Digital is disruptive, IT has struggled to take charge
Digital transformation is affecting all aspects of our lives, the retail sector more so with the customer being targeted across different channels and the rise of Omnichannel euphoria. Across digital social media – Facebook, Instagram, YouTube, WhatsApp, Websites, and physical signages across the city, in malls, print media, and within stores vie for the elusive customer attention. Overload of messages from retail and brands ensure that the customer has enough and more information on what she should choose among the plethora of choices.
From aspirational products to lifestyle living, same day delivery, hyperlocal, deep discounts, big sale days, the customer is not just spoilt for choice, she is confused; in many cases, inertia prevails over action confusing Retailers on why the customer did not act despite them offering her the best of options. The cycle thus continues with retailers trying to outdo each other in their quest to get the customer to buy. As technology consumerization is now mass market, Retailers have been pushing the agenda to the IT leadership to take charge and get out of their backend role.
Chief Information Officer (CIO), Chief Technology Officer (CTO), Director/Vice President IT, whatever the title, the Head of the IT function was expected to take charge of the business going digital, taking a leadership position within the company and work with cross-functional teams to help the business win in a fiercely competitive arena. Globally the trend that started less than a decade back had more misses than hits in the early days giving rise to the role of the Chief Digital Officer (CDO) as an alternative to inadequacies of the current teams; the loss was purely of the operational CIO.
Chief Digital Officers were appointed from the outside – primarily consulting companies or self-professed experts with a technology background, the moot point being that the problem appeared solvable with the help of technology rather than a holistic view across the enterprise involving cross-functional teams (read people), a change of process to align to the new way of working, and finally a dose of technology to digitize the process or connect the dots across the three tenets of change. Quickly it was evident that most CDOs will not be able to take the company to the summit. Retail is in the detail.
According to McKinsey study earlier this year only 8 percent of companies surveyed will be able to achieve success if they continue their efforts at current pace; clearly the pace of change needs acceleration. The answer has to do with the magnitude of the disruptive economic force – digital has become and its incompatibility with traditional economic, strategic, and operating models. A CB Insights survey of retailers in the US portrays retail apocalypse with more than 7000 retail shops that shutdown in the US alone in 2017. Brands like ToysRUs and Radio Shack filed for bankruptcy; closer in India too we have seen demise as well as acquisition of struggling retailers – pure play online to store only retailers and some who attempted to bridge the digital wave unsuccessfully.
Few successful transformations at Crate & Barrel and Sephora with a judicious mix of technology to enable their stores. At the same time companies such as Warby Parker and Nordstrom focused on customer experience gathering data across the journeys to help the customer buy at her terms.
The lesson to IT leaders: they need to look forward and prepare themselves to adapt to new realities so that they can capitalize on the change that they can create. Technology matters when analysing data and trends; focus on customers matters more to understand how they shop. Aligning the tools to customer journeys has better chances of success. Know your business: being business-savvy and cooperating with other stakeholders are essential to improving the experiences of customers and end-users. Also keep the lights on: innovation and widespread digital transformation aren’t possible without stable business operations.