In today’s fast-paced business world, it’s sadly unsurprising to see many organisations failing. Research by the Department of Trade shows just under 70 per cent of VAT-registered businesses cease to trade within ten years. It’s therefore vital businesses are doing everything they can to safeguard against failure. This is particularly true for retailers, we’ve seen household names such as Woolworths and Blockbuster become nothing but footnotes in history over the past few years.
The consumer-facing nature of retail means it is more susceptible to the constant fluctuations in technology trends and expected to keep up with customer expectations and demands. Combining the two together though, is key to ensuring retail business success. Ten years ago, the idea of a seamless retail experience blurring the lines between online and in-store was a pipedream. Now, we live in a world of click and collect and same day delivery. Amazon is even testing drone deliveries.
Reflecting on recent retail failures; a change in mindset and practises within the sector is now vital. The evidence is clear, according to OC&C, 59 per cent of online purchases are now being made outside of typical high street retail opening hours, with click and collect services expected to increase by 25 per cent in the next five years. There will be a continuous change in customer demands, so for retailers, running business as usual isn’t an option. No retailer wants to fail. But unless antiquated mindsets change quickly, the outcome is likely to be business failure.
Take Blockbuster for example, a retailer who failed to innovate, by missing the opportunity to buy Netflix in 2000. The organisation saw themselves as a big, successful retailer who would never fail and did not need to make a change. The response from Netflix was agile - it reacted quickly to consumer demand, by providing an efficient, technology platform for its customers.
In its DNA, Netflix has put a mobile and digital strategy at the heart of the business. Over night, this decision changed the business model to react to consumer needs.
Retailers must adapt now
To adapt to new customer demands, businesses are realising the importance of being more than a retailer and evolving into a technology business. John Lewis, M&S and Argos have all realised this transition, and have focused on creating mobile and digital strategies to meet customer demands. According to OC&C, both Argos and Next now generate over half of their traffic from mobile devices, with Argos at 68 per cent and Next at 64 per cent.
Not having a digital strategy in place, or not seeing the importance of it fast enough, will result in business failure. I believe the key for retailers is to change their approach. They need to be agile and transition from being a retailer to being a technology business, by creating mobile solutions based on customer data and provide a first class customer experience. What are they buying? How are they buying it? Understanding and utilising the mass of data available will help businesses to create a competitive digital strategy.
Turncoat: from retailer to tech business
Big retailers investing in mobile solutions should see technology as the DNA of the business and not as just a costly expense. Amazon is the prime example of this transition. It’s not the cheapest, it doesn’t have everything, but the Prime offering is convenient and reliable, which is what customers want. OC&C revealed 62 per cent of customers subscribe to Amazon due to its one-day delivery option and one in three homes are now locked-in with Prime.
The reason for this success? Amazon from the outset positioned itself as a technology-led organisation, retailer second. It embraced the internet and adapted to changes, as it wanted to sell as much as possible, to as many people as possible. Amazon used data-driven, actionable insight and reacted quickly to meet consumer needs. Leading as a technology organisation based on customer needs and not as an online retailer, has been crucial in Amazon’s global success.
Making sure the customer and technology are at the heart of the retail business strategy is critical. To become a much more technology focused industry, retailers need to understand the technology available to them, and be agile enough to be able to embrace new innovations in order to meet ever changing customer demands. The big retailers have started to realise the importance of investing in new technologies and are switching on in regards to the latest innovations. Investing in internal technology labs is an example of this. John Lewis launched JLAB in March of 2014, a startup incubator in London to find new technologies which can be used in store. Also, M&S created its own Digital Lab in February 2013 to enable more agile development within the business. The team of product design specialists, data scientists and marketeers work alongside the M&S in-house software engineering team, creating new technologies to assist with the growth of the business. These labs have been adopted by retailers to understand shifting customer preferences, investigating emerging technologies and solutions and implementing new digital strategies across the business.
In a nutshell, the future is about continuing to respond to consumer wants, needs and desires. This can only be achieved if retailers understand that whether they like it or not, they now need to be a technology business that successfully retails, in order to lead the new retail technology sector.