Digital Transformation: RETAIL & TECHNOLOGY
Updated: Aug 24
The digital transformation is everywhere: not just in retail, but in schools, government, hospitality; the list goes on. This also includes social media, blogs, vlogs, influencers, affiliates, marketplaces, and your very own online store - AKA your eCommerce Store.
What Is Digital Transformation?
“Digital transformation is the integration of digital technology into all areas of a business, fundamentally changing how [it] operates and delivers value to customers.” -The Enterprisers Project
More than just implementing new technology to increase efficiency, accuracy, and speed-to-market, it also requires cultural changes in which organizations “continually challenge the status quo, experiment, and get comfortable with failure”.
This is scary for a lot of older, especially enterprise-level companies, many of which have multitudes of long-standing, and frankly outdated business practices that they’ll have to change or discontinue completely.
For younger companies and aspiring business owners, it can also be intimidating if they don’t have the technical skills internally to write code for a website, build a social media following, or set up automated inventory control, shipping, logistics, customer service, and marketing efforts!
We turned to a technical expert for some additional context on the impending changes to the retail industry – the Founder of NetVerta Technologies, and 25-year IT veteran, Mike Cote. “Retail has been turned upside down - including the technology that enables it.” Cote explains that “mindsets towards IT support have changed drastically and will continue to change as businesses begin to ramp back up — particularly when it comes to retail store infrastructure.
Business leaders have been focused on huge continuity challenges and have had to make hard decisions on how to better use technology to augment people, not replace them. Fast-forward from the past several months, and a major social, economic, and technological transformation has played out before our eyes.
Literally overnight, businesses are shuttering doors for good, including major retail brands. Across the world, and in almost every aspect throughout the pandemic crisis, technology has been the common denominator for most organizations’ resiliency and survival.
It’s also driving significant organizational and cultural shifts – such as people working from home and connecting with family members, colleagues and employees through video conferencing platforms and a host of other collaboration tools.
The principal change is a matter of pace. COVID-19 has turbocharged the shift to online shopping - which had already begun - to redefine the retail landscape.
“The global pandemic has quickly shaped our shopping behaviors as thrift and value have become more important than ever.” - Mike Cote
Even as social-distancing begins to ease over the next year, the growing trend towards online shopping will force retailers to bolster their eCommerce operations; not just in product availability, but also speed-to-customer, customer experience, and customer service.
Which businesses will succeed is yet to be seen, however. According to Cote's forecast, “we’re going to see a true test of current CIO’s & CTO’s ability to deliver the right technology as their company’s vision and roadmap may have drastically changed since the beginning of 2020. “
There is a lot to unpack in the digital world as it pertains to the retail industry. Online commerce can be messy, but it’s flourishing, and making more and more progress towards its inevitable dominance over its Brick+Mortar (B+M) counterpart in the retail sales in the world.
Post-pandemic, we’ll be living in a much different world than that of 2019 and its predecessors. New brands will emerge - and old brands that don’t invest in technology will shutter - faster than we have seen since the start of the 'Retail Apocalypse'.
Software and Apps can easily be installed and integrated with millions of other solutions to control your inventory, purchase orders, fulfillment, allocation, distribution, social media posts, email marketing, and MORE.
Of course, technology alone is not able to run a business; there is a lot that goes on between the various parts of your company. However, you cannot simply point-and-click your way to having the best online store in your industry.
Some things just require investments of time and resources to bring your business up-to-speed with the technology that is available. There has never been a better time to be in retail; whether as a new startup or a seasoned enterprise operation, today’s tech is sure to enable you to reach more customers, better, and faster than you did yesterday.
The key areas of Digital Transformation we’re focusing on in this post include:
Artificial Intelligence + Machine Learning
Extended Reality: Augmented
Without further a due, let’s dive right in.
1. Headless Commerce
A quick Google search “what is headless commerce?” will get you somewhere in the ballpark of 1.5-million search results and ads from industry leaders such as Salesforce, BigCommerce, and more. You can even find articles from brands like Shopify on “choosing between headless commerce vs traditional commerce.”
What is Headless Commerce?
Headless Commerce is when the front-end and back-end systems in an eCommerce platform are ‘decoupled,’ or more simply, when the front-end and the back-end systems do not have to rely on one another for changes to take place.
For those who are not familiar:
How can ‘going headless’ benefit you?
Requires less time and resources from IT to make changes on the front-end
Increased personalization for your customers
Better omni-channel commerce experiences creating competitive advantages
What are the potential challenges with Headless Commerce?
There are no guard rails. You are in complete control over the front end.
Going live and timelines. A lot more work goes into the front end if you are building it from scratch.
Cost. Time is money, and quality translates to quantity when talking about dollar bills.
How does Headless Commerce work?
Most modern software services are delivered via a server-less environment. As a merchant, software applications generally do not require hosting on your own servers or systems; most are already “in the cloud,” and the majority of modern tech allows for communication between systems via APIs and Webhooks.
For a refresher on API’s and Webhooks, check out this awesome retail glossary. These API’s allow backend systems like BigCommerce and Shopify to connect to any front-end system. You can find their respective API documentation here:
Some important applications of Headless Commerce for retail eCommerce businesses include the ability to easily and instantly update design, copy, and calls-to-action throughout the site, enabling your marketing teams to test strategies, collect data, and pinpoint the most effective messaging/designs with ease – and MUCH faster.
Furthermore, when operating in a headless environment, a “front-end” is not even necessary. Consider these examples you may already be familiar with:
⫸ Asking Alexa or Google Assistant to order more toilet paper with simply a vocal command.
⫸ Amazon Dash Buttons enable customers to order go-to items with the push of a button on the fridge.
There is no front-end in either of these situations, but the consumer is still able to interact with marketing content, connect with the company, and place an order. The key difference is that these transactions are made possible by making the act of placing an order as CONVENIENT as possible for consumers, which ultimately reinforces brand loyalty and drives repeat purchases.
2. Artificial Intelligence (AI) & Machine Learning (ML)
AI + ML are already impacting industry operations and the way consumers interact with businesses, and developers and scientists worldwide are racing to create systems and machines capable of interpreting, reacting, and adapting to data, trends, and situations – just like the human brain.
You may be familiar with the acronym “SaaS” (Software as a Service). The latest acronym trending everywhere is AIaaS (Artificial Intelligence as a Service), meaning 3rd party companies are selling software solutions that offer artificial intelligence which retailers can apply to:
Shipping and Logistics
Targeted Marketing Campaigns
“Artificial Intelligence technology takes a big data set…runs it through AI algorithms…and then produces a model which can provide answers like a real human.” -The Balance Small Business
Another area where big changes are expected is Retail Merchandising.
In most retail businesses, a Merchandising department is comprised of data analysts, planners, designers, buyers, and merchandisers; the people whose work, cross-functionally, makes retail stores run.
For small businesses, these functions could all be owned by the business owner and their staff. For large, corporate enterprises, however, the Merchandising department can consist of several dozen (sometimes even a few hundred 😲) employees.
They design goods.
They source materials and production.
They analyze consumer trends and competition.
They choose which goods will be sold in their stores.
They monitor and control inventory levels.
They make product placement and display decisions that drive sales.
They interpret data + trends to predict what customers will want and how many units they'll sell.
Merchandising is the engine of retail.
We spoke with Stacey Mendez, VP of Retail Planning and Advising at NetVerta Technologies (and former VP of Merchandising at Francesca’s), to get her take on the importance of businesses making a conscious effort to keep up with these constant advances in technology and automation.
“In a highly competitive retail landscape, now with additional pressures in the industry, who will survive? Those who are engaging in solutions that will increase their use of Artificial Intelligence (AI) and Machine Learning (ML) across the enterprise."
Looking back on her experiences in big corporate retail, Mendez notes low-hanging fruit specifically, in "branding, assortment curation, site merchandising, enterprise planning, and supply chains", and notes that teams utilizing Artificial Intelligence and Machine Learning will "better understand their product drivers, constraints, threats and, of course, assortment opportunities."
Artificial Intelligence and Machine Learning will be the fuel for retailers to stay competitive and profitable.
Other benefits could include "transitioning your 'analysis-paralysis-excel-based' teams to more revenue-driving action-oriented testimonies" enabling merchandising teams to "allocate additional time to studying and modeling forecasted outcomes.”
Typically, 40%-50% of a merchandiser’s work hours each year are spent solely on formatting, formula-writing, and updating spreadsheets in Excel. Many companies rely heavily on ad-hoc reports that are time-consuming (and costly) to keep up-to-date.
Furthering Mendez's point, merchandisers are data-junkies. They love analyzing data. But data that’s already been formatted, with formulas already calculated, and insights ready to digest is MUCH more valuable to a retail planner/merchandiser.
For businesses that implement AI and ML into their merchandising departments, a few things will happen.
Their talented teams of analysts and planners will be able to do their jobs better. Partly for lack of spending over 1,000 hrs/year updating spreadsheets, but also because the data will be more accurate (no human errors!), and key, business-critical insights will be much easier to identify!
Their insights will be stronger, their decisions more informed, and their products, sales, and inventory positions will all improve.
Mendez goes on to highlight that this switch in mindset will also give merchandising teams "more time to dive into the unproductive bottom 20%" AI will help bring light to outliers that "otherwise disrupt revenue-driving results into channels", showing:
increased predictive results
decreasing inventory liability
reducing margin pressure
customer purchase fatigue
Utilizing ML for recycled team-tasks also helps businesses "transition their focus to supporting business-driving efforts, and individuals become armed to ideate more on operational efficiencies, supplier relations, and cost-saving initiatives.”
For more information about how AI is impacting retail, check out these other helpful links:
Tech Republic - “6 ways AI will revolutionize retail”
The Storefront - “How Artificial Intelligence is Powering the Retail Experience”
3. Computer Vision
While Computer Vision (CV) sounds like a superpower 🦸♀️- which it totally is considering the powerful use cases - it is the technology that allows a computer to use AI and ML to visually identify and respond to what it sees through images, or videos.
We are already seeing and adopting CV:
Facial recognition to unlock mobile devices, payment information, passwords, and more.
Translation apps for travelers using the camera to digitally translate text in signs, menus, maps, etc.
Autonomous driving, lane assist, parking assist, etc.
With CV (and AI + ML), a retailer can provide better customer experiences. Imagine an accessibility revolution in which a blind person wears a prosthetic eye, glasses, or other lens equipped with CV, AR, AI, and ML, and an earpiece that dictates information about the items they are shopping.
With widespread adoption of this technology in retail, visually-impaired shoppers could easily identify and compare various products, read ingredients, identify allergens, and so much more, completely transforming the shopping experience, and adding new depths of independence for the visually-impaired! 🙌
Computer vision will play a BIG role in retail, and it has already started.
Have you ever virtually viewed furniture in your living room?
Virtually tried on makeup?
All from the lens on your mobile device?
While CV obviously has numerous applications in online retail, it will significantly affect B+M experiences as well. As eCommerce continues to make its climb towards the top of the leader-board for total contribution of retail sales, CV becomes more of a NEED than a WANT for retailers looking to survive, thrive, and scale in today's retail landscape.
Brick+Mortar sales may be slipping, but they are still dominating total retail sales by a large margin - at least for now. Innovation in the B+M experience is going to be crucial.
Naveen with Forbes wrote a piece on this very topic, you can check it out here. If you want to learn more about “how computer vision works,” check out this awesome video by Sara with the Google Cloud Platform.
4. Extended Reality: Augmented
We have discussed AI, ML, and CV; now bring these systems together and you can create an incredible experience that was once impossible with: Augmented Reality (AR).
AR takes your real-world environment, and with the help of all these technologies - AI, ML, and CV - allows physical and digital items and information to coexist through a lens - most commonly, your smart phone, and soon, smart glasses or contacts.
Mendez explains that “hologram interaction ‘try on before you buy’ could be a great way to determine interest from the customer, even if she didn’t buy.” Also, in the age of Corona Virus, “touch-less purchasing” will likely become more regular part of our global economy.
There are already a multitude of use cases for AR in retail and eCommerce stores as well.
According to Accenture, we can expect to see additional use cases in virtual merchandising, customer service, marketing, engagement, product comparisons, brand loyalty, and more.
“Extended Reality will redefine the ways people interact with technology — ways that have yet to be imagined — and could represent a $110 billion market by 2025.” - Extended Reality News
Retailers (and businesses in other industries) that understand the importance of these technological advances, and actively work to incorporate them into their business – again, back to digital transformation – will reap major rewards for being ahead of the curve, instead of waiting until it's already too late to catch up.
If you’ve had a smart phone for the last few years, then you are likely familiar with internet speeds of 4G, 3G, etc.
Think of each "G" as having its own unique limitations surrounding speed and capability, that have gotten better and faster with each generation.
When we make a call, send a text, or receive an email, these networks collect the desired information from the sender, carry it across designated radio frequencies and bandwidths, and deliver it to the receiver [almost] anywhere in the world - at warp speeds.
Here is a quick crash course on “How 5G works and what it delivers” by CNET.
As chief technical guru, we asked Cote to share his perspective. He explains that the capabilities 5G will bring – "faster speeds for connectivity, downloading, and live streaming" are definitely noteworthy, but it's "the ability to connect millions more IoT (internet of things) devices that’s most intriguing."
Whether or not you're aware of it, we’ve all had experiences with IoT.
Cote continues, “4G LTE began the IoT movement with wearable devices, contactless payments, smart home appliances, mobile applications, VR, AI, and more.
5G will vastly improve all this technology and beyond. The 5G movement is far-reaching and with millions more devices being connected, the efforts surrounding cybersecurity and protecting consumer privacy will need to keep pace.”
Mendez also shared some behind-the-scenes implications that we are sure to see. “The quality of [5G] connections will give [businesses] confidence to migrate to new platforms and improve all aspects of the supply chain."
Digging deeper, she notes that "5G also supports the evolution towards autonomous driving, lane assist, and more, which will have significant implications on retail logistics. Transportation and speed-to-market are growing customer demands due to the ‘Amazon Effect’ and age of customer convenience.”
Imagine a future in the retail industry where picking, packing, shipping, and delivery for your orders are all carried out by a self-driving shipping truck and it’s partner, the trusty robot-arm. Delivery trucks may not need a human technician at all!
📺 Watch this quick clip of 5G + AR in action:
The types of speeds that are available with 5G could allow us to download apps, songs, and even entire movies in a matter of seconds. These data rates will make AI, AR, ML, and CV more powerful and accessible, and unlocks potential for a myriad of other applications that are just not possible with 4G speeds.
We can certainly expect a sharp rise in 5G availability now through the end of 2021, but for the average consumer of mobile broadband, our everyday consumption of current LTE services won’t change much – for now.
Before we move on, it is worth bringing up one of the FAQ’s surrounding 5G:
Is 5G safe?
5G radio waves are 10-100x higher than 3G and 4G, and because of this we get INCREDIBLE speed, complexity, and new 'towers.'
5G will be setup EVERYWHERE due to its powerful, but fragile wavelengths. With these cell structures being ever closer to our daily lives, the increased strength of the waves – AKA radiation - some might worry about these powerful radio waves.
From a scientific perspective, 5G radio waves are NOT a form of harmful ionizing radiation, and thus should not be considered a health risk.
The Short Answer: Yes, 5G is safe.
For a deeper dive, check out this piece by Tim with Live Science “5G Network: How it works, and is it dangerous?”
6. Blockchain Technology
If you are unfamiliar with Blockchain, then it may take some time to really digest the full concept. For some, blockchain is simply “the technology that powers Bitcoin” according to Lucas Mostazo, an international digital marketing specialist.
While blockchain will eventually be a normal part of everyone’s life, it is not yet something most people currently interact with, but it will soon revolutionize the way we share, send, and receive confidential information, payments, and so much more.
What does Blockchain do?
In a nutshell: blockchain technology enables users to: (1) access timely, verified data, (2) send safe and secure payments, (3) and even store, share, and update sensitive records with various medical offices, government agencies, and businesses. Because of its transparent, verified nature, it also dramatically reduces the potential for fraud.
For a deeper dive, watch this quick 6:00 minute video.👇
How will Blockchain impact Retail?
There are a variety of Blockchain applications that will revolutionize the retail industry. In utilizing this technology, retailers large and small will have opportunities to provide consumers with a more secure, timely, and customized experience. The three main areas that this technology will impact retail include: Customer Service, Digital Marketing and Supply Chain Management.
Retailers will be able to store customer demographics, addresses, payment methods, and purchase history in a much more secure way. This will make it easier to digitally manage order-tracking, repeat purchases, and customer loyalty.
Because accurate, real-time customer data is available to businesses, they can gain better insights into their customer personas and find tailored ways to implement AI and AR in marketing, resulting in more customized, engaging marketing content for users.
The dramatic leaps forward in how businesses exchange and update information with their cross-functional supply chain are vast. Imagine easily communicating - and instantly updating PO’s, delivery dates, etc. - with every one of your suppliers, manufacturers, warehouses, distributors, couriers, and so on.
Furthermore, retailers and their customers can rest assured that the materials &/or finished goods they are buying are authentic, ethically sourced, and safe to use.
For more info, check out this PDF: Retail Opportunities with Blockchain by IBM.
So – this was a lot.
You may be feeling overwhelmed.
Digital Transformation in the retail industry – not just in selling online but also implementing the technology that is becoming available - will be CRITICAL to long-term success. As technology advances and consumer demands change, we too must adapt to give the people what they want!
You may be thinking your business is "too small", or that this technology is "too expensive."
From Entrepreneur.com “with time, AI has developed into a technology that delivers results, and although expensive initially, it has now become affordable for small businesses as well.”
Money does not have to be a barrier anymore.
While yes, most good tech solutions aren’t free - however, many do offer free plans, and many offer a range of paid plans at very affordable monthly rates – some as low as just a few dollars a month, but many options in a variety of price points.
Alternatively, you might think “I’m part of an enterprise retailer that’s stuck in the past...”
In order to unlock the full potential of Digital Transformation, it will require a serious change in attitudes and loyalties towards the dated processes and solutions that a business employs.
However, with an understanding of, and appreciation for, these impending shifts to the way consumers buy and use things, you can set the stage for many successful years ahead.
Regardless of your company size, or how long you’ve been in business: with each passing day, these technologies become more widely available, and as familiarity with them grows among consumers, they’ll soon be wondering why you aren’t keeping up.
The time is NOW to stay ahead!
FOMO agency will develop the right solutions to fit
YOUR goals, YOUR budget, and DRIVE YOUR BUSINESS!
About the Author:
Taylor J. Daniel is a 13-year retail veteran, and a Bachelor of Science in Fashion Merchandising with focuses in Consumer Behavior and Business Management. Her career has largely been spent in merchandising departments: analyzing data, managing inventory, devising investment strategies, and making product and marketing decisions.
After successfully managing over $50M in a variety of product categories for large global retailers such as Levi's, Old Navy, and Johnston&Murphy, Taylor now uses her expertise in retail planning to help SMB Retailers create thoughtful and calculated eCommerce and Merchandising strategies that deliver results.
"Retail has changed; what worked for you yesterday won't get the results you want tomorrow! I aim to provide the insights and strategies needed to be successful in today's ever-evolving retail landscape."
Taylor J. Daniel
Vice President | FOMO agency ™