Building the connected retail experience

It is easy to get drawn into the negative headlines about retail. One article, for example, suggests more retailers are headed into bankruptcy than at any time since the Great Recession. It often seems the retail industry is in crisis. However, the reality is that every industry, including retail, is going through massive change. These changes, which include the rise of the smartphone, the internet of things and a globalized marketplace, alter how customers want to interact with retailers and how retailers get merchandise into customers’ hands. Retailers used to follow a prescriptive formula of planning inventory, buying merchandise, moving it to retail outlets, and selling it to consumers on a particular schedule at a particular price. Now, however, retailers need to deliver seamless customer experiences across channels.

Building the connected retail experience

Introduction

The retail industry is unique in that there are few other sectors which are so complex and varied. Retailers today are required to be multifaceted and adapt to dramatic socioeconomic changes. Not only has the retail industry gone through significant disruption because of technology, but the global economy, changes in working patterns, and new entrants have brought waves of change to the modern retailer. Retail is a tremendously broad space, encompassing multiple segments such as quick service restaurants, car dealerships, drugstores, on-demand shopping, and subscription services — and that is just to name a few. And each segment has their unique demands and needs. For example, in the apparel sector, “Fast fashion” retail stores, such as Zara and H&M, have different needs and logistics than a midmarket department store like Nordstrom or a luxury retailer like Prada. Each type of retailer is unique and has its own strategy to engage with customers, the demands of which are increasing. Just a few years ago customers were willing to accept tradeoffs. If you wanted that exact green sweater, you would maybe need to wait a week, or more, for delivery. If you wanted a new dress, you would shop at your local store. And if you went on Gap.com, there were just several options for a t-shirt. Today, this is all radically different - a retailer must match consumer expectations on all dimensions, across speed, convenience and choice.

More and more, retailers today have adopted technology to augment each of these commonalities of the retail business in order to meet increased customer expectations. Retailers recognize the need to adopt technology and often have seen it implemented successfully in other businesses — perhaps even competitors who have done it. To adapt to these changes and outpace competition, this often results in more and more technology weaved throughout the retailers’ ecosystem.

The unique nature of digital transformation in retail

We are amid an unprecedented phase of digital transformation. Customers can videoconference with sales associates, experience a store through virtual reality, or custom-order jewelry that is 3-D printed. These changes are irreversibly reshaping retail boundaries and business models, and in the process, changing the winners and losers in retail. As previously stated, implementing more technology is not the silver bullet to solving retail’s challenges; you cannot buy your way out of digital disruption. Rather, the secret to retail digital transformation lies in a well-thought out integration strategy. At MuleSoft, we believe that IT is the strategic enabler for the business. A new IT operating model, correctly planned and implemented, will have dramatic improvements across the entire retail value chain. When business and IT are not partners, the dissonance can block success. Perhaps this is a situation you are familiar with: your customers are growing ever more demanding, and unless you respond quickly to build relationships with them, they will take their business somewhere else. Line of business executives throw all kinds of digital initiatives at the IT team, all of which must be completed with the utmost urgency.

New IT Operating Model

The solution is that IT needs to change the way it thinks about meeting business demands. No longer can it simply view itself as a deliverer of projects; it needs to think about itself more as an enabler that allows LoB IT to self-serve. IT needs to enable self-service of assets and make them consumable and reusable by the rest of the organization, which in turn provides agility. Time IT delivery capacity Today Demands on IT IoT Customer analytics Supply chain Omnichannel Increasing demands on IT 16 Imagine a franchise business like McDonald’s. It has core assets such as recipes, retail layouts, and marketing offers, which it packages for reuse and self-service by their franchisees. Amazon has done something similar by creating core reusable services for its vendor partners on the platform—shipping, payments, inventory management, web presence, product search, returns, etc. These businesses encourage innovation at the edges by federating reusable assets and intellectual property for self-service and consumption at the edges. By leveraging the resources and capabilities outside of central IT, organizations can make a step change in delivery speed and capacity. It’s only in this way, with a new IT operating model, that IT can deliver the agility necessary to meet the needs of the modern business.

We encourage retailers to join in driving this change by applying the principles and methodologies prescribed in this book to evolve from disrupted to disruptor, leveraging technology to not only improve the customer experience, but to establish market leadership in doing so. You now have the chance to seize the unique opportunities available to retailers and create a powerful, connected retail experience.

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