‘Virtual-physical’ dynamic giving rise to customer-centric digital transformation in retail

Retail CIOs are building an omnichannel network to reach their customers in multiple ways. The looming challenge remains the unparalleled speed of changing dynamics, driven primarily by a savvier and demanding new generation of shoppers. With this, CIOs in the retail industry today are facing a “do or die” situation with building and introducing novel digital experiences for customers.

Although online sales for retailers are growing exponentially, there is still very strong interest in shopping at brick-and-mortar stores. However, the dynamics have grown to a complex juxtaposition – where apart from being able to securely shop online from their favorite retailer, the customer also wants to have the ability to walk into a store location and have an ultra-rich digital experience that establishes an intimate relationship.

This “virtual-physical” cross-channel, or omnichannel, dynamic has given rise to services like “click and collect,” and many others now being established as table-stakes among loyal shoppers. In this milieu of challenges, one key thing that retailers need to focus on is to move from a product-centric strategy to a customer-centric strategy – which is quickly becoming the nucleus of the digital transformation for the retail industry.

So, what are retail CIOs doing to meet digital expectations?

I believe retailers have come to terms with understanding the mantra for building a successful business through digitization – using data and information to build agile practices for responding rapidly to ever-changing scenarios and expectations. Retail has become a data business as digital interaction helps retailers collect mountains of data on specific customers, based on their shopping behaviors.

Amazon exemplified this and has set a huge standard of personalization with this capability and set the bar high, while also lifting customer expectations from other retailers. Driving a successful digital transformation in the retail industry is about how soon can you collect data, turn it into insights and further turn insights into actions. Amazon then extended the same capabilities to its brick and mortar outlet, Amazon Go, with the added concept of a checkout-less experience – the ultimate friction free payments approach! Similarly, clothing retailers such as Mango and Neiman Marcus are extending digital interaction, such as through digital mirrors, between them and customers in the store – building an intimate and trusted relationship.

The retail industry is growing to be one of the largest spenders on digital transformation as a result of this revolution. CIOs are aware of the importance of adding various customer-centric applications and generate the critical amount of data required to build key insights into how their customers behave. In a survey we conducted, 86 percent of retailers viewed customer experience as the most important and critical aspect of their success and 52 percent of retailers described data analytics as the top business application critical for future success, followed by workforce management and point of sale system upgrades. It is estimated that by 2020, global retail industry CIOs will spend to the tune of $15.8 billion on enterprise applications, while over 40 percent of their IT projects will be related to advanced analytics and customer experience .

Retail CIOs are ensuring that they cover the entire spectrum of the retail value chain through their application integration. As omnichannel remains the objective, there is a reasonable complexity in stitching the links between their customer presence, the physical presence, the online presence, as well as the ecosystem of payment processing, suppliers, logistics, warehousing, inventory, etc. Successful digital transformation across all of these areas will require one key component to operate both efficiently and at high performance and agility – their enterprise network to their stores. This is what will determine the quality of experience store associates, corporate employees, and customers alike will see.

CIOs must evaluate the quality of their network & application performance

A significant number of CIOs understand that application performance is pivotal to their digital aspirations, however, 74 percent of retailers claimed that sub-optimal networks impede the user experience. This goes to show that CIOs need to ensure that their networks align with their digital goals and objectives. Our ongoing research has found that approximately 3 percent of retailer annual revenues are lost due to application downtime and/or application slowdown – which could result in millions of dollars of losses for large retailers in a very limited time. Although retail CIOs are deploying hybrid WAN and SD-WAN networks for connectivity between their retail stores and to manage bandwidth, the lack of effective network management can render it meaningless. CIOs must focus on some key areas to ensure their networks deliver optimized returns. This is particularly true as new payment systems are deployed in stores to support mobile payments and other secure processing techniques in the post-EMV world.

Reduce complexity; increase flexibility, efficient network management

Retail enterprises must ensure effective and efficient management of their hybrid networks. As enterprises deploy these networks to manage bandwidth, it is also imperative that IT managers establish policies of network management, with a focus on business intent and objectives. This creates a solid platform for effective prioritization of networks and applications to ensure seamless and non-impeding flow of processes, allowing for the best user experience. Retailers must adopt scalable solutions that can get stores integrated using zero touch installation as well as offer a centralized management and control, while offering flexibility in integration of network functions, creating a successful base for digital transformation.

Understanding the real-time behavior of the applications flowing through the network

Retail CIOs need to have an in-depth and granular view of their applications and their behavior on their store networks. In today’s competitive times, a single application outage affecting customers can result in expensive damages to the organization. The need to consider an end-to-end software-defined network management solution, that is focused on application intelligence and performance optimization is pivotal. Providing in-depth visibility and control will allow IT and network managers to set policies that will effectively help with application optimization. Imagine such a performance slowdown in an Amazon Go style store with automated payments an d checkout-free shopping! Not only will the customer experience suffer, but payments will be lost and shrinkage will increase! Any store operating in this manner is unlikely to have IT staff on site to solve these problems when they arise so the network must be able to self-heal!

Knowing your application performance through a logical KPI

CIOs must choose a solution that informs them of their application performance with respect to their business intent and objectives. The solution must provide them efficient tools and functions that build a set of KPI metrics which give them a dashboard view of various elements such as the application type, usage trends, user specifics, bandwidth consumed, etc. which would be essential in establishing the prioritizing policies.

More importantly, this tool should derive a logical score for each application based on several variable parameters, such as actual used vs. ideal bandwidth, measured delay, jitter, latency, roundtrip time, etc. Only then will retail IT teams have the data and insight they need to keep new digital in-store experiences running at peak performance to deliver the consistent, high performance experience shoppers demand!

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