AI, Big Data and other new technologies in the retail sector
Due to the pandemic, digital transformation has been more accelerated in the past months than it has been in years and specialists believe it will only continue to grow in the upcoming months. Nowadays, it is essential that new technologies such as Big Data or artificial intelligence form part of the digital strategy of companies since they generate value both externally, towards the market, and internally, towards the transformation of an organization.
From an external point of view, these technologies help improve the value proposition for our clients with aspects as necessary as hyper-personalization or improving the effectiveness and efficiency of customer service which will differentiate everis from our competitors and will allow us to gain share of wallet. In other cases, these technologies can help generate new business models, such as in the case of the Hogami by Leroy Merlin.
However, in addition to increasing customer satisfaction and expanding our portfolio of services, from an internal point of view these technologies promote the improvement of operational efficiency. An example could be improving the forecasting of online activity (with its consequent impact on associated operations), optimizing loads and transport or decreasing the number of returns, thanks to solutions that suggest the perfect size for a specific customer using AI.
Beyond enriching more traditional channels such as ecommerce, retailers are promoting new means of communication with their customers using new channels. Social networks (including those that allow conversational commerce such as WhatsApp or WeChat) come to mind but retailers are becoming interested in even newer channels that are succeeding in certain markets, such as sales through live streaming. Of course, in the adoption of these channels it is essential to have a solution that allows managing the same content regardless of the channel not only for the sake of consistency in the communication with customers but also for said communication to be efficient from an operational point of view.
Regardless of the channel and especially in certain retailers such as Amazon, dynamic price management is especially relevant, which will help us adjust the price of products in a personalized, recurring and immediate way. Although in retail the application of dynamic prices is not as evident as in other sectors such as commercial aviation, it is the dynamic management of prices in sales campaigns that will allow us to minimize the remaining stock at the end of the campaign at the same time that we maximize revenue or gross margin.
How to prevent a retail company from failing at digital transformation
Many companies fail because they implement a superficial or partial transformation rather than a comprehensive one which implies adapting the processes, changing the technologies that support them and migrating to a business culture that fosters innovation.
In a digitalized company, departments are leaving behind a defined model and migrating towards a multidisciplinary and liquid one. In this way, information flows freely between the different departments of the company, and the different divisions work interconnected rather than independently. This new way of operating facilitates and speeds up decision-making processes.
Another important aspect is to adapt the culture of the company to a digital approach. A digital transformation project can take months or years depending on the magnitude of the project, but the challenge comes later, when the ecosystem that forms the company does not adapt at the same speed, and an internal culture shock occurs that invalidates the processes, frustrates people and therefore causes the regression of the transformation.
How can companies transform and avoid investing resources on the wrong technologies?
First of all, we must not lose sight of the fact that technology is a means and not an end. Companies need to understand which pain points from their value chain they have to solve or which use cases they want to respond to.
Once these aspects have been identified, it is necessary to identify what technologies exist on the market. For this, it is highly recommended to adopt an open innovation strategy which helps companies develop cooperation with external organizations, including start-ups. In this sense, consulting firms are pivotal to facilitating the adoption of this type of strategy, on many occasions, making specific spaces available to companies that promote this open innovation, such as the everis Living Lab.
Once the technology or partner has been identified, it is essential to start testing it in an agile, iterative and evolutionary format that allows us to see how said technology is responding to that pain point or use case that we had identified. In this way and based on results, we either accelerate the process or discard it quickly to test a new technology.
Digital transformation for large companies vs. small and medium enterprises
Although at first glance it may seem that the complexity of an efficient and successful digital transformation would only be viable for large companies, small and medium businesses have some advantages that large corporations do not have. They are more agile when it comes to implementing new processes and technologies thanks to their quick decision-making process. At the same time, the digital transformation in the retail sector is balancing the rules of the game, offering equal opportunities to all companies when it comes to capturing customer attention, for example. Thanks to cloud solutions that often involve a pay-per-use model, small and medium-sized companies have a multitude of new technologies at their fingertips without the need for multi-million dollar investments. If we think about the digital space, it is the first time in history when a niche player can compete with big brands around the world, when just a few years ago this would have been unthinkable.
Of course we are going through a very complicated period in terms of the market context and uncertainty that has impacted the retail sector more than other industries, but it is also true that the current technological revolution offers more tools than ever for any company to achieve its objectives. Now more than ever, any business can compete for the attention of their potential customers and can get them to go through their digital door and buy their products or services while increasing engagement with the brand.