Are retailers shortchanging the digital transformation?
While 90 percent of commerce may still be offline, 95 percent of the growth in retail is expected to come from digital (e-commerce + digitally influenced). And with asymmetric competition — whether big (Amazon, Walmart, etc.) or niche (Harry’s, Casper, Everlane, etc.) — benefiting from the law of accelerating returns, pursuing linear, incremental progress instead of step function change will get you killed in the long run.
Yet digital commerce and marketing technologies — married with a good strategy and the right internal talent — are available to help retailers fight back against the “Amazon effect.”
Last week’s CARMA conference in New York City hosted by Custora featured several retailers who are waking up to this and starting to take advantage. However, most retailers I’ve talked to in the last couple of years are not doing nearly enough.
So how are retailers getting it wrong?
Far too many who are still thinking about their investment approach with a linear, static planning model. In a resource constrained retail business, if you are investing in a traditional business intelligence platform that doesn’t offer a customer-centric view of your data instead of a solution that provides that view and allows your digital marketers to create segments on the fly, you are doing it wrong. Or if you are spending a year or more to upgrade to the next release of a POS system that was built around the traditional cash wrap without seriously considering one that is built around a mobile first, check-out anywhere model, you are doing it wrong.
On a more macro level, if you are one of the many retailers who still devotes 70 – 80 percent of your capital budget to store openings, remodels and internal-facing system upgrades instead of allocating at least half to building the digital future of your company, disruption and accelerating competition are about to come along and leave you in the dust.
DISCUSSIONS QUESTIONS: Do you see retailers focusing too much on traditional business investments at the expense of the future digital opportunity? Into which areas should they be shifting their investments? How should retailers balance such needs?