Retail Aims High on Digital Transformation, But Has Room to Improve on Integrations
At the end of 2019, retail was one of the hottest industries poised for digital disruption in 2020 and the decade ahead. In fact, PwC reported it’s one of the top industries with the greatest opportunity for artificial intelligence (AI) impact by 2030.
Looking back at the digital strides retailers have made over the past decade — from leveraging Internet of Things for inventory tracking, to consumerizing virtual reality (VR), to making at-home, digital try-ons a breeze, and installing in-store WiFi to enhance physical and digital shopping experiences — you would think that retail has actualized industrywide digital transformation.
In truth, the integration of all of these disparate data sources is a challenge for the industry — and COVID-19 brought many modernization initiatives to a screeching halt. Pair this with new data showing lack of technical skills (36 percent) and budget restrictions (30 percent) are key roadblocks to transformation in retail — 37 percent of which are still in the early stages of rolling out transformation initiatives.
Now, as retailers slowly begin reopening their doors, it's imperative to address these digital gaps if they want to increase loyalty and improve customer experiences — something retailers cite as one of the biggest benefits of modernization (49 percent). However, the old way of innovating just isn’t going to cut it anymore.
Integration is Critical to Innovation
According to Gartner, “conventional, monolithic and supposedly fail-safe methods of assessing technology are ill-suited to support the quickening pace of digital business.” Retailers can increase business value and create brand differentiation through the adoption of technologies like cloud, AI, advanced analytics and more. However, strategic data integration is necessary to accelerate time to value and ensure lasting change.
Integration is especially critical when you consider modern technologies and data are core to creating a successful omnichannel retail experience, something that’s become central to business survival in the era of the remote consumer. Retailers that neglect their data management strategy risk falling behind competitors and losing the trust and loyalty of their customers.
Here are some of the top challenges retailers face when it comes to integrating data across a multitude of channels, and how they can address them:
Adapting Swiftly to Change
Like all industries in this data-driven business landscape, retail systems need agility in order to respond quickly to ever-changing consumer demands and shifting priorities — e.g., launching a new VR feature in your mobile app, or integrating online and in-store point-of-sale systems for more streamlined customer transactions.
Despite being slow out of the gate initially, Lucky Brand was able to overcome its integration challenges as a traditional retailer and emerge as a $700 million software company. By connecting its inventory, wholesalers, distribution centers, retail stores, employee website and customer loyalty program, Lucky Brand was able to embrace risk, close critical gaps in its omnichannel operations, and accelerate fulfillment and revenue growth.
Start Innovation by Eliminating Data Silos
By connecting the various systems they rely on to conduct business (from ordering and fulfillment, to shipping and selling, to customer and employee experience), retailers can more intelligently define how connection points work. This enables smoother operational efficiencies (e.g., eliminating data silos across the brand, quickly identifying the root causes of application slowdowns and data discrepancies) while decentralizing data so that store managers can make better decisions faster, and with greater impact to their store location.
For example, a bookseller in Nebraska likely has a different customer profile than one in Maine. Therefore, store managers will want to promote different types of books via newsletters and social media as well as offer personalized experiences to ultimately drive higher sales. It’s no longer enough to give CIOs the information to make those decisions exclusively; it’s critical that local managers have access to the data they need to make the best decision for their own store and the customers they serve every day.
Scaling on Demand
Once disparate data systems are connected and retailers begin to see the impact of faster, more streamlined operations on their business, the obvious next question is, “How do we grow this success?”
The fact is, having a solid integration strategy in place is critical for any business to scale, especially for retailers managing real-time data between legacy and modern systems. Once retailers have that foundation in place and start to see their integration workloads increase (e.g., more consumer demand makes way for new product development), performance and scalability become critical issues (e.g., higher order volume requires faster fulfillment and more inventory). Retailers cannot afford roadblocks in their integration processes because of limitations in areas like CPU power, memory or network bandwidth.
Enter cloud adoption. As opportunities for growth abound, agile cloud integrations are key to enabling retailers to scale processes and technologies with expediency as needs arise — e.g., application updates and new channels for customer communications. What’s more, cloud-based integration offers dramatic improvements over legacy on-premise options, and are unrivaled when it comes to speed, flexibility, ease of use and cost savings.
Accurately Applying Analytics
Finally, many retailers struggle with the challenge of managing the exchange of data from a growing portfolio of cloud applications. The White Company is one retailer that needed to move beyond its single business system while continuing to use existing on-premise applications, which were typically connected by ad hoc integrations. Rather than risk a dip in quality performance and slower processes, the company decided to tie together its front-end and back-office operations and bring its data management under a single pane of glass.
If data is king, then analytics are the kingdom, tracking shifts in regional trends, inventory fluctuations, store performance and other insights that pull in data from various sources. Solid data management is necessary for retailers to consolidate data accurately and efficiently for a 360-degree view of customer journeys, inventory tracking, billing, payroll and more.
All of the various systems that need to be connected to create competitive and seamless omnichannel retail experiences require a smart and flexible data management strategy. With that, the role of emerging technology (particularly AI) is critical when it comes to ensuring that the data retailers are collecting reflects the latest changes in customer needs, especially during this trying time. Over the next few years, AI will be critical in building — and in many cases, restoring — bridges across operational data silos and democratizing the flow of information across retailers’ entire businesses.
Silvia Davis is global go-to market manager at Boomi, a Dell Technologies business.
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