Huw Thomas, Managing Director of PMC, talks about the difficult tightrope that retailers need to walk to keep pace with consumer’s demands.
It feels as if retail has been in continual turmoil for the past decade. The 2008-13 recession hit retail hard and there were many losers during that period. Even though the recession is long gone the trading environment for retailers has remained particularly challenging. Brexit, both from a currency and consumer uncertainty point of view has not helped matters.
Recent headlines have seen some of retail’s stalwarts struggling for survival or even worse, failing.
Consumer demands in retail are evolving at an ever-increasing pace and those retailers that can’t (or won’t) keep pace with consumer demands are counting the days to oblivion.
Consumers demand a shopping experience that is frictionless across and between all of the channels they shop in. Anything less, particularly for the generation Y onwards, is unacceptable.
Retailers understand this clearly and there is a generic drive to meet these Millennials requirements but unfortunately for long established retailers the legacy of disparate IT systems and a myriad of intricate integration makes this transition very complex and costly.
For retailers to keep pace with consumer’s demands they must walk a difficult tightrope. How do they carry out a digital transformation of their existing IT systems whilst simultaneously transforming the cost of delivery? All whilst improving existing service levels and system stability.
The digital transformation is all about enabling the frictionless omni-channel experience that consumers demand, along with providing greater personalisation; an ever-increasing complexity of payments, enabling mobility in store (for both consumers and store staff) whilst re-engineering the supply chain to deliver anywhere any time.
The cost transformation part of the journey is equally challenging and necessary as it can often provide a source of income to support the digital transformation activities. IT departments need to lower the overall cost of delivery of existing and new systems whilst transitioning their IT to the new world. Selective outsourcing to get access to additional skills and to free up existing resources to concentrate on digital transformation is an effective way of achieving this.
Whatever retailers brand their change activities as; project customer, single view of product, price, promotion, etc one thing that is abundantly clear is that all roads lead back to IT. Digital transformation activities may well be led and sponsored by other parts of the business but the road to successful completion and maintaining longevity of survival and growth in this new world, it is absolutely pivotal that IT plays a critical and central role in this transition.
Retailers may not reflect the importance of IT within the corporate governance structure but not putting them at the centre of this revolution will undoubtedly lead to them joining many ex-retailing company’s that have gone before them.