This is a primer on how (and why) retail brands should embrace and implement digital transformation. We'll explain what that means, the benefits, the channels to prioritize, and the techniques for a retail digital transformation strategy that will attract and retain customers.
Retail digital transformation may tackle a variety of problems with the correct tools and techniques. This is how.
Consider an in-store experience that is similar to online buying. With the touch of a button, you can find the correct size or shade, use a fitting room that remembers your name and shows you product recommendations, and walk out of the store without having to wait in line — essentially, all the convenience of shopping on your favorite website, but delivered by your local store.
It may sound like something from The Jetsons, but digital transformation is making it a reality that customers desire.
Sixty-six percent of shoppers like to shop in a hybrid environment that mixes in-store and online encounters. Retail digital transformation bridges the gap between the two to create a unified shopping experience for customers, regardless of whatever touchpoints they utilize along the process.
Retailers benefit from digital transformation by enhancing customer retention and happiness, ensuring relevance in a competitive sector, and optimizing processes.
In the retail industry, digital transformation is the incorporation of technology into the shopping experience in order to achieve growth. A digital transformation affects every part of the organization, including employee engagement, customer experience, and operational effectiveness.
From adopting chatbots to experimenting with augmented reality to bring the showroom to your clients' mobile phones, digital transformation spans a wide range of technology developments and creates an omnichannel experience for your customers.
With its physical clothes stores, Amazon Style, e-commerce behemoth Amazon is setting the tone for digital transformation in the retail business. Customers scan things in the showroom with their Amazon app, select their size and color, and have them transported to their individual dressing room.
Customers are greeted in the dressing room by a digital screen that recognizes their name and preferences, allowing them to request extra sizes or things to try on – all without leaving the shop floor. They can then use the Amazon app to pay for their items instead of standing in line or looking for salespeople.
These physical storefronts provide all of the advantages of online buying, such as ease and personalisation, while also allowing shoppers to touch and engage with things in person.
Amazon Style stores employ retail digital transformation to give customers the best of both worlds, with customers' shopping habits split fairly evenly between online and in-store shopping.
Any component of your business model that incorporates digital technologies will have an impact. Of course, fully digitizing your operations will have the most impact, but even modest digital features such as chatbots or self-service kiosks can have a major influence.
While price is still the most important factor, 50% of shoppers agree that a bad shopping experience is the second most common reason they would stop shopping with a brand. Customer retention is heavily reliant on delivering optimal customer experiences - everything from finding products to checking out and contacting customer support must be simple and easy.
With technology that improve shopping experiences, digital transformation improves convenience. Using mobile apps to help customers quickly locate products in-store, streamlining checkout processes with automated carts, and providing multiple customer service options with chatbots and automated messaging systems — all of these elements work together to keep customers satisfied and loyal to your brand.
Which is something you'll want because existing customers are 70% easier to sell to than new ones.
Imagine stepping into an Apple store, ready to purchase the latest MacBook, approaching a sales representative for assistance, and receiving ambiguous responses. Whether clients are spending hundreds of dollars on new tech devices or a few dollars on baby wipes, having access to informed and friendly personnel may transform a mediocre shopping experience into a memorable interaction.
Equipping employees with the correct technology, such as tablets with real-time inventory updates and in-depth product descriptions, will satisfy consumers by ensuring they receive the most accurate and precise information available, as well as making employees feel accomplished at work.
Retail digital transformation enhances inventory management in a variety of ways, including real-time inventory management, AI-powered forecasting software, and rapid delivery tracking via mobile apps.
Digital technologies assist merchants in better anticipating their inventory demands while also giving correct information to customers, resulting in a win-win situation.
From automating warehouse fulfillment to staying on top of your supply chain with real-time information, digital transformation has the added benefits of lowering costs, enhancing operational efficiency, and satisfying customers.
Retail digital transformation can significantly enhance proactive customer service activities. Customers expect to be able to contact customer support through a variety of channels, such as messaging applications, chatbots, and service centers. Digital transformation guarantees that every option available to them is available, allowing customers to solve problems and obtain assistance regardless of their preferred channel.
Self-service technologies such as information kiosks and knowledge tools for sales associates such as portable inventory databases and payment devices can also help to improve in-store customer service.
These digital technologies ensure that the in-store experience is swift and convenient, and that customers have access to knowledgeable sales professionals, reducing the likelihood that they will seek answers elsewhere.
Depending on your industry, consumer demographics, growth objectives, and other aspects that define your business, each retailer's digital transformation strategy will be unique.
Some aspects, such as omnichannel commerce, can be implemented by almost any retailer. More complex technologies, such as augmented reality (AR), may be difficult (but not impossible!) for small-scale enterprises that lack the financial resources to invest in R&D. However, just because you are not Amazon does not preclude you from implementing new technologies to support your strategy.
Finding the correct mix of technologies to support the growth of your particular organization is the key to developing a solid digital transformation strategy.
Omnichannel shopping offers clients a seamless experience and has fast become an industry standard. Customers may browse, learn about, and purchase products across a variety of channels, including mobile applications, websites, social media, and chatbots, with the omnichannel experience.
Customers no longer accept this enlarged shopping experience as a choice; they expect it. According to Klarna's Owning Omnichannel Report, 75% of shoppers expect to access products over several brand channels. The main channels, according to the survey, include e-commerce sites, search engines, mobile apps, and other marketplaces. Social media and brick-and-mortar establishments aren't far behind.
However, omnichannel commerce benefits more than just customers; it also provides opportunities for brand growth. When retailers offer omnichannel solutions, customer retention, engagement, average order value, and spending rates rise.
Target embraces the omnichannel experience, offering a plethora of in-store and online shopping options to its customers. Customers can shop via Instagram, which includes direct access to the e-commerce site, the mobile app, online, and in-store. Target also provides curbside pickup and same-day delivery as options.
Customers who sign up for a Target RedCard receive exclusive discounts and product offers in their emails. Users of mobile apps receive recommendations based on their purchase and browsing histories at the same time.
Target's omnichannel commerce seamlessly mixes tailored marketing, convenient services, and enlarged product inventories to guarantee customers leave delighted with their purchases.
Going to a store looking for a specific item and discovering it's sold out is one of the most aggravating emotions for customers. By providing limitless aisles, retail digital transformation overcomes this problem and assures customers never leave empty-handed. Endless aisles broaden the in-store product selection to include online-only items, sold-out items, and special discount packages by giving customers with in-store tools to complete their purchasing journey.
Self-service kiosks, digital panels, QR codes linked to mobile apps, and even personnel armed with tablets are examples of these technologies. Whatever method is used, the goal is to assist customers in locating the desired product and completing their purchase.
Walmart combined these strategies to address a problem identified by its sales associates: customers were utilizing the store's display laptops and tablets to purchase on Walmart.com. Following some research, the company discovered that customers either thought their mobile phones were too small to see all of the product details or had left their devices at home. Walmart deployed digital kiosk screens to assist customers in making in-store purchases through the e-commerce site.
Tablet computers were also distributed to sales staff on the sales floor as an alternative form of online ordering.
When employed for marketing reasons, consumer insights provide businesses with a comprehensive understanding of their customers, which can lead to improved personalisation. According to McKinsey's Next in customization Report, 71% of consumers demand customization and 76% are unhappy when they don't get it.
Zero-party data, which your consumers actively supply, is frequently the simplest approach to learn about your target audience. Retailers can obtain zero-party data through a variety of means, such as contests, challenges, surveys, quizzes, polls, and freebies. All of these methods necessitate customer engagement by completing a quick, fun task while providing feedback and information about their communication and product preferences.
Disney Theme Parks goes even farther in digitizing data collection by providing its consumers with technology that tracks interactions and collects data. MyMagic+ is a digital bracelet that allows visitors to pay for items in the park, access their hotel rooms, schedule rides, and more. These RFID-enabled wristbands follow visitors through the park, collecting data in order to deliver customised offers to the user.
The smart wristbands are transformed into data warehouses that are used to provide the most personalized, one-of-a-kind experience for each visitor. If a guest wearing the band has a habit of returning to the same restaurant, they may receive a push message regarding new menu items. Visitors that connect with specific companies across the park may receive goods recommendations to help them shop faster.
Data is sometimes utilized to obtain information about items rather than people. The Internet of Things (IoT) refers to a network of things that are tracked using sensors and software in order to link and move data within a network.
Contactless checkout in physical stores is one of the most common IoT use cases in digital transformation.
Using Just Walk Out technology, Amazon Go employs this strategy to expedite the purchasing process for customers. Just Walk Out technology, according to the website, employs the "same types of technologies used in self-driving cars: computer vision, sensor fusion, and deep learning."
Shoppers use their mobile app to enter an Amazon Go store, load things into their carts, and then exit. Other retailers, such as Whole Foods Market, have followed suit and have begun to implement this technology in limited locations.
This IoT technology makes it easier for customers to grab a few items quickly, and it also helps retailers save on labor costs, reduce shrink, and create better store planograms based on purchasing data.
When most people hear the word blockchain technology, they immediately think of payment methods such as cryptocurrencies, but it is much more than that. Giving customers the opportunity to pay with cryptocurrencies is one aspect of retail digital transformation, but blockchain technology may also be used to track things from raw materials to completed goods or to authenticate luxury items.
LVMH collaborated with ConsenSys and Microsoft to form the blockchain consortium AURA to ensure that every product could be traced and authenticated regardless of where it was purchased. AURA refers to its authentication service as a "tamper-proof digital stamp of authenticity" that is used to inhibit the creation of counterfeit LVMH-branded items.
Customers may also track the complete life cycle of the goods they're buying, from creation to sales and resale, ensuring they're paying for the genuine article.
Retail digital transformation marketing encompasses every channel available to consumers to assist them in discovering your brand and making purchasing decisions. Your digital shelf — an e-commerce idea that resembles in-store product displays — is where these channels converge. Retailers must generate visibility and trust in order to draw customers to their digital stores.
Increase visibility in search engines by using SEO best practices on product pages with selected keywords, guaranteeing shoppers locate your brand. Then, on product pages, use UGC like ratings and reviews, visual content, and questions and answers to keep shoppers engaged (and earn their trust!).
With a complete platform that allows merchants to simply install UGC components on their website, product pages, and social media channels, Dotlogics streamlines this aspect of digital transformation.
Case study of a digital shelf: Fresh Cosmetics Beauty brand Fresh added photo-first displays with customer-submitted photographs, ratings, and reviews to its product description sites. Fresh also leveraged retail syndication to increase the volume of its reviews, resulting in a thorough, insightful look at each product.
Retail syndication increased Fresh's review volume by a whopping 7,702%, giving customers more of the vital information they needed to make online cosmetics purchases.
Fresh also promotes visual UGC, such as images and videos, on its product pages and social media channels. Customers may easily transition from discovering things on Instagram or TikTok to shopping on the website because to this consistency.
With a single click, Like2Buy converts visual UGC into shoppable content. Instagram postings include a visit shop button, which directs buyers to a one-of-a-kind in-app boutique where they can browse and learn more about the products. Purchasing a product is as simple as clicking the view on the website button, which takes consumers directly to the e-commerce shop. Creating these digital links between touchpoints simplifies, expedites, and simplifies purchasing.
Gamification marketing adds video game features such as points, awards, and challenges into marketing initiatives. The most basic version of this notion is loyalty benefits, which compensate customers for recurring purchases. Gamification marketing not only encourages loyalty, but it is also what shoppers want, with an amazing 70% of shoppers desiring gamification in their online purchasing journeys.
Gamified components also make marketing campaigns and purchasing experiences for customers more interactive, engaging, and fascinating. Assume a retailer is promoting a new product through various marketing strategies. It broadcasts a branded advertising image for the product on its social media channels, but it also creates a mini-game on its mobile app that generates a little discount voucher. Which option do you want to interact with?
Gaming components can also be used in-store to digitize the traditional buying experience. H&M, for example, employs gamification to assist recycling efforts and engage customers in-store with "smart garment collecting bins." These recycling bins accept discarded and unwanted clothing in exchange for a discount certificate that may be used against a future purchase. In addition, the containers have interactive digital panels that provide facts such as recycling rankings by location.
Users can also scan a QR code to find out how their recycling efforts affect the environment and how many trees are planted in exchange for their gift.
Last but not least, two technologies at the vanguard of digital change in retail. Artificial intelligence and augmented reality enable firms to experiment with the latest technology while offering customers with a seamless e-commerce experience.
Augmented reality (AR) technology has the ability to bridge the gap between in-store and online purchasing experiences. Retailers have been using augmented reality (AR) in novel ways to allow customers to test and experience things in-store from the comfort of their own homes. And over a quarter of those polled are delighted to see retailers adopt AR technology to bypass the fitting room.
One of the most major disadvantages of purchasing cosmetics online is the inability to test different colours to discover whether items fit your skin. Sephora's Virtual Artist uses augmented reality to bring the in-store testing experience to its consumers' mobile devices.
When users launch the app, the technology scans and maps their faces, resulting in a realistic filter that allows them to "test" Sephora goods as if they were in-store. Products can be added to the shopping cart and purchased directly from the app.
With IKEA Place, the Swedish furniture and home goods giant IKEA uses augmented reality to assist clients in planning their home design. While IKEA is known for curating showrooms to inspire customers, the mobile app allows customers to visualize the products in their own space. With the AR-powered app, users can browse through IKEA's entire catalog, select pieces, and place them in their homes.
They may also buy things directly from the app and have them delivered to their home or pick them up in-store, delivering a convenient shopping experience from beginning to end.
Another area where merchants can experiment to find the best solutions for their clients is artificial intelligence (AI) marketing. AI-powered chatbots and messaging apps can provide an additional channel for customer support concerns, relieving the pressure on customer service professionals and ensuring your audience receives immediate assistance whenever needed.
AI is also being used by brands to transform other areas of their business, such as advertising. Levi's will begin testing AI-generated models on its product pages in order to enhance diversity and inclusivity, allowing it to appeal to a wider audience. AI-generated models, like UGC, allow buyers to engage with the company by displaying "regular people" with varying skin tones, heights, and body shapes. This strategy improves customer-brand ties, which can influence consumer loyalty and retention.
Through retail digital transformation, you can accelerate growth while attracting, retaining, and satisfying customers. Step one is to learn how to use the Dotlogics platform to provide an omnichannel experience for your clients.
Dotlogics offers omnichannel solutions for your retail digital transformation, from user-generated content to customer data and in-store QR code-activated evaluations.