The future of retail Part 3: digital transformation in retail

In a three-part series our retail and customer experience expert Jonathan Hilton discusses the ‘future of retail’, offering insight into the current challenges retailers’ face, along with some proven advice on how they can start to fight back.

In part two, Jonathan explored what it means to be an omni-channel retailer, who is successfully joining up the customer journey as well as some tips on how to approach omni-channel retailing.

In this final interview, Jonathan talks about:

• The biggest challenges of digital transformation in retail
• Taking the organisation on a digital journey
• Some great advice for retailers looking to transform

Sophie: Hi Jonathan, thanks for your time today. Can you introduce yourself and what you do at Digital Works Group?

Yes, I’m a partner within the Strategy, Leadership and Innovation practice with a focus on retail and telco. I help businesses look at their customer experience and the digitisation of customer experience in these industries. Helping them to adapt and develop this vital part of the business.

I have over 20 years’ experience, both on agency and client-side. Most recently, leaving Vodafone as the Head of Retail, where I created the final strategy and vision for the Vodafone board.

Sophie: What are the biggest challenges of digital transformation in retail?

The biggest challenge first and foremost of digital transformation in retail is getting the hearts and minds of a cross-functional team to come together to deliver a ‘common goal and vision’  – one that can then be sold and communicated across the business.

Once you get to that point you can start to break it down into the ‘outcomes’ needed to deliver the vision. Leadership across all areas of the business, need to be brought together to focus on this.

It’s not a program of change that happens once. This is now a program of activity that will continue to evolve. All functional business areas need to have really passionate people with deep expertise in them. So if you’re looking at experiential retail, for example, you need to have somebody who really understands that space – it’s not good enough just to say, ‘let’s do something in store’. They need to know how to design for the right location and input, what the footprint optimisation is going to look like now and in the future and how you are going to train people and deliver it.

Sophie: how can you take the whole organisation on the journey you mentioned?

If we look at the maturity curve, that Digital Works Group uses to assess companies, I still believe many retailers are only just moving into stage one. They are aware of the need to digitise and the benefits, but they’re not sure how to go about doing it.

The first important step is education, where your communication is set across the business to help people not feel afraid, and therefore become resistant, to change. If employees are afraid and resistant, they’re not going to go on the journey. This is the hardest thing to overcome.

As you move into the second phase – digital marketing – this a very important stage because you’re looking at the marketing capability of the business. But as you move to stage three – company-wide transformation – this is where the real challenges come. A communication plan, endorsed by the senior executives is critical.

Sophie: What help do larger retailers need to digitally transform?

It’s a scary place for retailers right now. They need help from the government and the industry bodies as well. They’ve been challenged like never before. And there are more and more businesses going into administration than we’ve ever seen.

But the good news is retailers are innovative people. They are resilient, and they will try and find ways to make it work. Niche businesses and high-end goods are going to really thrive. These are the businesses which will bridge the gap between discovery and excitement via the online channels really well, and motivate people to go and see and experience them in store. The high street is going to have to change.

Sophie: How much harder is it for larger organisations to change and adapt?

For the large companies, it’s about organisationally how they structure themselves for a clear route to success, and who’s responsible. There’s still a lot of siloed in-fights going on that needs to be removed.

There’s also a big drive to create an agile mindset and ways of working. It’s going to take time to adopt this way of working, but it’s starting. A lot of the larger organisations are trying to release product updates more frequently than ever did before. Struggles happen because of the legacy back-end systems and the way in which the IT stack has evolved over time. You can’t just get rid of that – you’ve got to adapt it to be more flexible and agile.

As agility becomes possible, the rate of innovation and trial, test and succeed will increase rapidly. But it’s going to take time to get there. This is the fundamental difference between a ‘pure-play’ – who can do it immediately – and a large corporation who have got this legacy issue.

Sophie: How about smaller retailers. What challenges do they have?

Smaller retailers have got access to online tools and capabilities like never before. So they can have reach and distribution way beyond what they’ve had in the past.

But they’ve got to learn and adapt and evolve and be open to this. You still have to test and trial quickly and then evolve and build up. The businesses who can do this will be the winners. Stores are getting smaller in terms of the customer space, and the back office is getting bigger because they’re holding stock for distribution across their websites.

Sophie: Jonathan, what advice would you give to retailers looking to transform what they are doing right now?

If I was to give a recipe for success it would be this:

• First and foremost, know your customers, and what experience they get excited about.
• Use data that you have on your customers to inform you on your decision-making about what you’re going to do.
• Don’t try and do everything at scale! Trial things as quickly as you can so that learnings can happen. Those learnings – if successful – can be rolled out.
• Look at the business processes and the technical capabilities of the business. Map what is available today to enable us to innovate and advance our experiences, and what needs to be built and put in place for the future so that we futureproof ourselves.
• Finally, think about how you bring the people and the business with you as you go through this digital transformation. This is essential because we are talking about full-scale digital transformation in retail.

Full-scale transformation allows you to end up with an omnichannel operation, where you are able to offer your customers great experiences that are agile enough to be renewed on an ongoing basis. Where your formats are changing so they are always meeting the needs of the location in a better way, and the technology is keeping pace so you’re not having to rebuild the technology stack time and time again.

I’m a firm believer of more you can build a vision and visualise it in an engaging way, the easier it becomes. Once you’ve set your vision, you then need to identify the ‘outcomes’ and who will lead those outcomes across the different areas of your business.

Do the hard ‘up-front’ work and build a crystal clear set of customer journeys that you can visualise, right across the business. It is essential you work in a cross-functional way, to enable it to be fully end-to-end rather than just from a siloed perspective.

Talk to Jonathan about your retail challenges…

Jonathan has a proven track record of generating outstanding commercial returns for clients. He has a wealth of experience spanning omnichannel retailing, customer experience design, retail IT, sales and service optimisation and global transformation programmes. So, if you need help with your retail transformation, you can reach him on LinkedIn or email