How Retailers Are Leveraging Their Enterprise Architecture for Digital Transformation

Retailers continue to adapt to meet changing customer demands. Many of those changes are driven by technology. The pandemic has changed consumer buying habits, driving more shoppers online and forcing retailers to emulate their in-store shopping experience in a digital world. Now, customers expect more from their online shopping experience, and technology is also shaping the in-store experience.

Consumers are using technology to generate shopping lists on their smartphones that direct them to goods in-store. They also can remotely check inventory and verify what they need is in stock before leaving home. Goods ordered online can now be picked up in-store, which increases foot traffic and encourages incremental purchases.

Thanks to technology, retailers also have more detailed information about their customers. They can track purchases, buying cycles, and even items considered but not purchased. Retailers also use technology to test new products, pricing and sales strategies.

All this technological innovation is driving the need for more data processing and insights. Custom solutions need to be implemented quickly to stay competitive, and more pressure is being placed on IT teams to enable digital transformation through a collaborative enterprise architecture (EA).

The Digitization of Retail

U.S. consumers spent $250 billion with online retailers in the first quarter of 2022. That was more than 14 percent of total retail sales. Sixty-two percent of consumers shop online at least once per month, and 78 percent don’t even look at an item in-store before making an online purchase. In addition, 56 percent of customers use “click-and-collect” services at least six timers per year, and 41 percent of retailers say consumers who buy online and pick up in-store add one or more items to their purchase. To remain competitive, retailers must improve their online sales presence.

Embracing a hybrid sales model means embracing and managing technology. Retailers are adopting better inventory management tools and replacing outdated point-of-sale (POS) systems. Retailers also need to manage applications, including assigning ownership, users, managing updates, and more. Using application portfolio management (APM) in conjunction with EA provides insight into what applications are used, what information is needed, who uses them, and what processes are performed. The goal is to use technology to power frictionless transactions.

Digital transformation in retail directly responds to changing customer expectations and embraces new solutions to meet those expectations. Retail digital disruption has global dimensions thanks to e-commerce. To remain relevant and successful, retailers must continue to evolve, using technology in new ways to connect with customers. Transformation may require new products, new services, new channels, or a combination of innovations to have the greatest impact.

The Foundation of Digital Transformation

Many retailers use enterprise architecture as the foundation for digital transformation, but there's no standard EA blueprint for retail deployment. Each organization must create its own design and technology strategy. The complexity and scope of digital transformation can be daunting, and it’s not always clear where to begin.

Retailers need a new perspective and new approaches to implementing change. Digital transformation requires innovation, speed of delivery, feedback, adaptability, cross-department collaboration, an understanding of agile development, and the need to “fail fast” and learn from those setbacks.

Even though the changes may seem dramatic, most processes required for digitalization already exist in some form. Reusing existing applications, components, tools and processes makes defining a new digital landscape easier. Using microservices and low-code/no-code applications make it easier to reuse existing components rather than starting over. Reusing and adapting existing processes also helps create a consistent customer experience, including brand look and feel, service levels, product information, etc.

For example, consider using an automated system that adjusts online product prices based on competitive pricing. The system is automated using an algorithm that updates the website. This approach would create misalignment with brick-and-mortar store prices. You must align your online strategy with the in-store experience, reinforcing brand loyalty.

Harnessing a Collaborative EA

Before strategizing on building using your EA, you must first assess your current infrastructure. Keep your EA up-to-date to better allocate resources. Develop best practices, gain insights into the applications and processes already in place, and identify what's missing.

Rather than relying on one team or department to manage the EA, use a collaborative approach. Create a single repository to keep applications up-to-date and share them with the entire organization. Collaboration is the best way to use the intelligence from those employees closest to the processes and applications. They know what's happening, what works, and what’s needed. Continuous feedback from employees informs updates on the current state of the EA and helps guide future development. The EA is where business and IT converge, digital landscapes are analyzed, and dependencies and obstacles are identified.

Planning and executing a transformation strategy seldom goes smoothly, so don’t try to implement too much at once. It will take time to engage stakeholders and identify the legacy systems that need to be replaced. Instead, break a comprehensive transformation strategy into more manageable pieces. Prioritize projects so they contribute to the long-term agenda. Using an agile approach to EA development, changes can be made faster, and adjustments made to achieve long-term goals.

Using an enterprise architecture and indexing processes, applications and capabilities ensures your digital transformation initiatives come together in harmonious, digital-led processes. You can make better decisions to meet business objectives while creating a better experience for customers and employees. The right approach to digital transformation makes it easier to adapt to new trends, technologies and customer demands while facilitating ongoing growth.

Wilko Visser is the CEO of ValueBlue, a market leader in agile business transformation, providing a strategic planning and collaboration solution for enterprises.