Recent studies show that retail is now the third-most disrupted business sector. Current research shows that four out of 10 companies will fail over the next decade if they cannot redesign their business to meet digital demands, also known as “unified retail.”
We’re seeing these predictions playing out in what the media has been calling the “retail apocalypse.” Apocalypse? Absolutely not. But we are seeing a new approach and repositioning of malls and store chains, mergers and acquisitions and closures, and disruptive new technical capabilities.
The good news is that many retailers are responding to these challenges. For example, they are making investments in tech – according to RetailDive (Jan. 19, 2017), Wal-Mart alone spent more than $10.5 billion in 2015 on new tech and delivery models. And, we are all familiar with the Amazon® and Whole Foods merger and new business approaches arising from that. However, the bad news is that many other companies are not acting on these findings. Those who did not take steps to change are beginning to pay the price. But those who have evolved are now in a position to win.
According to the Digital Global Innovation Center:
- Only 25% of organizations are proactively disrupting their business
- 45% report that digital disruption is “not a board-level concern”
- 32% are taking a “follower approach”
- ~40% of today’s top 10 market leaders will be displaced by 2020
Unprepared and Vulnerable
Purchases in-store still account for approximately 90% of all retail transactions, but instead of digital channels replacing physical channels for retail, a combination of channels is being used by shoppers. This is referred to as “clicks and mortar,” in which the convenience and facilities of the physical shop is combined with the availability, choice, and personalization of online channels. In fact, most consumers no longer perceive barriers between different ways of shopping. They simply want to shop: online, on the phone, or in the physical store.
However, unifying all these approaches into a single omni-channel environment can be a challenge. It is still too easy for retailers to set up separate divisions with unique tools and processes, leading to siloed transaction management. To help make this work, businesses are spending more on customer experience and technology that will allow them to understand their customers at a deeper level.
In those companies that have been able to take advantage of these changes, a recent Gartner CEO study (2017) showed that CEOs feel that “Recent digital improvements… have directly resulted in increased profits.” It provides the data needed to enable excellent customer service through AI, gamification, and data sharing as well as new emerging capabilities such as virtual and augmented reality shopping experiences (VR/AR); and wearables for interactive selling, such as Apple Watches.
NorthState Technology Solutions supports enterprise architecture solutions that spare retailers the major IT investments required for in-house security, collaboration, cloud, compliance, Wi-Fi, disaster recovery, and other capabilities, designed by our retail experts. Built on such a flexible foundation, retailers can both support traditional consumers who still prefer face-to-face transactions, while shifting over to meet the needs of digital users.
White Paper: The Changing Face of Retail
To learn more about how digitization provides what consumers want and how to give it to them, share your email to read our most recent point-of-view paper, The Changing Face of Retail.