Digital transformation in retail: slightly more than 5 stores out of 10 have a strategy

In Italy 52% of retailers have defined their DX Journey, 44% are still defining the area of governance, and 2% say they have no strategy in place.

Distribution is very much aware that the moment has come to implement an omnichannel strategy to manage the customer journey.
What is less clear is how to manage the digital transformation journey. Riding the wave of innovation, and choosing the right technologies, requires a strategy that 44% of Italian retailers still have not defined, while 2% admit to not having one at all. According to the data published by the Osservatorio Innovazione Digitale nel Retail (Retail Digital Innovation Monitoring Unit) 54% of brands state they have implemented a specific plan to manage the DX. Who is leading the change? According to 42% of the sample it is the CEO, while 12% say it is the Line of Business.

Innovation tailor-made for every brand
Undoubtedly the culture of change needs people able to guide the decisional processes on the one hand, and innovation on the other. Not only digital projects must be coherent with the business objectives, but there is also the need for a new awareness in order to implement the new systems and solutions. Technologies cannot be bought as a package; for the solutions to be really functional and effective they need previous analysis, but also testing and monitoring. If, with regard to the back end, retailers have already implemented solid and sensible choices to solve logistics, production, orders and payments management, at the front end level there is still much trial and error.

It is easy to say digital transformation
The technologies are many and can be combined in variuos ways: tag Rfid andNFC, barcode and Qr code, digital signage and interactive stations, beacon, Wi-Fi, streaming, cloud and apps… The Internet of Things is gaining ground, and the world of sensors, integrated with the latest generation of management software, can take innumerable forms. Understanding how to short circuit the business and relationship touch points can be quite a challenge, especially when reasoning about the convergence of the on line and off line worlds. To capitalize e-commerce in order to trace and track product data, transactions, and stock, as well as managing the choices, and the positive and negative opinions of the customers is a challenge that involves Big Data Management and Analytics. Who, though, decides the choices? The Ceo? Marketing? IT? The Digital Innovation Officers? The Data Scientists? Criteria and reference models change according to how well established is the firm. The analysts of Milan Polytechnic have mapped the approach and the level of maturity of Italian Distribution.

The level of (un)preparedness of Italian Distribution
Going into more detail, according to the analysts’ data, 74% of Italian retailers state their implementation of digital projects is coherent with the defined strategy; the digital governance is a priority and involve the top management and the relevant functions and the digital projects undergo a time of testing before the actual implementation. At the forefront, in respect to the digital governance, is the Fashion sector (56%), the Food and Grocery sector follows at a much slower pace (21%). The Other Sectors – including electronics, furnishing, food & beverage, and Horeca, to name the main ones, count 53%, although there are major variations among the single sectors.
What is lacking, according to the experts, is a well thought out approach to the management of the technologies used. Solutions are introduced according to a scarcely integrated logic, adding technologies at random.

” According to the Monitoring Unit, 2% of retailers in Italy have not yet defined a clear strategy of digital innovation, and they have no intention of doing so in the foreseeable future. “

“Digital innovation projects are implemented only as an answer to specific needs, without a comprehensive plan of transformation. Against this first level of unpreparedness for the DX Journey, nearly 4 retailers out of 10 are working on it, and even though there is no defined strategy there is a general plan in relation to the objective of processes optimisation, and management of the customer experience”.

Learning to balance the physical with the virtual
The brands with an organic vision, that take into consideration integration and advanced development, are the ones implementing projects where Customer Experience is of key importance for the business: showing and describing the products is no longer enough, nowadays customers expect advice, involvement, and emotions. This is why it is so important to profile the customers, study their flow and behaviour inside and outside the store, and design systems that can offer services while tracking the consumers interaction in respect to these services. Through digital technologies stores are realising that Big Data Management and Analytics depend not only from sales receipts, but also from the most advanced platforms of Visual Content Management. The aim, for example, is to short-circuit the information coming from the production with the e-commerce websites. Or again, to install interactive touch points offering services that combine information and suggestion, enabling marketing to study the feedback of the attention paths. Nowadays innovation means introducing in the store the digital experience, in order to implement systems that allow retailers to capitalise the experience of store personnel and customers. The store is still an important distribution channel, not only to try and physically touch the products, or to be sure they meet the customers requirements. The store represents also a satisfying ecosystem: it completes the sensorial experience, guarantees the assistance of the sales staff, and ensures the immediate possession of the item purchased.

Laura Zanotti, Journalist and Technical Writer