Retail CEO, where is your digital transformation?

Tomorrow's commerce will certainly be driven by the digital, and cannot be made with yesterday’s tools, says Philip Bianchi founder and CEO of Proximis, the French software provider.

The COVID-19 crisis has had a strong impact on retailers and brands, who are seeing their ability to respond largely diminished.

Many companies saw themselves as particularly involved in their digital transformation – with some even boasting about having put in place intelligent artificial algorithms that were expected to revolutionise the consumer experience.

However, with the lockdown, reality is very different, and it unveiled a model of retailers who were operating in silos and stores in competition with online channels such as e-commerce. In truth, many retailers now face a failure of their digital transformation.

The numbers demonstrate why the consumers are less and less loyal to those stores:

● 81% of purchases made in stores started on their website (source: GE Capital Retail Bank, February

2018).

● 77% of consumers use multiple channels to finalise a transaction (Source: State of the Connected Customer, SF Research, June 2019).

● 83% of retail sales will always involve stores until 2023 (IHL Group, November 2019).

● 84 % of the baskets started online are abandoned, in the absence of a strong promise regarding the availability of products in stores (Forrester, December 2019)

It is hence not right to say ‘my website only represents 5 percent of my turnover’ but ‘my website is responsible for 81 percent of my turnover, and this contribution is experiencing a strong growth.’

This assumption is indisputable and every CEO must henceforth ask him or herself a fundamental question: who is defining the online selling strategy, knowing that the latter has a direct and strong impact on the turnover and margin of the entire company and thus on the objectives and commitments taken before the Board?

Appropriateness of choices

In a recent discussion with a consumer experience director of a big retailer in perfume and cosmetics, I brought her attention to the fact that the consumer does not care about historical selling channels. For instance, if they want to buy two products online, one to collect in one hour in store and the other, which is unavailable in store, would be delivered at home – and crucially that this would be done all in one cart and with one payment. Consumers want to have this altogether ordinary possibility in their purchasing. Equally, a sales associate should be able to add various products in one cart without any friction in store, even if one of them in unavailable and set to be delivered to the consumer’s home.

Due to constraints posed by recent technological choices, this ordinary experience was impossible, although those same technologies were chosen after a long research exercise and consultation throughout organisations. This consumer experience director I was speaking with simply responded that the consumer did not need this flexibility, and would accept delivery for 100 percent of the order, or retrieve 100 percent of the order in store. her assumption, while imposing her choices on the consumer, was that consumers would continue buy without batting an eye, and remain loyal to the store where she is working.

Before this crisis, not a week would pass without hearing about those so-called omnichannel strategies in those various fairs where retailers would send their teams. Where are those strategies today? Why aren’t the e-commerce websites of those stores yielding 40 percent of their turnover? Why is the inventory of available products in store locked behind closed doors until further notice?

The priority of the retailer is the consumer

A few weeks ago, I had the pleasure to meet the Chairman and CEO of an important fashion retail brand. He was telling me that he had just signed up for a full e-commerce website make-over that he should be launching brand-new in eight months. He admitted that he was not involved in the decision workshops, but had met with the provider and agency at the end of the cycle. Quite surprisingly, he also revealed that he set, at the beginning of the year, the implementation of click-and-collect in a different solution as a priority for his teams, in addition to a tool for sales in order to avoid out-of-stocks in stores in a third solution, so that the sales associates would stop saying ‘no’ to consumers. All those services have been expected for quite some time and hence were highly strategic.

Unfortunately, according to his teams, he would still need to wait at least twenty-four months more to get what is highly strategic for him today. While the e-commerce project will take approximately eight months, a parallel project to change the point-of-sale system in store that had started eighteen months ago and was expected to end in sixteen to twenty-four months. A request for a warehouse management proposal also had to be made to integrate a powerful order management system, as well as the completion of a project to unify e-commerce and store data. Despite this complexity, the CEO was promised that ‘once everything is over, it will be super simple and that it will deliver.’

The result is that many retail brands are facing great difficulty as a consequence of having to wait before being able to provide simple and intuitive sales channels for their consumers – who, by the way, could not care less about complicated choices and only want to buy when and where they want.

If your business holds in-store resources and considerable means, and it is able to wait years to meet the expectations of modern consumers, then why not? If not, it is urgent to reconsider those choices that have been disrupted by the crisis and re-focus on the promise given to consumers. The dramatic context of COVID-19 has shed daylight on the failing level of preparation of most retailers in the face of this situation, despite those millions invested in e-commerce over the past couple of years.

 

Philip Bianchi is the founder and CEO of Proximis Unified Commerce, the French Saas software provider which works with brands and retailers to enhance consumer experience across all sales channels. For more information please visit their website.

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