The world of retail has been constantly trying to redefine itself with the changing times. The number of disruptions retail has witnessed over the years is probably the highest across all industries. Whether in terms of customer experience, payment methods, changing consumer needs, online marketplaces, or the use of technology, unless a business has secured its place, it has been difficult to sustain, let alone succeed. The latest disruption retail is facing is technology transformation.
Like all major influencers in almost every industry, the COVID-19 pandemic has a key role to play in driving this change; and this is irreversible. Never before has consumer patterns and behavioral change been so immediate, causing every business to struggle during the initial days. Having a technical backbone in place to manage an efficient operating model is a challenge and this has been an Achilles heel for businesses globally.
As global businesses grapple with this issue, retailers in Asia-Pacific (APAC) have been successful in adopting digital transformation in their business and have managed to stay ahead of the game. According to a report by eMarketer, APAC is by far the world’s largest market for retail e-commerce, with digital sales amounting to nearly $2.992 trillion in 2021. It often outpaces the competition in North America and Western Europe, with China leading the trend globally. China’s digital success story is a case study as to how they have been able to leverage digital tools to drive growth.
Online marketplaces and application-based marketplaces have been major e-commerce drivers. They have managed to get retailers into their platform and have enabled consumers to access all the physical stores online. Moreover, last mile delivery providers have used this opportunity to close the demand gap, thus closing the loop for the customer and helping businesses optimize their omnichannel reach. While we consider the overall operation in APAC to be a success, the biggest news is for investors who had been strategically investing in the technology transformation for APAC retail. With the growing demand and market size, they have been reaping greater dividends for their members.
How Technology Transformation in Retail is Redefining the Industry Dynamics
Retailers harnessing technology as the core enabler of their business, and using it to provide an omnichannel experience to their customers is the ideal way to unleash technology transformation. Technology has the capability to seamlessly combine both online and offline channels using smart offerings. This has a major impact and influences the end-to-end customer journey.
Moreover, technology impacts every aspect of the retail chain such as supply chain, order management, logistics, finance, and manpower. This effectively extends the business models further from the core business and opens up greater opportunities to improve revenue generation, bring more customer touchpoints, and provide insights with more customer data at your fingertips.
Different Dimensions of Technology Transformation
Technology transformation has two major dimensions – technology architecture and operating model. Transforming the technology architecture requires:
- Omnichannel Integration: For any business, retail or otherwise, omnichannel is the way to go. With multiple touchpoints available today for businesses to connect with customers, this is an unprecedented opportunity for retailers to connect directly wih customers and ensure consistent communication. Businesses can offer a unique and personalized experience for customers based on their needs.
- Data analytics: With so much data being collected from users, businesses can use this data to better understand their target audience. Retail APAC businesses can use advanced analytics via modern and cloud-based analytics engines and data platforms. Many data analytics services are available for businesses today.
- Modernization of legacy technology: Legacy technology has always been a major challenge as businesses are not very keen on replacing a major investment. Today, it is recommended that businesses opt for modular, microservice-based architecture technology which allows them the flexibility and scalability needed to adapt their business to the ever-changing technology landscape for retail business not just in APAC, but globally.
Transforming the operating model requires:
- Adopting agile: Agile has become the standard for businesses globally owing to its benefits of enabling businesses to deliver faster by improving speed and reducing the time to near zero. Major organizations have vowed to rapidly transform their practices, allowing them to get their products to market faster and thus be more competitive in their space. Adopting agile will enable even retail businesses to integrate their business and technology resources into self-managing agile teams.
- High automation levels: It is never possible to reach every customer manually; it requires a high level of automation in the business process. Implementing retail automation via any cloud-based platform using a generic software delivery model is enough for retailers to operate their systems running to deliver an omnichannel experience, unique and personalized for their customers.
- Hiring skilled talent: Moving towards technology will require skilled talent who can manage the entire operation. Upgrading the existing workforce is one way to go, but to run the operation today, hiring talent from the market is a better idea as it allows you to run your operations, while you prepare the workforce for the next phase.
With the technology transformation, APAC retailers are able to surpass the global retailers by a certain margin. However, there are challenges too. Some of the major challenges include:
- Inadequate change management: Change management has always been a major challenge for businesses adopting new technology-led business operations. Most of the time, even the top management is not aligned with the direction the company is taking and the changes needed within the system to reach the goal. This creates issues that can eventually hamper the business. Experts recommend outside help for change management as they can provide a third-party view and involve everyone in the change.
- Lack of sustainable commitment: Taking a new direction can be a scary proposition and businesses unwilling to take such big risks sometimes act conservatively. This can hamper progress as the new model cannot co-exist with the older one causing certain commitment issues which eventually hamper the business.
- Complexity: Adopting technology can be complex and certain unforeseen circumstances can occur from time to time. At times, these circumstances can result in businesses not wanting to continue with the process, thus abandoning the technology-led approach.
- Limited access to technology: APAC consists of many developing countries, thus posing challenges in terms of access to the appropriate technology at times. This may prevent certain businesses from transforming their retail business and face challenges to sustain in the fierce market where other businesses have moved on with the times and are offering unique experiences to the customers.
Even with the challenges, opportunities and trends indicate that making the move toward technology-led retail operations is the right way to go for retailers in APAC. The reasons are as follows:
- Explosive growth in the number of social media and Internet users: Technology-led retail operations depend completely on the online audience. The number of social media platforms and users is a promising sight for businesses since they have a significant number of users to target, thus providing a positive Return on Investment (ROI). The overall number of Internet users has also increased, which is a good sign as more people are joining the pool.
- Proliferation of m-commerce: M-commerce arrived much earlier than expected, influenced greatly by the pandemic. We witnessed almost every major business either going m-commerce or getting a presence of third-party m-commerce platforms. The rise of smartphone users in the past five years has also been a major driver.
- Expansion of digital infrastructure: With each new technology introduced, the supporting infrastructure is also in place. This not only helps expand the infrastructure but also makes it robust. Thus, technology-led offerings are becoming more robust and easily accessible.
Overall, the retail operations in APAC have accelerated the pace of technology transformation. Within a short span, operations will be streamlined and the customers can enjoy a truly digital retail experience. Modern technologies such as artificial intelligence/ machine learning (AI/ML), Internet of things (IoT), and data analytics have a major role to play in bringing about this paradigm shift and it is clear that the future of retail, not only in APAC but globally, will be driven by technology. APAC has already benefitted from this and has become a reference model for global retail businesses.
Click here for more information.