By Nick Pike, VP UK and Ireland, OutSystems.
Every month we hear yet another negative retail story and without a doubt this is an industry going through huge transformation. With changing consumer shopping habits there is enormous pressure on retailers – both online and offline – as they look at shifting their business models and digitising their business.
Under pressure to retain their customers, grow new customers and products and services, many are looking at how they either start or continue to digitally transform. But ask 10 different retailers “What is digital transformation?” and no doubt you would get 10 different answers; only the minority in retail have a clear steer on this.
But while some retailers are still at the start of their digital journey, or struggling to understand what that journey looks like, many of the big online retailers, like Amazon for example, are honing it to perfection. The key to Amazon’s overall success is understanding how customers are shopping and being responsive to changing shopping habits.
Traditional “brick-and-mortar” retailers are desperately fighting to keep pace. But they do have one advantage over the online retailers – they can look at how they make shopping experiential and rework how the store is set out so that the shopper enjoys the experience. For example, Sainsbury’s is building an experiential omnichannel ecosystem, with phone branches, pharmacies, opticians, dentists and even children’s learning centres in-store, alongside branded coffee shops and restaurants.
However, the main problem facing traditional retailers is that they have 10, 15, 20 years’ worth of legacy or heritage systems, which often prevents them from developing new customer journeys both online and in-store. Until they retire, update or transform these systems, they’ll never be truly dynamic, adaptable and competitive. Also, retailers have an attitude of ‘making do and mending’ their core applications for fear of tampering with heritage systems that hold the retail crown jewels. Granted, in-store they’ve been a bit more entrepreneurial, driven by consumer demand, by providing initiatives such as self-service that ease any friction around the in-store experience.
Clearly, retailers just want to sell more and grow revenue. Customer loyalty, retention, and omnichannel are key agenda items for senior management. This inevitably means modernising, developing apps and automating processes, bringing back-end systems in line with some of the front-end capabilities.
That said, the hindrance around back-end systems is very real. It is all mission critical; if you touch a point of sale system and it falls over the retailer is in major trouble. This means there is a level of suspicion and fear around making changes. To the point where many retailers are constrained by legacy and restricted from doing really cool agile initiatives. It takes retailers forever to bolt on new features, both to their legacy systems and processes.
They have to adapt their processes to overcome problems with their systems. Likewise, there is also a clear disjoint between their front office and sales floor and point of sale and their back-end systems. Retailers also need to have comparable visibility into their supply chain and ecosystems so that they can collaborate effectively with suppliers. For example, if a retailer needs to get goods shipped from Asia-Pacific to the UK they need to work with their suppliers and have an ecosystem that is joined up.
The other aspect with regard to legacy systems, is that over the years ‘customisation’ has taken place, rather than ‘transformation’. This is because margins are shrinking – with few resources to enact digital transformation programmes; customisation is the best way to extract the maximum value from existing systems, but highly customised systems are not scalable or agile.
However, today technology trends are rapidly changing the retail sector. Retailers looking to remain relevant in the future must primarily focus on two major developments: low-code platforms and artificial intelligence (AI). In contrast to other technology trends such as Internet of Things, blockchain or virtual reality, low-code platforms and AI have been identified by Gartner as trends that have reached a mature stage, which enables them to disrupt the retail sector.
Low-code platforms give retailers the ability to build new functionality quicker and at a substantially lower cost, and the success of ideas can be evaluated more rapidly. Retailers who adopt this trend are able to test new propositions quickly in changing market conditions and with little risk. The accelerated development of applications shortens the time-to-market – in some cases by 10 times in comparison to traditional packages. This is especially interesting when the development of applications requires customisation.
In comparison to traditional solutions, total cost of ownership is reduced to a third, a recent study by Gartner found. Next to development time, low-code platforms offer big advantages when it comes to operational controllability in terms of ease of integration, altering applications, and the assurance that applications keep working after the update. At the same time retailers can make incremental changes to their infrastructure and legacy systems so that they can change over time. All of this with lower maintenance costs.
This is where a huge amount of experience is needed and here at OutSystems we have a long history of helping retailers revamp their heritage systems and create new apps that enable them to leapfrog their competitors using low-code. In fact, OutSystems was named a Leader in the new 2019 Gartner Magic Quadrant for Multiexperience Development Platforms (MXDP)*, positioned highest overall for ability to execute. The report states that, “the term ‘multiexperience’ refers to the various permutations of modality (touch, voice and gesture, for example), device and app with which users interact on their digital journeys across diverse touchpoints,” which is particularly relevant in the world of retail where customers will use various touchpoints to engage with the retailer.
And interestingly, the best companies for OutSystems to work with are those that are behind the innovation curve, because we quickly make a difference, helping them deliver a frictionless experience for the customer. Low-code enables these organisations to create new lines of business and improve critical processes without having to invest huge amounts of money or time.
There is no doubt that adoption and awareness of low-code and the benefits of low-code development platforms are now becoming mainstream. Some savvy retailers are already developing strategies for low-code in their organisation and the faster that more retailers look at adopting low-code, the better they will be able to respond to today’s 21st century consumer.
Now retailers can extract the richness from their legacy and use low-code to make a quantum leap forward in digitising their business, in a fast, scalable and cost-effective way which means they’ll stay relevant to the consumer.