Making the digital transformation, from traditional roots as a sole bricks-and-mortar company into building out a digital and social commerce experience for customers, is crucial to the survival of retail as we know it.
Retail businesses must respond to new shopper expectations. Looming changes to the status quo are forcing companies to bridge digital and physical shopping experiences and to try different ways of transforming the retail experience.
While the lines keep getting blurrier between customers’ digital, physical and in-store experiences, it’s going to take serious leadership and vision to guide a company (or yourself) across each moving border and back again. Evolution is happening rapidly and only those leaders who manage digital transformation skillfully will be positioned for survival in the next 5 years.
We heard recently that department store giant Macy’s plans to close 100 stores, a dramatic step aimed at helping the chain get ahead of a potentially crippling problem: America, executives say, has too many stores for the online shopping era.
Just the day before, Michael Kors said it would reduce the amount of merchandise sent to department stores. The day before that, Coach said it planned to pull its purses and other goods from 250 of these bricks-and-mortar stores — about 25% of such locations.
Both brands said that the hefty discounting now common at department stores has cut into margins and their perceived cachet with customers.
Digital transformation means retail businesses can’t afford to be stuck. Companies are getting stuck in three major ways:
- Lack of social presence.
- Data is not a focus.
- Old technology and platforms.
I just spent three days at a retail automotive conference where I was on a keynote panel discussing the topic of digital transformation and ways in which data should guide decisions on digital advertising dollars.
I went to this conference with the intention of listening. To pay attention to pain points, successes, and failures that were considered successes, while filtering out the noise of even more “easy solutions” to transform a bricks-and-mortar business into a digital superstar.
Digital transformation does not occur with the purchase of just another piece of software.
I serve automotive retail and this disruption in department stores is coming just as fast to the auto industry. A small amount of manufacturers and retailers realize digital transformation is important but for the most part, everyone else has their head in the sand.
The fact is, today, the customer is in charge. No one wants to spend any more time at car dealerships than they have to. They are looking for frictionless experiences. The industry has now had nearly 10 years to listen to consumer preferences and has done very little to adapt and accommodate. Disruption is at the door and now it seems everyone is scrambling.
There are salespeople that buy into digital transformation and have even leveraged the opportunities of the connected world. I hear from them and their frustrated colleagues regularly and they’ve given up waiting for the boss to accept social media and digital marketing. They need to make a living and they can’t wait for someone to just walk in and buy. They know it doesn’t work that way anymore.
So many traditional models, including car dealerships, have struggled with adapting to digital. I get it. Communicating a vision to transform operations in order to maneuver seamlessly through the connected world is no cake walk. It’s why I titled my book “Automotive Social Business 2.0” so retail automotive could begin to evolve and eventually become a modern retail business.
Closing stores is an easy answer. Truly understanding the shifting retail landscape is much more difficult.
The need for traditional components of great customer in-store experiences is still intact:
- Happy, helpful employees
- Clean, welcoming environment
- Respectful interactions
- Overall delightful experience that customers can’t wait to tell others about
A digital transformation includes all of these AND they are evident in online experiences too.
I spent part of my time at the conference with one of my clients who is struggling with digital transformation. His dilemma is getting buy-in from not only his superiors but from the rank and file employees. He shared with me an insight he discovered once he began comparing the numbers.
The best part about math is that it’s true, whether you believe it or not.
After reviewing some simple calculations, he found that 275 people on average physically walk into their store every month. He also discovered that over 10,000 unique visitors come to their website every month (this number does not factor in the traffic and engagement they get on social media channels).
He said, “Why are we spending so much attention and money on delivering a stellar in-store experience while patently ignoring the multitude of shoppers who come to our site?”
I should mention too that this particular client is hamstrung by the manufacturer’s rules that are less like digital marketing and more like obstacles to sales.
As I interacted with and listened to attendees at the conference, I found most struggle with:
- Outdated platforms (websites).
- Too many solutions for problems they don’t have.
- Social media savvy and where to focus.
- Nearly non-existent analysis of data (aka: targeting their ideal customers and proof that what they’re doing is paying off).
A holistic approach matters.
In order to succeed at digital transformation, companies must think holistically about their strategy. Consumer behavior is driving retail changes and it’s important to understand what those behaviors are exactly.
Ever-evolving consumer shopping behaviors are driven by:
- Channel-agnostic shopping journey. The use of digital tools and channels during pre-sale, transaction, and post-sale.
- Expectation of a seamless experience. Consumers display so-called omni-channel behavior and seek experiences that are as easy, fast and frictionless.
- Innovation as a new expectation. There’s a growing demand for shopping experiences that transcend beyond excellence which are unique and satisfy a need to witness innovation.
- Easy access to information that matters. Helpful relevant content throughout the digital shopping experience that bridges through to in-store employee/customer interactions.
Adapting your store’s operations to these behaviors is key.
As digital transformation strategies emerge, deconstructing the organization and restructuring based on specific goals will become commonplace.
We already see the need in the social media and digital marketing goals for dealerships. There is an emergence of customer-facing advocates (salespeople or otherwise) who engage the customer through all channels and all phases of the buying cycle.
Pro Tip: Use customer feedback to assist evolutionary change. This is very different than just catering to the customer’s needs. It’s acting on what customers are asking for.
Retail disruption is here and digital transformation is the way forward. The question is, how will you evolve?