How Digital Transformation is Revolutionizing the Retail Industry

If you think the only impact digitization has had on retail is the rise of the eCommerce store, you need to think again. Sure, on-line retail sales are huge, but that’s just a small part of the impact technology is having on retail. In the retail industry, digital transformation is everywhere. 

Digital Transformation is More than eCommerce

There’s more to a digital transformation in retail than simply upgrading your website or shopping cart. Today’s retail shoppers want to connect with brands, are looking for the best possible customer experience, and move effortlessly from one channel to another.

Digital transformations in the retail industry impact supply chains, marketing operations, and incorporate new and exciting technology like augmented reality to the delight of customers. 

Retail Digital Transformations Put the Customer in the Center

Successful retail industry digital transformations are centered around making customers happy. 2020 was the year that customer experience surpassed price as a key differentiator. 

Customers are willing to pay more for an improved customer experience and customer experience has a tremendous impact on brand loyalty. 

Target targets customer needs

Target recognized the ability of a digital transformation to grow and transform their brand. Starting with simple apps in 2016, they discovered the hold digital devices have over shoppers. They created apps for finding coupons, creating gift registries, and an app for mobile shopping.  What they learned was their customers wanted everything in one app. 

Target improved the customer experience by creating one app for all interactions. Now customers use just one app to:

• shop online and request delivery or in-store pickup
• navigate the aisle of a physical store
• find coupons
• manage rewards
• make mobile payments

As part of the digital transformation, Target upgraded their point-of-sale (POS) systems so one back-end technology drives mobile and in-store shopping. Within one year, sales increased by 32%

Sephora’s foundational digital transformation

Cosmetics retailer Sephora found their online and in-store customers shared a common pain point. It was difficult to find a foundation shade that matched their skin color exactly.

Sephora created an app that uses facial scanning technology to help the customer find the right shade. By linking the app to the eCommerce store, customers can get product recommendations based on purchases they make on-line or products they test in-store.

Not only can customers virtually try on different shades, but they can also test new looks using their own faces. By incorporating “how-to” advice and tutorials, Sephora took on the competition face-to-face and achieved great results. Now 80% of Sephora sales are through the loyalty program that’s part of the app.  

Digital Wallets Are Transforming Retail POS

Even before COVID-19 had people concerned about contact with surfaces, digital wallets were becoming popular.

Now instead of rare, digital wallets are common and the providers of payment processing equipment are scrambling to keep up. In 2018, 110 million people in the US used a mobile wallet to make a payment at least once. For 2020, the forecasts estimated that digital wallet payments would reach $410 billion.  

When combined with rewards programs, they increase customer loyalty. From smartphones to smartwatches, these wallets are turning up everywhere. 

Customers love them because they are easy to carry and are perfect for spur of the minute purchases like that cup of coffee, magazine, or beer they want when out on a walk. 

Retailers love how they speed checkout time. 

Between tokenizing non-decryptable data, utilizing biometrics, and removing the possibility of card data skimming, both customers and retailers appreciate the safety and security of this form of payment.

For Duncan Donuts, the digital wallet is incorporated as part of the mobile app. Customers order and pay with just a few taps.  The customer can use Apple pay or another digital wallet stored on their phone.  

This form of payment also makes offering curbside pickup so much easier. Payment is processed at the time of order, so all that remains is to deliver the order with a smile. 

It’s no wonder that Business Insider estimates a 5-year compound annual growth rate of 68% going into 2021. 

Voice Search is the New Search

It’s not enough to optimize your website for traditional search engines. You’ve got to optimize for voice search.

In 2016, one in every five Google searches done on an Android device was made with voice. Siri, Alexa, and Cortana are the virtual assistants consumers are relying upon to speed their search. According to eMarketer, over 39% of US internet users make a voice search at least once a month. 

Natural speech and longer tail keywords are critical. Marketers must develop a deep understanding of the pain points that drive customers to their products. And they’ve got to make being found through Voice search easy. Voice search operates based on contexts such as current location and any apps being used. So, this rising technology is driving a deep dive into the mind of the consumer. 

In addition, savvy sellers that are advertising on Pluto TV include text reminding viewers to say “Alexa buy more tuna fish”.  It’s not only recognizing the power of voice to make the sale, it’s encouraging the viewer to use voice to act now. 

Rebirth of the QR Code

QR codes were hot when they first appeared in 1994. It was the next wave of technology that wasn’t. While QR codes were a great way to condense a large amount of information, they required the user to have a QR code reader.

But, with COVID-19 pushing a contactless society on all fronts, the QR is back and better than before. 

Phones and tablets now come with QR code readers as part of the on-board camera.

Savvy retailers are using these codes to enhance marketing messages. 

They are showing up on television commercials and restaurants are using them in lieu of menus. Wine sellers can place QR codes on the display to send shoppers to supporting videos or other information about the wine. It’s a means of engaging the shopper with the brand.

According to a Statista survey, in 2020 11 million households will scan a QR code. That’s not people, that’s households. 

(Disclaimer: Devdiscourse's journalists were not involved in the production of this article. The facts and opinions appearing in the article do not reflect the views of Devdiscourse and Devdiscourse does not claim any responsibility for the same.)