The impact of the digital economy has created challenges for all CEOs, particularly for those in the retail sector. What began as a quest to create the perfect customer experience has made retailers turn their attention to building a superior omnichannel environment, to keep up with the proliferation of touch points and to meet the ever-changing shopping habits of consumers.
Recently, Stibo Systems conducted a comprehensive research study to learn more about the state of the digital transformation and the key benefits and challenges companies from various industry verticals and regions have faced. What we found is that three-quarters of all respondents (75%) claimed that they were currently undertaking a digital transformation project, while nearly three out of five (59%) said their organization was investing more in related transformational activities in 2015 vs. what was spent the previous year.
Let’s face it, for nearly all industries, digital tools are disrupting the business environment and require significant changes in operations, communications and selling; and it is about to get much worse. Take smart devices for example. The adoption of new sales channels, the abundance of product options and the emergence of mass personalization have increased consumers’ expectations and price sensitivity, leading to less brand loyalty than in the past.
Less About Channel, More About Relevance
So while managing information and synchronizing it across channels has become a pressing priority for retailers who have been implementing an omnichannel strategy, the reality is it is becoming less about the channel and more about creating a relevant and consistent customer experience. This may be why retail and distribution businesses are taking steps to address the need brought about by the growing number of channels and to meet the changing behavior of their customers, according to the study.
At the WWD Digital Forum in September 2015, Christopher Walton, Vice President and Merchandise Manager at Target, summed the situation up best when he said, “Our customer doesn’t care what type of sale it is. Experiences are coming together and creating almost a new channel unto itself. It’s not omnichannel, it’s on-demand. No one channel and no one experience reigns supreme.”
Creating an effective customer experience is a sentiment that appears to be growing among numerous businesses. When asked about the core benefits they’d seen or were expecting to see as a direct result of implementing a digital transformation, businesses appear to be increasingly focused on generating revenue rather than cutting costs internally.
According to the Stibo Systems’ study, nearly three out of four respondents (74%) reported that “the ability to meet customer expectations” was significantly more important than “reducing the cost of doing business” (62%) and “reducing IT costs” (54%).
The overwhelming focus on meeting customer expectations is no doubt driven by the spending power of today’s digital generation, who expect products and services to meet their individual needs, be accessible at any time they want, via any channel they choose. Therefore, it’s perhaps unsurprising that this is a particularly high priority for businesses in the retail sector. It follows naturally then that customer management and service were listed as starting points for digital transformation by approximately two-thirds of companies, with three-quarters of retail businesses seeing these as priorities.
This is why retailers are broadening their scope and focusing their attention on creating an effective digital transformation. And they are not alone. The size of global spending on digital transformation technologies will be $2.1 billion in 2019 with a compound annual growth rate (CAGR) of 16.8% over 2014-2019, according to IDC.
Spending on digital transformation technologies in the U.S. alone will be reaching nearly $732 million in 2019, and enterprises are forecast to invest nearly half the worldwide total in 2019 on digital transformation technologies — focusing on making business operations responsive and effective by leveraging digitally connected products and services.
Digital Is A Crucial Survival Tool
We live in an age of unprecedented change largely because of advances in both technology and the proliferation of consumer devices. If you look at the average lifespan of companies over the years you will find that a company in 1958 had an average lifespan of 61 years compared to the average 18-year lifespan in 2011.
This makes the transition to digital less of an option and more of a crucial survival tool for any modern company, particularly those in retail. In fact, IDC forecasts the retail industry to have the fastest growing digital transformation spending, both worldwide and in the U.S., with a five-year CAGR of more than 21%.
And this is precisely where solutions such as Master Data Management (MDM) shine. Using MDM, companies can tackle their digital transformation to continually innovate their systems and processes and deliver the best possible customer experience regardless of the channel. Everything has become a journey and since there is no longer an end point, MDM must become an integral part of a business that is constantly moving and adapting, as data management is crucial to a successful digital transformation.
According to the study, more than two-thirds of respondents considered the role of effective data management to be a key part of improving business processes through digital transformation, particularly with regard to improving the customer experience. While retailers understandably rated this area the highest (87%), all other industry sectors also considered data management to be the most important element, which reflected a cross-industry focus on consumers and the growing need to drive personalized offers.
As customers of all businesses become ever more sophisticated in their requirements, the need for data will continue to grow as organizations look to truly understand their wants and desires. However, achieving data management is not without its challenges, as businesses cited “finding the right data” (70%) and “inconsistent data” (62%) as existing issues that could potentially hinder transformational activities and lessen their overall impact.
Consumers are certainly in control of the shopping process, as they have an abundance of choices for what, when, where and how they buy their products. In an effort to meet the expectations of the demanding consumer, retailers are extending their omnichannel efforts to one that is truly channel agnostic. Superior and consistent product content is a key element in this journey, and MDM can ensure consistency across all touch points and multiple channels.
Christophe Marcant is Vice President of Product Strategy at Stibo Systems, a global leader in multidomain Master Data Management (MDM) solutions. Contact him at [email protected] or visit http://www.stibosystems.com.