CEO, where is your digital transformation ?
The COVID-19 crisis that we are facing is surely the most severe and dramatic of our modern history.
Like on all the business activities and companies, it has a hard impact on retailers and brands, who are seeing their ability to respond largely diminished.
Yet, over the previous years, those companies saw themselves as particularly involved in their digital transformation. Some were even boasting about having put in place intelligent artificial algorithms that were expected to revolutionise the consumer experience. However with the lockdown, reality is very different and unveils, despite caveats, the model of those retailers who are operating in silos, where stores are often competing against online channels such as e-commerce. With stores being shut down and e-commerce “disconnected” websites that only represent a very weak portion of their business activities, those retailers face the failure of this transformation.
The numbers are unquestionable and maybe demonstrate at face-value why the consumers are less and less loyal to those stores:
- 81% of purchases made in stores started on the website (source : GE Capital Retail Bank, February 2018).
- 77% of consumers use multiple channels to finalise one same transaction (Source : « State of the Connected Customer », SF Research, June 2019).
- 83% of retail sales will always involve stores until 2023 (IHL Group, November 2019).
- 84 % of the baskets started online are abandoned, in the absence of a strong promise regarding the availability of products in stores (Forrester, December 2019)
It is hence not right to say “my website only represents 5% of my turnover” but “my website is responsible for 81% of my turnover, and this contribution is experiencing a strong growth”.
This assumption is indisputable and every CEO must henceforth ask himself/herself a fundamental question: who is defining the online selling strategy, knowing that the latter has a direct and strong impact on the turnover and margin of the entire company and thus on the objectives and commitments taken before the Board?
Yes, what is happening on our website and how, is not an annexe question, but central. And in particular, the promise capacity that makes the difference. Amazon derived its strength from this. It is obvious that a consumer buys where he has the most chances of finding the products with the best quality of service.
The business, during COVID, must hence suffer from the choices that have been made before the crisis, that often rallied the digital and marketing teams during very long periods, and that prove totally irrelevant at this time.
Appropriateness of choices
Therefore, after discussing with the Director of Customer Experience of a big retailer in perfume and cosmetics, I brought her attention on the fact that the consumer does not care about historical selling channels, and that he would for instance want to buy 2 products online, one to collect in one hour in store and the other, unavailable in store, would be delivered at home. And all that in one cart and with one payment. All consumers want to have this possibility, altogether ordinary. Equally in store, the sales associate should be able to add various products in one cart without any friction, even if one of them in unavailable and delivered at home.
Due to constraints posed by recent technological choices, this ordinary experience was impossible, although those same technologies were chosen after a long research exercise and consultation rallying various persons in the company. This Director simply responded that the consumer did not need this flexibility, and would accept to get delivered for 100% of his order, or retrieve 100% of his order in store. She hence thought she would impose her choices to the consumer, who would buy without batting an eye, and remain loyal to the store where she is working…
No, this conversation did not take place in 2010, but in 2018. Before this crisis, not a week would pass without hearing about those so-called omnichannel strategies in those various fairs where retailers would send their teams. Where are those strategies today? Why aren’t the e-commerce websites of those stores yielding 40% of their turnover? Why is the inventory of available products in store locked behind closed doors until further notice?
The priority of the retailer is the consumer
A few weeks ago, I had the pleasure to meet the Chairman and CEO of an important fashion retail brand. He was telling me that he had just signed up for a full e-commerce website make-over that he should be launching brand-new in 8 months. He admitted that he was not involved in the decision workshops, but had met with the provider and agency at the end of the cycle. Quite surprisingly, he also revealed that he set, at the beginning of the year, the implementation of Click and collect Express (Drive) in a different solution as a priority for his teams, in addition to a tool for sales in order to avoid out-of-stocks in stores in a third solution, so that the sales associates would stop saying “no” to consumers. All those services have been expected since a long time and hence highly strategic.
Unfortunately and according to his teams, he would still need to wait at least 24 months more to get what is highly strategic for him today. The reasons brought forward: the e-commerce project will take approximately 8 months, with in parallel a project to change the point-of-sale system in store that had started 18 months ago and was expected to end in 16 to 24 months, next a request for proposal for warehouse management that had to be made and that would integrate a powerful order management system, preceding a reference project to unify e-commerce and store data… But it has been promised to him that “once everything is over, it will be super simple and that it will deliver”.
The result is a retail brand that is facing great difficulty as a consequence of waiting before finding a simple answer for its consumers, who could not care less about complicated choices and only want to buy when and where they want.
If your business holds in store some resources and unlimited means and that it is able to wait some years to meet the expectations of modern consumers, then why not? If not, it is urgent to reconsider those choices that have been disrupted by the crisis and focus on the promise given to consumers.
Whenever you see a successful business, someone once made a courageous decision (Peter Drucker)
The dramatic context of Covid has brought to the daylight the failing level of preparation of most retailers in the face of this situation, and this despite those millions invested in e-commerce over the past couple of years.
For example, how many retailers were able to deliver the Drive since the start of the lockdown? This service is yet one of the most basic expectations of consumers, and not only during a period of sanitary crisis. How many retailers were still able to dispose of the store stock by using those to fulfill online orders (ship from store)? In spite of a brand new e-commerce website and recently built, those services are inexistent and when one thinks about putting them in place, at least one year is required for the project.
On the contrary, some mid-sized retailers have placed their bets on Unified Commerce in 2018 and today, they can activate those new services in a few clicks only. Unified Commerce can indeed shift the focus on the consumer – who decides how he wants to buy, and deliver a strong promise to the latter via all the possible channels, all this in one single unified basket, that is shared between all channels.
The results of those retailers are compelling, just like one of them, very dynamic in a toys industry that is particularly challenged by online pure players and big marketplaces:
- In 2019 : +4% of global revenue on a market that has reached an equilibrium and that is strongly challenged on the price by marketplaces like Amazon or C-Discount
- Since Covid : the sales carried out online have undergone a growth of more than 200% (vs N-1) right from the early days of the lockdown. As soon as the Drive was activated, growth reached 2000% (two thousand percent!!) enough to seriously reduce the impact of the crisis.
Yesterday, there were social movements with strikes and yellow vests in France, and tomorrow there could be something else, another virus, another competitor, legislation, or simply a Covid comeback…. whatever it is, we must be ready and for that decisions and turning points need to be made today in order to level up in only a few weeks the promise that is being given to consumers.
And for this, there is only one captain on board the business: the respect given to the consumer is a topic for the corporate governance.
Tomorrow’s commerce will certainly be driven by the digital, and cannot be made with yesterday’s tools. And let’s bet it will be unified!
Philip Bianchi is the founder and CEO of PROXIMIS, french eponymous software provider of a Unified Commerce solution, commercialised since 2016. PROXIMIS offers to brands and retailers to enhance only in a few weeks the promise that is made to consumers and the selling capabilities on channels (web, stores, social…), without altering the existing information system in place. PROXIMIS has been awarded 3 times during those past couple of months for its innovative and practical response to the issues at stake in Retail: E-commerce Trophee 2019 (PRW), Cross-Canal Trophee 2019 (LSA), Digital Transformation Trophee (Microsoft). PROXIMIS is present in France, Spain, United Kingdom and Canada since 2020.Anaïs Veerapatren