Digital Transformation in Retail: How to Take Advantage of Innovation

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Digital Transformation in Retail: How to Take Advantage of Innovation

By Jessica Vadino, Digital Experience Leader, SoftServe - 06/23/2017

Digital consumers have become accustomed to all of the trappings of the modern digital landscape. Real-time personalization, recommendations, loyalty programs, expedited shipping and increased competition are just some of the elements that have increased the pressure on brands to adapt.

Today's retailers have never had more demanding customers nor more opportunities to interact with them in new ways. Both brick-and-mortar stores and online shops are growing more empowered with data; collecting it and, more importantly, leveraging it. They have a better understanding of customer preferences, and are now capable of taking advantage of a variety of tools and technologies to become truly customer-centric. Here are a few of the biggest technology trends currently impacting the industry.

Virtual and augmented reality
Whether it's checking the image quality on a new TV, trying on a tailored suit, or testing a new shade of lipstick, many consumers prefer to preview their possible purchase in real life. The desire to have that experience before committing can be a deterrent for online shoppers, but virtual and augmented reality (VR and AR, respectively) can help to close that gap. The key difference between them is that VR offers a digital recreation of a real-life settings, while AR puts on computer-generated graphical additions on top of the "real" world. These technologies are designed to empower consumers to "experience" the object by allowing them to virtually hold it in their hands before committing to buying it.

These technologies have tremendous potential in the retail industry. Take, for example, e-commerce giant eBay. The company is already making large investments in VR by launching the world's first VR department store.

Artificial intelligence
All retailers have data, but the question is how they can best get actionable insights from it. And here comes another essential prerequisite for digital transformation: artificial intelligence. Artificial intelligence (AI) has been a part of technological development for quite some time. Grounded in both big data and automation, AI helps retailers understand and interpret customers' personal preferences to make more accurate product suggestions. Talking about IBM's AI platform, Watson, tailoring customer recommendations on 1-800-flowers.com, IBM CMO Michelle Peluso notes that "Watson understands, reasons and learns as it interacts with people in natural language and then applies that insight to the gift recommendation. It pulls data from the interaction but also many other sources such as consumer buying trends and behaviors."

Today, several major retailers — from Macy's to Amazon to 1-800-flowers.com — are testing or already using the supercomputer's artificial intelligence capabilities to more accurately anticipate and serve their customers' wishes.

The mobile ecosystem
Mobile users have had a drastic impact on the retail industry, whether it's directly buying products, checking them out online or vetting them for reviews before purchase.

During Black Friday Weekend of 2016, $4.6 billion in sales came from mobile shoppers, and 54 percent of visits to retail sites came from mobile devices. Sixty-two percent of smartphone users have made a purchase online using their mobile device in the past 6 months. And a recent study showed 44 percent of smartphone users aged 18- to 34-years old consulted reviews while in brick-and-mortar stores, making decisions on what to buy.

Certainly most people these days use smartphones and tablets, and are quickly adapting to using these devices to make purchases more frequently each year. It is therefore more important than ever to make sure that your business is mobile-friendly, and in a way that best speaks to your customers.

"Mobile-first social networks like Instagram, and more frequent mobile-based searches on mobile devices, will make it hard for anyone to be a winner in the e-commerce and retail space without a huge focus on mobile," says Matt Smith, the founder of an Instagram marketing platform called Later.

How to take advantage of digital innovation
Businesses are now split into those who disrupt their industries and those who will be disrupted by others. The question is how do you prepare to disrupt your industry without being disrupted yourself? Here are some steps for remaining proactive in a modern era of digital transformation:

  • Embrace the latest technological trends like AR and VR and make a shift towards the development of digital product offerings for your customers to evolve into a high-tech company, even if that is not your core competency.
  • Look within your organization to review your key stakeholders' mind- and skillsets to determine if you are ready to disrupt and handle new challenges or if your business is still vulnerable to disruption.
  • As digital disruption is constantly changing, remember to maintain a continuous cycle of revising your cost structure, refreshing revenue streams, and reforming corporate strategies in order to stay afloat in the digital marketplace.

The key to embracing digital transformation is not to entirely abandon the way you have been doing business so far, but to enrich it with new digital offerings that meet the needs of your new digital-savvy generation of customers.

The ability to adapt to new digital realities requires a constant, thorough observation of ongoing business processes, products and customer preferences as well as careful evaluation of newcomers in the marketplace to ensure you remain competitive. In the near future, however, we will likely see many retailers continue to struggle with digital disruption phenomena, trying to determine the ideal balance of physical and digital market presence. This issue is not something new, but it is one that will continue to evolve in challenging and unexpected ways as the digital transformation continues to gather momentum.


Jessica Vadino is a digital experience leader at SoftServe, a global provider of digital services and software development. Vadino has more than 15 years of experience in customer experience, merchandising, platforms, and personalization in the retail sector.