’s actual need has to drive their digital innovation. It is easy for companies to get caught up in a trendy technology they see on the market, but looking first at the consumer will help them more quickly implement the digital products that create real, lasting value for their customers.
Retailers must be able to introduce new capabilities to the market by using a “Product Mindset,” rather than a project mindset. which has three main principles.
1. Solve for Need
2. Minimize Time to value
3. Excel at change