The digital transformation of retail has been going on for some years now, and as a retailer, it’s easy to become worried over how to remain competitive in such a fast changing environment.
The bad news is that this change still has a long way to go. The good news, however, is that you shouldn’t worry if you develop an understanding of the change and if you build a strategy on that understanding.
To help you on the way, I will share some advice, built on my experience and my focus on digital change for individuals, organizations, and society.
Here we go:
- Investigate your business model. Digital goods can be copied infinitely, and non-digital goods can be shared efficiently on digital platforms. And you reach the world with one click. Generally, this combination is what breaks traditional business models and also creates a push from owning to accessing, as for example in the music industry. Investigate to what extent your offerings are purely digital, or shareable on digital platforms, and play with ideas on business models taking advantage of the digital economy. Maybe you could design new digital services to go with your existing products or mix your digital offerings with digital content from other fields. Don’t stop. Ever.
- Be local (or niche). E-commerce is continuously growing, but essentially there are four ways to stay ahead online: Lowest price (hard to compete with Amazon and Aliexpress), Well-known Brand (hard to compete with Adidas and Nike etc), Niche Products (yes, you might sell sheep shears from Sardinia), Local Presence (yes, you might have a local store, which is more common than having niche products).
- Become Phygital. Local is good, but in a digital world, you also need online and mobile presence. And once you have both it’s important to integrate your Physical store with your Digital store, seamlessly—into Phygital: One single cash system, one single stock system, one single sales system, one single marketing system etc. Many providers offer these solutions (some call this Omnichannel, but that doesn’t underline integration, which is essential).
- Be social locally. The advantage of local presence is that it’s easier to meet people—managing returns and being able to offer additional items at the same time, building a brand experience in your store where people want to hang out, offering customers a pick-up location for goods ordered online, and more. This is why even Amazon is experimenting with local stores.
- Be social online. Naturally, you need to take advantage of all the opportunities offered on the Internet to be digitally social. Listen to advice from experts on social networks and always aim at creating an online presence that people might want to share with each other. Here’s where you can build digital momentum.
- Be super transparent. Customers visiting your physical or digital store should always know exactly what they can find in each of them, at any moment. Your physical store might be small, and could yet offer digital ways of discovering a large stock of products. Customers should be able to place orders in both stores and get deliveries at home or in the physical store, independently of where the order is placed.
- Develop logistics. Logistics is key for retail, and logistic services for phygital commerce is evolving. Investigate what new opportunities are offered, for example integrating delivery with nearby stores or having stock delivered to you in real time.
- Be predictive. With big data analysis, it’s possible for large online businesses to know what customers will order before they order it. Today, Predictive Analytics is also available for small businesses. The two top benefits are:
- Customer Retention—for example predicting when existing customers will come back and buy more of something. Reminding them before they think of it will make them happy.
- Demand Forecasting—tracking inventory, discovering trends and forecasting demand at different times can significantly help improve the top line.
In other words—digital is still a great opportunity in retail, and the earlier you investigate its opportunities further and keep track of new trends, the bigger the chance that you will be a digital winner.
Note: I also do seminars and workshops on digital transformation, and if you want a deeper look at digitalization, please don’t hesitate to contact me.
Insightful article as always. Keep on thinking, reflecting and writing!