Digital Transformation Requires a Cultural Shift Within Retail Organizations
It’s fun to get wrapped up in what retail is going to look like in the future — which these days could mean six months from now.
There’s widespread use of augmented reality letting shoppers see what clothes look like on them and what they look like on that living room couch; virtual reality allowing customers to “stroll” a store’s aisles from anywhere at anytime; robots stopping by the house with those Tide pods that you hadn’t quite gotten around to ordering.
The less fun part is figuring out how we’re going to get there.
A panel of retail experts at eTail West dug into the question on Tuesday and came up with what sounded like a consensus: Retail’s digital transformation is about a cultural reboot. Not a reboot of consumer culture. Consumers are already there. Now it’s up to retailers, their partners and the brands they feature to sell the change within their organizations.
“From our standpoint, digital transformation is all about customers. How do we get new experiences out to customers faster?” said Harsh Acharya, head of technology and product at Dell.com. “And how do we make our internal organization more productive in order to get there?”
There’s no taking a pass on your digital transformation
No, it isn’t easy. And yes, retailers have been at it for some years now. But as the pace of change in consumer desires and expectations picks up, so too does the need for a quicker pace of change within the organizations that hope to serve them. One thing was clear from the panel discussion, which also included Dhritiman Saha, senior vice president of digital at JCPenney, Raghu Sagi, chief engineering officer at Sephora and Signifyd Vice President of Marketing Stefan Nandzik: Sitting out the digital transformation is not an option.
“If you really think about it, in a world where manufacturers can transact directly with consumers, the main value add, or maybe the only reason for retail to exist, is the customer experience,” Nandzik said. “People enjoy shopping. With AR in stores, stores in VR and robots delivering products, this will look like a sci-fi movie. But this is what people want.”
The future-focus came in response to a question about which budding retail technology excited the panelists most. Nandzik said it really wasn’t one advancement that he felt the most enthusiastic about.
“I don’t think it’s one particular piece of technology that I’m most excited about,” he said, “but rather what kind of experience all of them can create when you package them together.”
The other panelists generally agreed that it can be dangerous to fall too hard for the next big thing, but there were clearly some favorites on the list of usual suspects. A couple of panelists pointed out not only how dramatically machine learning had changed the way businesses run, but they also pointed to its tremendous potential for future innovation and disruption.
The role of machine learning and algorithms in powering more relevant search received some props. And automation in general emerged as a favorite for improving the customer experience from the beginning of a digital shopping experience through the fulfillment stage, when a package is actually delivered.
How to embrace the culture that leads to digital transformation
The bigger question of the day was how can enterprises move themselves into a place where they can fully embrace all that technology and innovation has to offer to help them transform their businesses into digital powerhouses.
Not surprisingly, a big part of the answer involved doing things differently from how they’ve been done. Saha, of JCPenney, said communication is key. In fact, the retailer erred on the side of over-communication, knowing that some employees would be late adopters and some would be skeptical of the whole idea of digital transformation.
“As a leader it’s important to be extremely resilient,” he said. “We know that changes don’t happen in a day or a week, sometimes even in a year.”
Saha talked about how leaders at JCPenney moved away from their traditional process of prioritizing projects by having different teams arm themselves with spreadsheets of priorities and costs, each coming from its own perspective. Instead, he invited representatives of many teams — IT, stores, legal, finance, procurement — to gather in one place and hammer things out.
“We put 200 people in a ballroom, almost twice the size of this room,” he said from the eTail stage. “Two and a half days the team went through massive crunching of prioritization.”
Then they presented their findings to management, Shark Tank style, listing costs, dependencies and risks. It was a chance for once-siloed teams to see how their goals and priorities were intertwined with the goals and priorities of other teams.
For his part, Nandzik talked about how enterprises needed to understand that they are not alone in tackling the digital transformation.
“In reality, every merchant, every retailer actually, has to go through the digital transformation sooner or later,” he said. “By now, this has led to a whole ecosystem of partners out there that can really guide people through this, being consultants, being system integrators, solution providers or technology vendors. They typically have gone through the same journey with a lot of merchants before.”
Raghu implored retailers to consider the idea of cultural change in the full context of their operations, down to the store level. He pointed out that customers are empowered like never before.
“She has the ability to get any kind of information at her fingertips,” he said. “And she’s more tech savvy.”
That all needs to be acknowledged not only online, but in stores.
“When you want to scale the change, especially being a retailer and in stores, how do you take some of that culture and put it in stores?” Raghu asked.
Consider change from the bottom up
Answering his own question, he said the key is properly training store associates, so they understand how consumers shop and how the way they shop has changed and is changing.
It’s a lot to bite off at once, this idea of digital transition. But maybe, the panelists suggested, it isn’t something you bite off all at once. Instead, retailers need to adopt a startup mindset: Try new things on a small scale; test and measure results; abandon the failures and scale up the successes. And think the way flat organizations think.
“When you tell people what to do,” Acharya said, “there are always 100 reasons they can’t do that. But if you tell the team, ‘This is the end goal. We want our customers to be able to achieve this,’ this is a big change.”
Teams begin to focus less on deadlines and timelines, he said, and more on customers and their needs.
“So for us, the biggest lesson learned is to let the people at the grassroots level decide what works and what doesn’t.”
Photo by Nicole Anderson
Contact Mike Cassidy at firstname.lastname@example.org; follow him on Twitter at @mikecassidy.