Digital transformation tops the priority list for the vast majority of merchants in 2017, as almost seven in ten (69 percent) of retail executives report plans to increase their investment in emerging technologies, according to a survey from PwC and JDA Software. The fourth annual survey, titled “CEO Viewpoint 2017: The Transformation of Retail,” demonstrates that digital transformation has “firmly taken hold” across retail, as nearly half of all retail execs state that they have a defined digital strategy currently in place.
“The investment in technologies underscoring digital transformation was a major undercurrent within this year’s survey results, which is no surprise, since retail CEOs understand just how important it is to invest in the technology that will improve the customer experience,” said Lee Gill, group vice president, global retail strategy, JDA. “The next wave of results also reveal the continued balancing act retailers are struggling to maintain with delivering superior omni-channel execution and profitability, all while meeting the demands of the modern shopper, and keeping pace with the digital transformation underway across the supply chain.”
Retailers are leveraging digital technologies to gain deeper understanding and connection with their customers and prompt consumers to engage with them across retail channels, according to the report.
The study also found that mobile-enabled applications (85 percent), big data (86 percent) and use of social media data (85 percent) are the top technologies investments for survey respondents, while automation and the Internet of Things are lower on the list for investment but gaining momentum as they are perceived as true game changers.
Meanwhile, approximately 52 percent have either not defined or not started implementing a digital transformation strategy, though progress varies by region. Significantly, about 58 percent of Chinese retailers say they have started implementing such strategies, while the corresponding U.S. figure is just 40 percent, with 19 percent of U.S. retailers struggling to or choosing not to define this strategy at all.
As order fulfillment costs continue to rise, executives are also rethinking their overall strategies; 2017 will witness increased charges for online order, a rise in minimum order thresholds for free delivery, and an increase in the minimum order value for buy online, pick up in-store (BOPIS).
“While retailers have increased fulfillment options over the last year to meet consumer demands, as BOPIS becomes a staple and buy online ship to store emerges as another core fulfillment capability, retailer snow need to balance the effectiveness and profitability of the fulfillment channels they offer –with customer satisfaction. Because if shoppers experience a problem with home delivery or in store pickups, that is a lost sale – and customer – that retailers can’t afford in a highly competitive market,” explained Gill.
“Since JDA first commissioned PwC to conduct this survey in 2014, we have witnessed unprecedented change sweeping across the retail industry that continues in earnest as retailers reimagine their strategies to transform the customer experience, making it seamless and personalized, no matter how they shop. Supply chain complexities and cost will continue to challenge retailers and the difference between winners and non-winners will be how much, or how little, retailers understand their customers moving forward,” concluded Gill.