By Michael Allen, Solutions VP, Dynatrace.
Regardless of whether you sell dogs, gramophones or media you can no longer ignore the need for digital transformation. HMV was a major high street retailer that failed to make the digital transformation, and as a result collapsed into administration; it did not adapt to changing customer expectations and was usurped by over-the-top streaming platforms, such as Netflix. This is an all too common story for today's retailers, just look at Blockbusters, Woolworths, Borders and many others. It's no longer enough to have a strong brand, you need to be able to move with the times. To ensure you are not the next HMV, you need to futureproof your business, and embrace the digital transformation. In my view, to do this there are three key areas that all retailers must focus on; the customer experience, business operations and business culture.
Knowledge is power
According to BT, 65% of retailers struggle with the omni-channel experience. This is supported by Capgemini Consulting, which found that 26% of retailers, either by default or design, have neglected digital transformation. To be successful in the digital age retailers must deliver a consistent integrated experience across different platforms. The statistics behind this speak for themselves, online sales amounted to £45bn in 2014 and this figure will rise 16.2% to £52.2bn in 2015. It is also not enough to just operate across different channels, retailers must ensure that each platform takes advantage of channel attributes to enhance, and contribute to, the customer experience. According to Retail Systems Research, consumers that connect with retailers through multiple selling channels are more profitable than ones that don't.
For retailers to reap the benefits of multichannel vending they need to develop solutions that provide excellent experiences for the customer. It is not enough to simply have a presence across all channels, the omni-channel experience must deliver a consistent integrated experience regardless of channel of choice. To understand the customer experience, retailers need to have visibility of the buyer journey across all platforms, and devices, so that they can ensure services are running smoothly. Customers won't always highlight technical issues, or tell you they deferred to a competitor, they will just leave. A survey by Dynatrace found that 35% of consumers will abandon slow retail websites, highlighting the stakes for retailers – including damage to reputation, loss of sales and a resulting loss of market share.
This is why it is critical to have visibility down to each transaction. Retailers should be able to see where, why and when customers are having issues. Not only this, but they should know how their buyer journey compares to the competition. By benchmarking your customer experience against that of competitors, you'll be able to compare your digital standing within the marketplace, which allows you to compete on a level playing field.
Out of sight, out of mind
To complete a positive customer experience, technology needs to enhance business operations. Retailers must have agile and responsive supply chains that support the digital transformation. Technology can enhance operations through process digitalisation, worker enablement and performance management.
Process digitalisation can streamline the supply chain and deliver products with greater efficiency. If a retailer cannot deliver a product within a reasonable time, a customer will look for a competitor that can. Burberry uses mobile POS devices to enable staff to complete purchases anywhere in store, reducing both queues and the buyer journey. Technology can empower individuals to perform business activities more effectively. Burberry also arms its sales assistants with tablets to proactively monitor stock levels in real-time, allowing employees to spend longer with customers on the shop floor.
Performance management technology allows retailers to track the achievement of staff methodically and prepare for spikes in activity. Automated performance tests, deployment processes and scalability testing can increase the efficiency of digitalised business processes and reduce manual workloads.
However, as business operations become digitalised they expose retailers to increased risk of technical failure. When these operations fall down they can significantly harm the customer experience. There's little point devoting time to an ultra-responsive website if transactions take an age to process by staff working behind the scenes. If digitalised operations don't work they'll not only represent a wasted opportunity, but also a wasted investment. This can jeopardise the digital transformation, with companies reluctant to invest in areas with a history of failure.
So, if there is a problem with a digital business process or application it needs to be resolved quickly. This is why retailers need visibility of the entire application and service delivery chain to see where and why issues might be occurring. This visibility allows businesses to fix problems before a domino effect across the organisation negatively impacts the customer experience.
Prevention is better than a cure
These problems would occur less frequently if people worked as a team. Many retailers have adopted a superficial digital transformation, but it hasn't changed how IT departments operate. IT divisions can't afford to work in distinct technology silos as collaboration is needed – a DevOps culture can help facilitate this.
In order to complete the digital transformation, and to maximise the benefits, retailers should encourage a business culture centred on technology. To embrace the digital transformation, retailers must become more agile to allow a quick response to market shifts. DevOps, a design which requires development and operations teams to work in tandem, promotes such agility.
A major step in the creation of a DevOps culture is to reduce the boundaries between teams and encourage the sharing of expertise, data and tools to enhance the customer experience.
Going forward, development and operations teams should share objectives to encourage interworking. Departments can no longer operate independently of each other as staff need to work towards a shared business goal. As those in their IT departments work more closely together, retailers need the ability to track technology issues across all divisions. Problems need to be identified and fixed before customers receive a negative experience and defect to a competitor. The Dynatrace survey found that 36% of UK shoppers will go elsewhere if a website or mobile app fails to respond in three seconds or less.
To future-proof retailers the digital transformation needs to revamp three key areas; the customer experience, business operations and business culture. Retailers need to understand customer expectations and have visibility of the current experience to make improvements. Visibility across business processes and the customer experience is integral to the digital transformation, with application performance management underpinning the entire process. Technology needs to be seamlessly integrated into all aspects of the supply chain, from factory to shop floor. The implementation of agile business cultures, such as DevOps, will allow retailers to rapidly adapt to ongoing market, environmental and technological change.