Here’s How Digital Transformation has Revolutionized the Retail Industry

Posted by Rakshit Hirapara on January 23rd, 2021

Vaccination programs have begun in various countries. However, lockdown policies and social distancing measures are in place around the world. People still work from home, kids opt for online classes, and chats happen on virtual platforms. Mobile app usage, which surged in March 2020, continues to remain high. 


Impact on various operations of the retail sector 

The coronavirus and associated disruptions have turned everyone into a digital-savvy consumer. Small and large firms strived hard to adapt to the latest technology and join the transformation during the pandemic. However, only organizations with a cross-collaboration between various departments and thoughtful planning achieved success. 

Digital transformation in the retail sector is not just about launching an eCommerce website with unique user-friendly features. The introduction of newer technology has impacted in-store experience, warehousing, marketing operations, and even supply chains. 

Here’re critical takeaways from the comprehensive list of benefits achieved due to digital transformation. 

  • Better customer engagement during non-working hours

  • Cashierless stores during the pandemic 

  • Enhanced retail sector operational efficiency 

  • Connecting multiple locations to compete with Amazon during the pandemic

  • Dedicated apps for loyalty programs

  • Sephora and Target’s transformation makes them ideal candidates for case studies 

Chatbots for better customer engagement during non-working hours

Both physical and online stores are harnessing AI and ML’s power for offering a better consumer experience. 

The coronavirus pandemic forced call centers to remain shut for a few months as most of them did not have systems to support work from home. Thankfully, Artificial Intelligence and Machine Learning powered chatbots came to the rescue of small and large firms. 

Even in 2021, call centers are struggling due to a backlog of tickets. Chatbots on websites, apps, and social networking sites help businesses ensure shoppers get their primary queries resolved. Buyers can get basic level information within minutes, without waiting for a human to answer the email or call. On the other hand, human resources can focus on complicated queries rather than answering basic repetitive questions. 

Not just fashion world biggies like Sephora, Aerie, H&M, Rue21, Burberry, and Tommy Hilfiger, but even local businesses have embraced chatbots to save costs and workload. Advanced chatbots can help consumers raise tickets, place orders, choose delivery time-slot or in-store pickup slot. No wonder the market for chatbots is set to cross the .23 billion mark by 2025.


Cashierless stores during the pandemic 

Several physical and online retailers, including Amazon, have opened cashier-less stores in certain cities worldwide. Customers pick their favorite products, and AI-powered systems automatically track and register the same with the help of bar-codes and tags. Customers are charged for the same via their digital wallet when they leave the store. 

In-store digital promotion systems, contactless NFC tags, card readers, cameras, scanners, and beacons help stores run automatic checkout systems with ease. Automated, cashier-less checkout systems protect staff members from infection. On the other hand, firms save drastically by reducing human resources working in various shifts. 

From paying for a magazine, a coffee cup, and from groceries to a glass of beer, customers prefer using digital wallets to make payments. Even non-tech savvy people living in developing countries use digital payment methods. There is no need to stand and face the hassle of waiting in those long queues at checkout points. Such counters can minimize staff and consumer’s contact with surfaces or dirty currency notes. 


IoT has enhanced retail sector operational efficiency 

Analytical solutions, combined with data from apps, websites, and physical stores, help businesses enhance efficiency. Parameters like social network trends, buying behavior, and customer movement in various parts of physical stores assist in creating strategies for ensuring business continuity. 

IoT sensors, RFID chips are connected to storage containers, warehouses and trucks, so that goods can be stored or monitored while in the supply chain. Access to technology has enabled small businesses to let consumers track the location of their shipment. B2B customers can even monitor air pressure, temperature data from sensors attached to commercial temperature-sensitive shipments. 

Besides physical and online retailers, even consumers can get inventory insights while ordering via the app.


Digital transformation has helped retail chains race ahead of Amazon during the pandemic 

As pointed out in a recently published Forbes article, Lowe’s, Best Buy, Walmart, Target, and Home Depot used technology for hard-wiring physical and digital stores. The transformation helped them beat Amazon in its game by turning stores into hyperlocal distribution hubs during the pandemic. Shoppers can place orders via website and app and pick up items from their preferred stores or opt for home delivery. 

On the other hand, Amazon floundered due to an enormous increase in panicked shoppers’ orders during the initial lockdowns. After all, they do not have warehouses within ten miles of most Americans.


Dedicated apps for loyalty programs

Loyalty program solutions, combined with analytical tools, help in pushing targeted programs to shoppers via apps. 

Studies have proved that customers are keen to join loyalty programs that offer incentives matching their choice and preferences. Ultimately, targeted offers result in increased purchases.

Exciting case studies that prove the significance of digital transformation 

  • Sephora

Cosmetic retail giant Sephora does not need much of an introduction. The multi-national chain happens to be one of the early adopters of technology in the cosmetics retail sector. Both digital and physical stores act as nerve centers for the company. Sephora’s stores manage to impress consumers by combining online and offline components.  

In 2015, the retail giant found that both online and physical store consumers often find it challenging to choose a foundation shade that matches their skin color. They developed Augmented Reality (AR) powered tools like Sephora Visual Artist, Tap & Try, and Color IQ.

Today, Sephora apps are considered some of the most impressive solutions that enhance online and in-store shopping experiences. Shoppers can easily find the best suitable make-up shade due to facial scanning technology. It is linked to all the sales channels. The app provides recommendations based on in-store and online product purchases as well as browsing history. 

With these virtual tools, shoppers can test different shades and try new looks. The cosmetics giant offers tailor-made loyalty programs to buyers. And these initiatives result in roughly 80 percent of Sephora’s overall sales.

The smartphone application also turns on specific features when the consumer visits a store. Shoppers can check daily promotions, in-store maps, check wish lists, and virtual shopping carts, or make a payment digitally at the POS. 

  • Target hit the target in 2016

Target Corporation probably realized the significance of digital transformation in 2015. They launched a series of apps in 2016 that helped consumers create gift registers and find discount coupons besides shopping. 

The retail chain had predicted it could transform the brand and grow by offering everything that a customer wants in a single app. 

Consumers can now use a single application for shopping, selecting door-step or in-store pickup, checking in-store navigation maps, and making digital payments. Most importantly, Target also has in-app features for shoppers to check and encash, rewards earned from loyalty programs. Target reported a considerable increase in sales percentage after the launch of their all in one app.

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Rakshit Hirapara

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Rakshit Hirapara
Joined: January 23rd, 2021
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