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Reinventing the Way We Work

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The Dark Side of Digital Transformation in Retail

If you’ve been following the news lately, you’ve probably noticed a barrage of headlines covering digital, social and mobile transformation and the opportunities and innovation promised by the introduction of digital solutions.

Despite the buzz, any transformation presents a threat to the sustainability of business as usual for some companies. Inevitably, certain organizations will be forced to fold if they are not able to adapt to the potentially unsettling prospect of tomorrow’s world of AI and robots. Even this first wave of disruption to traditional retail operations is already apparent.

At One2Team, we’ve been monitoring the impact that digitalization has had over the past 10 years, over a volume of projects our clients are leading. We propose that retailers offer blended, multi-channel customer experiences to limit the negative impact of digital transformation on the overall business. The challenges that digitalization create for retailers and distributors are innumerable and most often occur in late stages of impact.

PHASE 1: A new price equilibrium.

The first digital lever opened up the possibility of a streamlined sales cycle resulting in a price reduction for goods and services sold online. Now, a consumer’s number one question is: “Why buy something in stores if the same thing is available online and for less?” Further complicating the issue for retailers, store locations have never experienced the same kind of rapid drop in foot traffic as they see now. Typically, customers are still browsing in stores before completing their purchases online.

Illustration: I’ll window shop at Darty and then buy it on Amazon.

These dramatic changes to the value chain and inventory requirements came as a brutal shock for many brands who struggled with pricing under these unusual circumstances.

PHASE 2: Simplification of the customer journey.

All of the obstacles in the traditional in-store customer journey made the shift to online sales all the more appealing.

Illustration of a distribution nightmare: In the store, while trying on a pair of shoes, a customer finds out their size isn’t available in the desired color. If a salesperson says: “We can have them sent over for you this afternoon from our other location,” the customer has already decided to order them online for delivery.

PHASE 3: Why buy anything in stores?

Trying things out just isn’t necessary anymore: sizes and dimensions are typically available online. Practically all goods and services compare at a competitive price and with an easier checkout flow. As consumers make the easy choice to buy online, it signifies a major shift away from a primary sales avenue to a secondary sales channel for traditional retailers. This third phase of digital transformation is terrifying for anyone paying exorbitant rates for square footage and watching the number of customers fall everyday. These companies have no choice but to reinvent themselves and offer a unique customer experience, where each step is thoughtful and deliberate, and where excellent customer service isn’t an exception, but the norm.

Schedule a call with one of our specialists to explore best practices for your transformation projects.

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