Seven enablers for successful digital transformation in retail

20 January 2017 Consultancy.uk

The retail industry is currently facing a significant challenge with an increasing competitive threat from online/digital-only retailers and equally digital savvy and demanding customers. Retailers need to innovate their sales models and integrate digital technologies throughout their businesses and operations.

To overcome these challenges and to stay competitive in the digital retail landscape, organisations are implementing large-scale digital transformation programmes. To help retailers effectively deliver digital transformation, experts from Wavestone – an international consulting firm with over 2,500 professionals globally – have identified seven enablers organisations need to consider for success.

1. Building the new value proposition for point of sale and the tasks of the sales force

The discussion around digital must focus on redefining the added value of the point of sale and the sales force. The following questions must be addressed: What additional services can be offered? What decision must be taken in terms of a once and done* attitude? How complementary are the added values of the physical or digital? What level of expertise should be expected from the sales force?

The positive outlook of the business and position of the employees is not a consequence of the digital transformation, but a central element of the path taken.

* The once and done approach involves dealing with all the questions a customer has altogether at the point of contact.

Seven enablers for successful digital transformation in retail
2. A clear roadmap having regularly updated milestones updates and quick wins

It is essential to build a transformation roadmap with progressive, concrete steps. At each stage of the roadmap what will the customer see? How will their experience be influenced? And for the consultant/salesperson, what will the benefits be? This roadmap must be used as a communication and planning tool. The composition of the roadmap and transformation programme should demonstrate that the same attention is given to the customer- orientated work streams and the work streams that involve the internal customers i.e. the employees.

It should also show concrete (albeit limited) results achieved within the first few months of the programme. The tunnel effect, in which the first tangible results are not achieved until after months of development, must be avoided. These milestones may take any form: new process, development of a service, signage, etc. 

3. Particular attention given to proximity management

All transformations of distribution networks we have analysed demonstrate that proximity management is the link that is most heavily impacted on in the transformation: in addition to integrating the new sales positions, organisations must assist their teams in improving their skills and the adoption of a new performance evaluation process. These groups often lack benchmarks on the latter point, and particular attention must be given to them. Training is not sufficient; other alternative approaches should be provided: tutoring, coaching, good practice exchanges.

4. Staging ‘phygital’ commerce

The design of the points of sale must emphasise the complementarity of physical/digital and must organise the switches and interactions between the two worlds. The flow of trade between the two worlds may take very different forms: tools for the salesperson providing access to the same interfaces that the customer sees on the web, self-service terminals enabling a purchase started at the point of sale to be completed on the Internet, etc.

5. Experimentation or the virtues of test and learn

The digital world is the universe of test and learn. As far as the impact of the digital world at the points of sale is concerned, the imperative is compounded by the need to find good positions vis-à-vis the customers. The successful digital transformation programmes therefore integrate multiple agile “learning” tools: co-construction of new positions with pilot consultants, customer surveys on the site, pilot points of sale, experimental corner, etc.

6. Multi-channel modernisation as a pre- requisite

The development of sales tools within the framework of a digital transformation programme will require a modern IT architecture to manage the multi-channel seamlessly and efficiently. This is a prerequisite for tool changes to accommodate new processes or services.

7. Significant investment in CRM

The planning of the work and the tool budgets must necessarily include strong growth of the projects associated with CRM: capture of customer activity at the point of sale, personalisation of the marketing campaigns at and outside the point of sale, to maximise the bounce between channels, among others.

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Four ways digitalisation is transforming car brands and dealers

16 April 2019 Consultancy.uk

From changing expectations from the customer to new stakeholders entering the industry, the digital transformation of global automotive industry means it is facing the wholesale transformation of its business model. In a new white paper, global consulting partnership Cordence Worldwide has highlighted four major digital trends that are transforming the relationships between car brands and dealers with consumers.

With digital transformation drives booming across the industrial spectrum, automotive groups are no different in having commenced large digital transformation programmes to improve productivity, efficiency, and ultimately profitability. Falling sales figures mean the automotive sector is facing an increasingly difficult road ahead, something which means companies in the market are even more hard pressed to find new ways to improve their bottom lines.

While it offers major opportunities, the industry’s move to digitalise is not without complications. It has triggered a series of major internal changes, which have presented automotive entities with the challenge of becoming a “customer-oriented” industry. A new report from Cordence Worldwide – a global management consulting partnership present in more than 20 countries – has explored how automotive companies are navigating the rapidly changing nature of digital business.

New business models

The level of change likely to be wrought on the automotive industry by digitalisation is hard to overstate. Automation could well lead to significant reductions in the number of accidents, higher vehicle utilisation and lower pollution levels, while leading to a $2.1 trillion change in traditional revenues, with up to $4.3 trillion in new revenue openings arising by 2030.

As a result of this colossal opportunity, it is easy to see why almost all automotive groups now have digital departments, with generally strong communication within the digital transformation and the customer approach. The changes to society which this may have are potentially distracting automotive firms from the change it is leading to in its own companies though, according to Cordence’s paper.

The automotive market is dead, long live the mobility market

Because of this, the sector’s business model is set to transform over the coming decades. With digitalisation speeding up the appearance of concepts such as car-sharing, a subscription package model will likely become more palatable. At the same time, car and ride-sharing models will cater to the sustainability criteria of millennials, who will rapidly become one of the automotive market’s leading consumer demographics in the coming years.

Antoine Glutron – a Managing Consultant with Cordence member Oresys, and the report’s author – said of the situation, “These ‘old school industries’ are now working on creating new opportunities, but in so-doing are facing challenges and threats: new jobs, new technologies, new ecosystem of partners, necessary reorganisation, different relationship with customers, and even new businesses. The customer approach topic is in fact a real challenge for car companies as it implies changing their business model and adjusting their mind-set to address the customer 4.0: from product-centric to customer-centric, from car manufacturer to service provider.”

Digital customer experience

In the hyper-competitive age of the internet, even top companies face an uphill challenge when it comes to holding onto customers through brand loyalty. Digital disruption has resulted in changes to consumer behaviour, which is forcing a range of marketing strategists to reconsider their old, possibly out-dated strategies. As modern customers wield an increasingly impressive array of digital tools and online databases, they and are now able to quickly and conveniently compare prices, check availability and read product reviews.

The automotive sector is no exception to this trend, according to the study. In order to adapt to the needs of the so-called ‘customer 4.0’, car companies will increasingly need to change their business model and move away from product-centric companies to customer-centric ones, from car manufacturers to service providers.

Glutron explained, “As an automotive company, you can no longer expect customer loyalty simply with good products; you must conquer and re-conquer a customer that “consumes” your service. The offer now has to be global, digital and personalised. Your offer has to be adapted to this customer’s needs at any given moment. A key issue related to data control is to build customer loyalty by creating a customer experience 'tailored' throughout the cycle of use of the 'car product': purchase, driving, maintenance and trade-in of the vehicle.”

One way in which the sector may be able to benefit from this desire for a tailored experience is via connectivity. Consumers are generally positive about new connective features for automobiles, and many are even willing to pay upfront for infotainment, emergency and maintenance services. Chinese consumers, where the connected car market is set to hit $216 billion, are already particularly interested in paying a little more for navigation and diagnostic features in their future new car. This can also enable automotive companies to exploit a rich vein of customer data, enabling them to rapidly tailor their offerings to consumer behaviour.

New automotive segments

Digital transformation has also brought with it the rise of completely new application areas. As mentioned earlier, the most well-known example is the autonomous or self-driving car, where the last steps forward were not taken by major automotive groups but by technology companies such as Tesla. While this may have given such firms the edge in the market briefly, a number of keystone automotive names will soon be set to take the plunge into the market themselves, leveraging their car manufacturing prowess and huge production capacities to their advantage.

Before companies rush to invest in this market, however, it is worth their while to remember that the readiness and uptake for such vehicles differs greatly geographically. For example, following a study published in 2018, 92% of Chinese would be ready to buy an autonomous car, compared with only around 35% of drivers in France, Germany and US. Meanwhile, the infrastructure of different nations will also be significantly less accommodating of the new technology.

Use digital for steering thr activity

Elsewhere, Cordence’s analysis has suggested that hooking the cars of tomorrow into the Internet of Things is also likely to see a rapid change in the business model for car maintenance, providing real-time diagnostics for problems. This presents chances for partnerships to improve the connectivity of cars, especially with tech companies; for example, PSA partnered with IBM for a global agreement on services in their vehicle. Meanwhile, data could also be sold to other parties with an interest in this data, such as the government, which could use it to manage traffic levels, or ensure that only adequately maintained vehicles take to the road.

Glutron added, “With the increase in the amount of client data and connected opportunities, the recommendation is to set up data-centric approaches. The value is now in the customer data. The general prerequisites are to rework the data model and the Enterprise Architecture and generally build up a data lake including data from all sources (internal and external, structured and unstructured).”

From automotive to mobility

Relating further to the idea of connectivity, the report claimed that automotive firms must now adjust their models in line with the provision of end-to-end mobility, rather than treating the sale of a car as an end point in their relationship with the customer. In order to realise this transformation, transformations are likely to become more and more important.

A network of partner companies means automotive firms can provide a global mobility experience. As the vehicle is increasingly connected to its environment, new partners can also be cities, governments, and other service providers within the global mobility services industry in which the car brands want to take part.

According to the study, the target is clear. Companies must look to a holistic transport service, offering to move customers from A to B in a unique and pleasant way – otherwise they might as well take public transport. At the same time, they should extend the services reachable “on-board” (especially the enhancement of the connectivity between the car and smartphones or other connected devices), and reach high standards in terms of user experience (online sales, online payment, customised experience during and after the use of the car).

Concluding the report, Glutron stated, “These mobility market transformations could be considered a threat for the car manufacturers. Quite the opposite: if they take up the challenge and review their business model so that they become the service provider – communicating no longer to a driver but to a ‘mobility customer’ – they can then take advantage of their expertise and their position as a historical player. The most convenient means of transport are cars, and building a car is highly-skilled work.”