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August 20, 2014

Tech Adoption: A Business Imperative for Retailers

Posted by Dinesh Bajaj (View Profile | View All Posts) at 8:42 AM

Today, retailers are seeing consumer behavior and social expectations change on a vast scale. There is a confluence of forces in the global markets that make the era in which we're living a very important one to large retailers. Forces like omni-channel retailing, ability to understand and respond to the context of each and every consumer touchpoint, and a concerted effort to revamp the information systems--have created tremendous pressure on even the savviest of companies.

Best-in-class retailers are quick to adopt processes and models that cater to the new demands of the industry. That sounds fairly straightforward. However, rapid and steady adoption of customer-focused processes is the exception in the retail industry. It's an industry that's very traditional and doesn't exactly change direction easily (art vs. science), especially when technology is involved. Too often, decisions are made on the basis of 'gut feel', competitor insights and current trends, some of which are not destined to survive another purchasing season or two. Once these investments do not yield the desired results, retailers often struggle to justify their decisions. By that time, however, it's too late and the monies are already spent.

The strategy of winning retailers is to adopt and develop more of what they're good at. They know their value proposition and are constantly honing and perfecting it. They're always asking themselves how to help improve their best practices. They want to know what generates better return on capital. In the last few years, we've seen pure-play e-commerce shift to bricks-and-mortar multi-channel commerce. Who foresaw that physical stores would become an integral part of e-commerce? This is just one big trend impacting the retail world as we speak. A lot of players in the industry have built omni-channel capabilities. But, the very best retailers are going beyond that. Initially, it was solely about buying online and picking up at the store. Now, most of the big retailers have additional capabilities and are intent on personalizing customer interactions across channels. They're asking themselves how they can take those interactions and place them into their back-end systems to add value to their supply chains.

Finally, the crème de la crème of global retailers are already experimenting with three new technologies--3D printing, the Internet of Things (IoT) and wearable devices. They're at very early stages of evolution and have great potential to impact the industry as we know it today. For example, 3D is now facing the question of how and when it will become viable for consumers to use it directly. I suspect that within three to seven years, there is going to be an enormous adoption of 3D printing. It will fundamentally affect how your customers order goods and how they're shipped as well. As for the 'IoT', it means preparing for everything to be connected on one network. Retailers are already looking for ways to interact with consumers via the IoT. A simple coffee maker or other kitchen appliances will have sensors that convey to the retailer what the consumer is preparing - and therefore what he/she might need at the store! And we've heard a lot about smart watches and Google Glass. They'll not only be connected to a network but will also enable geo-location capabilities. Retailers know that they can potentially influence the purchase of goods and services at the point of purchase.

All of this is not going to happen tomorrow, but the work must begin now. Winning retailers are putting the consumer as the focal point of how they design their new strategies and services. To stay ahead of the curve, retailers are realizing that technological innovation is no longer a choice, but a business imperative that will drive business transformation in the near future.

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