Nigel Lester, managing director, Software Solutions at Pitney Bowes, told iTWire that digital is just one part of digital transformation; an essential one, but not the whole picture.
"You’d be remiss to think that digital transformation can or should neglect the physical side of your customer communications and engagement efforts, too," Lester said
"Digital transformation isn’t an invitation to drop the physical and go 100% digital. Just the opposite: it is an opportunity to maximize the importance of the physical and leverage it to further heighten the value of the digital by weaving the two together."
Is customer data showing the decline of physical stores and the rapid ascent of on-line?
Retailers closing physical storefronts may give the perception that their business is suffering, when many are just adapting to new trends. By utilizing customer data (and there is a lot of it in various marketing clouds), a physical retailer may decide to trim down its expensive brick-and-mortar presence and expand its focus on a lower cost and more efficient on-line storefront.
It is all because the digital age has driven this “see-now-buy-now” expectation - the need for instant gratification is making retailers re-think their strategies and business models.
Millennials, for example, live for today and their “need-it-now” syndrome is forcing the retail and fashion industry to play catch-up. Living in such real-time world with such strong demand supply configuration, retail businesses must shake-up and shape-up and deliver what customers want and when they want.
TK Maxx, for instance, acquired Trade Secret in Australia and now is cashing on an opportunity as they see a huge demand from fashion struck consumers in Australia. Acquiring Trade Secret and scaling operations, they plan to open 35 retail stores in Australia this year. Smart Company reported that TJX saw a huge uptake from Australia and UK markets resulting in a combined sales demand of $43.3 billion.
How can retailers reorganise to meet customers on their terms?
You need to get the “inside” right – the whole ERP, e-commerce, back-of-house, and delivery systems – then frankly the “outside” will fall into place.
Today’s generation of cashed-up customers are more connected to brands and each other than ever before. They’re more informed about what they want, where they want to get it from and how they want to get it.
For example, last year brands including TopShop and Burberry launched a selection of designs which customers could buy immediately after their shows. They enabled consumers to browse and buy unique pieces in store, online and at the company’s fashion shows.
Is it digital vs physical, one or the other?
This instant gratification and “buy-it-now” demands have changed the operational structure of most retailers, as they will have to embrace both physical and digital channels to drive sales and loyalty, rather than choosing one over the other.
Organisations that don’t want to be left behind need to be able to adapt to disruptions even faster. IDC says that 22% of organisations are engaged in digital transformation initiatives and that figure will more than double by 2020. Big data, mobile apps, Internet of Things, and social media data will be top priorities for most businesses. But when people think of digital transformation, their minds tend to hone in on just that first part: digital.
Digital is just one part of digital transformation; an essential one, but not the whole picture.
You’d be remiss to think that digital transformation can or should neglect the physical side of your customer communications and engagement efforts, too. Digital transformation isn’t an invitation to drop the physical and go 100% digital. Just the opposite: it is an opportunity to maximize the importance of the physical and leverage it to further heighten the value of the digital by weaving the two together.
A recent report by GMSA outlines that digital technologies will influence 45% of retail sales by 2025. The writing is on the wall, digital transformation is the future, and “now” is the time for retailers to jump on the bandwagon.
Can the investment in digital transformation ensure a physical retailer’s survival?
If retailers use the right technology, they can gain better business outcomes and it would benefit them as they could track more aspects of customer behaviour from clicks, to conversation rates, to brand awareness. In addition, it helps to create demand for in-store campaigns and promotions. It won’t guarantee survival but it will help them to re-think their operational strategy, re-build survival plans to thrive in an increasingly competitive market.
Digital technologies can deliver powerful forms of contextual information to enhance existing business data, and location intelligence is one of the most powerful forms of contextual data available to businesses.
This contextual data can add a layer of relevance to customer information, that can be used to drive more meaningful interactions and engagement. It covers both physical context (Where is the customer? When are they contacting you, or vice versa?) and digital context (When are they most active on social media?).
Tech-savvy retailers can use location for strategic site selection. They can determine if competitors have market share in certain areas, what intersections and routes are heavily travelled and if their core customer base matches with the demographics of a certain area when deciding where to open new brick-and-mortar stores.
Is location the end of impersonal customer segmentation and, to use a contradiction, the beginning of mass personalisation?
Using geospatial solutions, retailers can inch closer to their customers by providing them with more personalized and targeted offerings. If businesses cannot understand their customers, they risk losing them. Loyalty must be earned with every interaction, it is not guaranteed.
Location Intelligence enables hyper-local targeting so that retailers can present the right offer, at the right location, at the right time, on a digital device.
For example, credit card transactions, have geotags that can help retailers figure out not only which of their physical stores are performing best, but also where geographically their buyers are more likely to shop online.
Taking a step further, retailers can even decipher which online shopping portals customers are utilizing to align their marketing efforts alongside the most profitable channels.
Are you are saying “listen to the data as it drives customer loyalty”?
Digital has the power to influence business outcomes and can enable businesses to operate more efficiently in market segmentation and customer acquisition.
Retailers who are using location data as part of the e-commerce solution have the edge as it empowers them to understand customer preferences. Good data overcomes limitations and ensures brands can woo their customers.
Loyalty in this fiercely competitive marketplace governs sales and brand affinity. This is a win-win for consumers and brands, as it helps businesses stay ahead of the curve by engaging with customers.
A McKinsey report states that brands that make extensive use of customer data analytics across all business decisions see a 126% profit improvement over companies that don’t.
All iStock images used are licensed to Pitney Bowes.