The widespread digitalization we’ve seen over the last year has retailers facing a number of new challenges and opportunities. While most CEOs now consider business transformation to be a top priority, only about 30% of business transformation strategies are executed successfully. This is often because leadership treats digital transformation as an IT project rather then employing a holistic approach to fundamentally redefining the ways in which the business operates. CEOs must establish a digital mindset, one of continuous innovation, across the entire organization while ensuring that the best people are in the right places to drive the transformation.
To help retailers navigate the complexities of a post-pandemic digital-first retail environment, Savantis’s CEO and President Keith Hontz, spoke with Melissa Gonzalez, the CEO and Chief Strategist for The Lionesque Group, Leslie Hand, GVP, IDC Retail and Financial Insights at IDC, and Anthony Biolatto, CIO at Sports Basement, a sporting goods retailer and Savantis client, to identify the top digital transformation challenges facing retailers today, what retailers can do to succeed and build resiliency, and what will be the “next big thing” in retail.
Keith: What are the biggest digital transformation challenges facing retailers today?
Melissa: Friction – When the transformation isn’t a seamless extension of existing consumer behaviors and it takes too many steps, too much explanation/education to execute the “call to action.”
IT lift – Often times the digital integration isn’t top of the list of priorities so it’s a challenge to get all the needed parties to be aligned – IT, marketing merchandising, etc.
Connectivity – Especially in-store, Wi-Fi connection, upload speeds, and download speeds still tend to be a significant hurdle.
Leslie: The overriding challenge for retailers is finding a path to both business growth and greater profitability at a time when everything a retailer does needs to be benchmarked against current best practices for omnichannel retail. Meeting current customer needs is job number 1 but ensuring continued organizational resiliency by investing in adaptable, scalable, and sustainable infrastructure and applications is job number 1-A. Short term tactical investments sometimes need to be made but staying true to long term objectives was never more important than it is now.
Anthony: When we were looking for a new ERP, we were operating off an ERP that was meant for a grocery store. It was busting at the seams, the reporting wasn’t functioning anymore, we really needed to move to a new ERP to allow us to grow. We thought SAP was kind of out of our price range completely. Savantis really helped us work through that and figured out what were the things that we needed to be successful and was able to package it in a way that we could collaborate and get this amazing software. We went from ECC to SAP S/4HANA Retail, so a pretty large jump. And not only that, but we also hadn’t had a lot of experience from doing these types of migrations. Of course, things came up, but it was very, very smooth. One of the biggest things that was very impressive to me was that we had zero downtime between our transfer from ECC to S/4HANA. We couldn’t have our stores closed for a single day, or a single hour outside of their normal operations, and we were able to do that seamlessly. The stores almost didn’t notice the initial migration and the next day, everything turned on and worked great, and we were able to just kind of roll into it. We are moving forward, and it’s given us the confidence that we can actually tackle just about anything at this point.
Keith: What advice do you have for retailers on how to succeed in today’s retail environment?
Melissa: Be consumer centric. Whether you are a product company, retailer or sell a service, we are all in service of our customer. They should be the guiding light for decisions.
Leslie: Retailers need to radically improve omnichannel processes to meet customer expectations. They need to eliminate wasted effort in customer and workforce processes so that customers can find and buy what they need/want, and employees can be more productive. Processes that can be connected and automated seamlessly should be. But before they can do this, they need to have a single view of customer, supply, and near real-time inventory. We have been talking about this for 10 years, but the last year has finally motivated the masses to take the necessary actions.
Anthony: For us, why we went to S/4HANA was purely to give us the ability to react to whatever came at us, and I think this past year has really emphasized that we do have that ability. I think the most important things are to focus on bringing value, being customer-centric, and optimizing your supply chain.
Keith: What do you think will be the “next big thing” in retail?
Melissa: I think we are still just scratching the service of contactless payments and self-check out. It’s still yet to be seen how it will truly transform the in-store environment.
Leslie: The future of retail is connected, frictionless, automated, and contactless.
The store will be a hub that maximizes three things: customer experience, the flow of goods to consumer, and the orchestration of workforce productivity. Result: improved revenue growth and profitability rates, higher inventory turns/GMROI, and customer satisfaction/customer lifetime value.
The new spin on personalized omnichannel experience will connect personal needs with the shopping journey more deeply, in real-time and in even more channels. Yes, we already can connect our refrigerators and pantries to shopping lists, pick lists, and wayfinding instructions. But even without the automated-in-home piece, the well-prepared shopper can build a list to cut time in the store, and then touch a button on screen to place an order and have someone else pick their goods for delivery or curbside pickup. The retailer will need to remodel their selling, service, and fulfillment strategies to garner greater long term customer lifetime value.
Anthony: One of the new tools we implemented is our Sales Saver App, so we now empower all of our staff with an in-store app. It gives every single employee the ability to see inventory and pricing across the company and that’s a basic stock checker on your phone, you know, that’s been around forever. But we realized that 35% of our products that we were transferring between stores never got picked up, so we figured out how to have our Sales Saver App take payments of transfers right then and there on the sales floor. We went from a 35% loss of moving product to around a 0% loss because everything was paid for upfront. And to take that to the next level, we started adding free shipping within 24 hours. Focus on the customer experience and find that “wow” kind of experience that’s going to resonate with them – those are the kind of moments of delight that we really try and share with our customers. Our Sales Saver App has been a huge tool, our staff love it, they feel empowered to be superstars. As retailers, if we can bring more surprise and delight into people’s lives and give them great service, that’s the greatest thing that we can possibly do.
Special Thanks to:
Melissa Gonzalez, CEO & Chief Strategist, The Lionesque Group
Leslie Hand, GVP, IDC Retail and Financial Insights, IDC
Anthony Biolatto, CIO, Sports Basement