Transforming conventional retail business processes in the digital age is tricky. It doesn’t always work, because traditional methods are often siloed and slower, while today’s digital customers expect a seamless omnichannel experience with instant results.
Retailers with multichannel operations face big challenges with complex organizational structures that have to accommodate the global market, multiple channels, and increasing consumer demands. This often leads to high operating costs and large inventory, resulting in more markdowns and lower margins.
In addition to the challenges of traditional ways of doing business, there is increasing competition from new digital-native companies forcing greater efficiency and quicker results. And this is only the beginning. The next wave of digital transformation is already emerging, with countless developments involving the Internet of Things, augmented reality, cognitive computing, smart vending machines, and hyperpersonalized marketing, as well as several other digital avenues.
What makes a successful omnichannel retailer?
So how does a traditional retailer transform to become a successful omnichannel retailer? First, it helps to know what makes a digital retailer successful. According to the IBM and SAP report, “The New Omnichannel Retailer,” the characteristics of successful omnichannel retailers include:
- Standardized business processes across channels to eliminate redundancy and streamline processes to focus resources on areas that really matter to the business.
- Clear merchandising and marketing plans with guidelines that are followed closely from planning and procurement through to sales and distribution.
- Global procurement and a common pool of regional inventory to improve inventory management and strategy.
- Omnichannel pricing and promotion decisions based on master data and distributed to all system applications supporting various channels and customers.
- Providing a consistent, hyperpersonalized customer experience across all channels.
Some retailers are already doing a great job of this. However, it’s clear that many merchants need to step up in the digital age. Even vendors and wholesalers who have tried to stay ahead of the curve realize that they need to do more to transform their business in order to maintain and grow their digital customer base.
How to run an effective omnichannel retail business
According to the IBM and SAP report, retailers need to simplify their operations and reinvent their business processes in four key areas:
- Planning: Integrate merchandising and marketing with a standardized, holistic solution that aligns with financial targets.
- Sourcing: Establish collaborative and effective procurement methods to quickly turn merchandising plans into purchase orders.
- Supply chain: Create more cost-effective processes with faster lead times to ensure the right type and quantity of goods are at the right place when needed.
- Customer experience: Learn to balance innovation and risk to keep digital customers engaged with your business through consistent, seamless omnichannel experiences.
Getting to the (digital) core of things
So how can you reinvent your business in all of these areas effectively? Well, first you need to standardize processes and information with a new digital core. An efficient digital core can simplify multi-channel operations and provide central processing in real time for all functions across the enterprise. This can create transparent processes and financial goals for revenue, cost, and profitability across all channels. It can also reduce turnaround time and has the potential for cognitive computing to optimize business models and learn how to make more informed future decisions. It also increases agility to enable quicker time-to-market and faster organizational changes. Once you have a digital core in place, you can create a roadmap aimed at shortening the time to value for your retail business.
Are you ready for omnichannel success?
Do you plan to continue using cumbersome, complex operating systems that are unable to respond quickly to changing markets and customers, or do you want to reinvent your business to become an integrated omnichannel organization focused on the digital customer experience?
Let’s face it: Digital customers have changed the rules of retail, and your business needs to change in order to keep those customers. Are you ready?
Discover how to deliver more personalized customer experiences.
Find out more about Digital Transformation with IBM and SAP.
Read more details in the IBM and SAP report, “The New Omnichannel Retailer.”
For an in-depth look at how the digital era is affecting business, download the SAP eBook, “The Digital Economy: Reinventing the Business World.”