• article
13/06/2024

Retail and E-Commerce Digital Transformation: 2024 Blueprint

The shift to digital is essential for any business to thrive and stay relevant. Learn how to build a successful roadmap to achieve it.

Paulina Twarogal

Content Specialist

Even though digital transformation has been a buzzword for a while now, it’s no longer just a trend. It has become a must-have for any business that wants to thrive and stay relevant across all industries, including retail and e-commerce. Not embracing it makes it harder and harder to stay competitive. Research shows 77% of companies have already started their digital journey, knowing how important it is these days. But… only 35% actually succeed.

The good news is that you’re not alone in this digital journey. Yet, to truly stand out, you need a strategy. However, bear in mind that digital transformation is something more than just implementing new technologies. It requires looking at the entire organization holistically. So, to achieve success, you need a well-defined transformation roadmap. With it in hand, you’ll be on your way to a successful digital future. Now, the question is: How can you build a strategy for this promising journey?

What drives digital transformation in retail and e-commerce?

Before we move on to discussing retail digital transformation strategy, let’s explain what this actually means. In short, digital transformation is rewiring your organization with digital technologies to create more value. That means better customer satisfaction, more efficient operations and business growth. It’s not a one-time thing but a continuous process of using the latest tech and tools to improve how you operate and serve your customers. 

This ability to adapt and keep up with the ever-evolving technologies is an essential part of staying in business. Companies must change and grow to remain competitive. If they aren’t evolving, they’re falling behind.

The key drivers of change

digital transformation in retail

The retail and e-commerce landscape are undergoing a significant transformation. Here are the key drivers:

1. Changing consumer behavior: The way people shop is different. Customers are increasingly turning to online shopping. Why? It’s convenient and simply offers more products to choose from. On top of that, the COVID-19 lockdowns and the need for social distancing have accelerated the whole shift. In fact, over the past 5 years, the number of digital shoppers has grown by 40%.

We can clearly see that mobile browsing and purchasing habits are on the rise. Today, 60% of website traffic comes from mobile devices. This means that retail businesses now need to be accessible and user-friendly on mobile devices like never before.

2. Evolving customer expectations: Offering customers products is not enough. They expect personalization, convenience, and a smooth shopping journey. Around 73% of customers say that experience plays an important role in their buying decisions. And 80% of shoppers expect a consistent experience across all channels, no matter if they’re shopping online, on mobile, or in-store. 

Digital transformation in retail enables companies to meet these expectations. 69% of them consider strengthening customer relationships to be a key factor.

3. Technological advancements: The rise of AI, machine learning, big data analytics, AR, and VR has opened the door to exciting possibilities. Businesses now can use these technologies to personalize marketing, optimize inventory management, and even offer immersive shopping experiences. It’s estimated that retailers globally spent $7.3 billion on AI by 2022, and 65% of the top retail brands have adopted AI-driven marketing strategies.

4. Competitive landscape: Online giants and digital-native brands are constantly raising the bar. Over 70% of retailers report strengthening competitiveness as their main goal. Digital transformation allows companies to stand out by offering better customer service and, in turn, stay ahead of the competition.

5. Business agility and innovation: Digital transformation fosters a culture of agility and innovation. This allows retail businesses to adapt to changing consumer trends and market conditions. As a result, they can achieve long-term success. For example, as many as 56% of companies that have implemented digital improvements say they’ve seen an increase in revenue.

Therefore, by understanding these driving forces, retailers can develop a strategy that meets the needs of their customers and gives them an advantage.

How to build your retail digital transformation blueprint?

digital transformation in retail

To build a successful digital transformation plan, there are a few important steps you should follow. Let’s take a closer look:

1. Assess the current state of your business

Before you dive into digital transformation, take a step back and assess your current situation. Try to understand where your organization stands at the moment. Sometimes radical changes are not really necessary. Are there areas where you can simply optimize your existing resources?

Here are some tips you might find useful:

  • SWOT analysis is good to start with. Once you analyze your internal capabilities, you’ll identify areas where you excel and those that need improvement.
  • Take a look at your current hardware, software, and network infrastructure. Are there any old systems that slow you down? Or cybersecurity risks that you need to address?
  • Compare your performance to retail industry standards to see how you measure up against other companies.
  • Collect feedback from your employees and customers. Surveys, focus groups, and conversations can help you understand your problems and areas for improvement.

2. Define your business goals

With a clear picture of your current state, you can set realistic and achievable digital transformation goals. The ones that align with your entire company’s strategy. Think of them as milestones that mark your progress. These goals shouldn’t be vague ideas. Quite the opposite—they should be specific and measurable.

To do so, you can:

  • Organize a brainstorming session with your leadership team and ask questions like: “What do we want to achieve with digital transformation? Are we aiming at boosting customer loyalty, increasing sales, or streamlining operations?” 
  • Once you’ve identified your main goals, break them into specific digital goals that focus on improving the customer experience and optimizing internal processes. 
  • Finally, develop ways to track your progress—these will be your indicators of success.

3. Develop a roadmap

Map out your digital transformation journey—a roadmap that details the key actions you’ll take and the timeline for achieving them. It should include:

  • Prioritized initiatives: Not everything can happen at once. Identify the most critical initiatives and prioritize them based on their impact and feasibility.
  • For each initiative, break it down into smaller, actionable steps. This will make the transformation process less overwhelming and allow you to track progress more easily.
  • Digital transformation requires resources, both financial and human. Your roadmap should outline the resources needed for each initiative and how they will be allocated.
  • Set realistic timelines for each step and key milestones along the way. As a result, you’ll find it easier to stay on track and measure progress towards your goals.

With a detailed roadmap at hand, you ensure your digital transformation journey is well-defined, organized, and achievable.

4. Implement and integrate

This stage involves implementing the initiatives outlined in your roadmap and integrating them into your existing operations. Some of the key elements to consider are omnichannel experience, data-driven decisions, the latest technology integration, and change management strategy. 

5. Analyze and adapt 

As mentioned before, digital transformation in retail is an ongoing process, not a one-time event. In the final stage, you must continuously monitor your progress, analyze results, and adapt your strategies as needed. How can you do it?

  • Define KPIs that align with your goals. Regularly track these metrics to measure the success of your initiatives and identify areas you should improve. 
  • Use data insights to refine your strategies and optimize your efforts. Be prepared to adapt your approach as needed based on the results you see.
  • Continually gather feedback from customers and employees. 

Key elements of a successful digital transformation

There are many factors contributing to a successful shift to digital. Failing to take them into account can result in wasted resources and ineffective strategies. Having an eye-catching website is not enough these days. It’s about using technology to create a seamless customer experience while optimizing your internal processes. Here’s how you can do it:

Customer centricity

digital transformation in retail

For 88% of online shoppers, not getting a personalized experience is the main reason to give up shopping on a retailer’s website. To avoid this situation, you should prioritize your customers by creating the most ideal buyer personas. So, focus on understanding their needs and preferences by collecting data. You can do it through surveys, loyalty programs, and tracking website behavior. Then, use these insights to deliver personalized experiences. These might include tailored product suggestions, tiered benefits for loyalty programs, or personalized greetings in-store based on past purchases.

Omnichannel strategy

Customers expect a smooth and consistent experience across all channels, whether they’re browsing online, using a mobile app, or visiting a physical store. Research indicates that businesses using omnichannel customer engagement strategies can retain 89% of their customers. This shows how effective these approaches are in keeping customers coming back.

Thus, developing an omnichannel strategy that integrates all your touchpoints is definitely a good move. You can do this by ensuring product availability across channels, offering convenient buy-online-pick-up-in-store (BOPIS) options, and streamlined return processes regardless of how the purchase was made. 

AI and emerging technologies

Artificial intelligence (AI) and emerging technologies play a crucial role in driving digital transformation. Today, 62% of companies are either testing or growing their AI products. By combining data analytics and AI, retail businesses can gain valuable insights into customer behavior. They can analyze purchasing habits, identify trends, and predict future needs. 

  • By giving targeted discounts and deals that match each customer’s preferences, you can optimize your pricing and promotions.
  • Crafting marketing messages that fit specific customer groups leads to higher engagement and conversion rates. AI and data analytics make it easier for you to personalize marketing campaigns effectively.
  • By analyzing past purchases and browsing behavior, you can recommend products that customers are likely interested in. This personalized approach makes the shopping experience better and increases customer satisfaction.

Robust cybersecurity

digital transformation in retail

Customer trust is paramount. That’s why you should focus on implementing robust cybersecurity measures to protect sensitive customer data and ensure secure transactions across all channels. This is particularly critical considering that 82% of cybersecurity incidents in retail involve breaches of customer data. So, make sure to invest in firewalls, data encryption, and employee training on best practices for data security.

By focusing on these key elements, you can build a winning digital transformation strategy for your retail and e-commerce business. Remember, it’s about harnessing the power of technology to create a seamless and personalized customer experience that drives sales, fosters loyalty, and positions your business for long-term success in an ever-evolving competitive landscape.

Supply chain optimization

It’s important to have a smooth and efficient supply chain for a positive customer experience. Here’s how you can make sure yours is running smoothly:

  • Implement automation technologies in your warehouse. They will speed up how quickly orders are processed and shipped out.
  • Make sure you always know exactly what’s in stock in real time. With this, you’ll avoid stockouts and ensure customers can get the products they need and when they need them.
  • Explore options like same-day delivery or convenient pick-up points to provide customers with fast and convenient delivery options.

Conclusion

The retail landscape is changing. That’s a fact. It’s driven by factors like online shopping growth and evolving customer expectations. To thrive, businesses must embrace digital transformation, a strategic approach that leverages technology to create a seamless and personalized customer experience. This requires a well-defined roadmap with key elements like customer centricity, omnichannel strategy, and data-driven insights. By implementing these strategies, retailers can stay competitive and achieve long-term success.

 

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Agata Tomasik
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agata.tomasik@neontri.com

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