Tech challenges in Retail

Tech challenges in Retail
Published: 17 February 2022

Ask retailers what their main challenges are today, and odds are their most pressing issues will be technology related. While the notion of implementing cutting-edge tech can be exciting, the reality of digital transformation is often far from plain sailing, and it’s imperative that retailers adopt the right type of technology for their particular business and their diverse customer base, to ensure their strategic goals are achieved.

Digital Transformation isn’t just about fancy e-commerce sites or cross-platform apps; however, it involves permeating and embedding technology into all aspects of the organisation, fundamentally changing the way the business operates in order to improve efficiency, value, or innovation.

Technological advancements such as facial recognition, AI and robotics, cashier-less stores, chatbots, AR/VR, voice commerce and more, are advancing at pace with no signs of abating, and the most successful retailers are the ones who are taking bold leaps to maximize technologies associated with their primary infrastructure. Other success stories have come from retailers who have adopted an omnichannel approach to ensure all available options are integrated, to enhance customer experience and elevate brand profile.

But for all that, it’s clear that adopting new technologies and ways of working is often far from seamless.

Here we’ll briefly look at the Top Ten Challenges many retailers are facing whilst navigating their digital transformation journey.

  1. Tackling ecommerce – By 2040 its estimated that 95% of purchases will be made online (Nasdaq.com), so the need to move commerce online is vital. However, retailers must get this right, and create interactive platforms that are fast, secure, functionally optimised and customer friendly.
  2. Digitising customer experience – As touched on above, the retailers making the largest leaps in growth are those who are focusing their efforts on omnichannel strategies and enhancing customer experience by utilising the latest customer-facing technologies. Consumers demand a seamless shopping experience whether in-store or on websites, apps and social media channels. This is where an omnichannel strategy must be slick and offer aligned touch points, to ensure consistency in the customer shopping experience. One of the difficulties here is, wherever or however customers interact with a retailer, the business must always be able to analyse who they are and what they want.
  3. Lack of customer data and/or poor data management – Businesses may be capturing more data than ever these days, but the important skill is being able to accurately analyse the right bits. Unfortunately for some retailers, they’re amassing huge amounts of data which is either unclear, inaccurate, or unused. The challenge, therefore, is to work out how to structure, analyse and monitor the right data from every single customer interaction for deeper insights and effective trend analysis.
  4. Cyber security / Data security – When it comes to expanding digital infrastructures for ecommerce, one of the most prevalent challenges faced by retailers is safeguarding against security breaches (phishing, malware, data theft). As technologies such as the IoT, AI and ML evolve, hackers are continually finding new ways to infiltrate organisations.
  5. Effective supply chain management – The global pandemic caused a multitude of supply chain issues which had (and is still having) a huge impact on retailers, and as online buying continues to sky-rocket, capacity handling is an ever-increasing challenge. As Paul Noble recently stated in Forbes.com, it’s time to apply 21st century technology to today’s supply chain challenges! Easier said than done?
  6. Change management – As humans we’re hardwired to resist change. Digital transformation in organisations can result in resistance to change from individuals or teams who are used to certain technologies or ways of working. Unfortunately for some organisations the mindset of questioning change or not changing until the last moment can be disastrous.
  7. Financial constraints – For many retail businesses, digital transformation will end with an ecommerce website and perhaps an app. But to truly capitalise on the benefits of digital transformation, retailers have a multitude of options to explore and implement, from AI-powered bots, AR/VR shopping experiences, mobile POS, cashier-less shops, chatbots… the list goes on. To keep up with the competition the race is tough, and costly, and some businesses have deeper pockets than others.
  8. Poor strategy – An incomplete strategy (or total lack of) can be a fast-approaching pitfall on any digital transformation journey. A well-defined strategy with a clear vision and clearly defined objectives requires input from several touchpoints, not just the IT team. Why? Because it’s not just about technology, it’s an amalgamation of cross-business processes and requires input from all corners, external and internal.
  9. Identifying the right technologies – In today’s market there are so many tech providers all vying to stand out. In order to prioritise digital in the customer journey and ensure maximum business efficiency, it’s imperative to identify and implement the right technologies. Failure to get this right first time can be catastrophic.
  10. Lack of human talent – As the UK experiences the ‘Great Resignation’ one of the key challenges faced by retail organisations is sourcing the best talent. High quality Tech and Digital candidates are in increasing demand, and many businesses are facing tough competition for the right people to help them on their digital transformation journey.

What does this mean for those who are ultimately responsible for delivering digital transformation plans?

The role of leadership in digital transformation is a complex one - it requires true transformational and cross-functional leadership abilities in addition to having a comprehensive understanding of digital technologies, in order to stay ahead of the curve in a rapidly evolving digital landscape. The role is pivotal in initiating such change and driving it forwards, and it requires a deep knowledge and understanding of customer experience, operational processes, and business models.

The best digital leaders are the ones who shape a strong and stimulating vision that’s born not only from experience, but from a holistic understanding of the organisation’s strengths, weaknesses, opportunities, and threats. Their vision will inspire both internal and external stakeholders and will act as a reliable compass for others to follow. A true digital leader is one who not only chooses the right cutting-edge alternatives to legacy systems, but one who can prepare the environment for impending change, build a solid change team, approach problems with curiosity, intelligence, and a solution-oriented mindset - all the while encouraging creativity and adaptability and instilling confidence within teams. And it still doesn’t end there…the role also involves sustaining a positive change culture in an ever-changing landscape in order to deliver operational efficiency and a competitive advantage.  

It’s people who ultimately determine the outcome of a digital transformation, and at Berwick Partners we find the people who will make the difference. It’s what we do. We’re experts in our sectors, and service excellence is at the heart of everything we do.

Fran Grant is a Consultant in our IT & Digital Leadership Practice specialising in recruiting Senior Technology and Digital professionals in Retail, Retail FS, Leisure and Hospitality, with a UK wide remit.

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