Businesses can learn lessons from Walmart’s response to the disruptive threat of Amazon. While this includes a focus on customer needs, it also requires investing in an online marketplace, forging new partnerships with brands available online and increased locations for online order pick-up.
As well as doing these things, Walmart has also announced some other new initiatives to emphasize the digital employee experience, including its new “Intelligent Retail Lab,” a space that will test use cases for AI to improve both employee and customer in-store experiences.
Does this signal that Walmart has finally figured out how to beat Amazon’s disruptive, customer (only)-driven formula for success? Should other retailers will likely follow suit? Keith Ryu, CEO of Fountain provides his analysis.
Digital Journal: How important is digital transformation for business?
Keith Ryu: “Digital transformation” is a somewhat vague phrase that simply implies a company is moving manual operations, processes, etc., to the cloud or another form of emerging, connected technology.
In today’s fast-paced, increasingly connected and global world, it’s more important than ever to ensure the quality of your product and services is, at the very least, on par with your competitors if not exceeding it. By streamlining your processes through digital transformation – investing in new software, moving the company’s data to a cloud provider, etc. – you allow your company to more agilely respond to changes in the market. Additionally, digital transformation, which often starts out as an initiative to manage cumbersome or outdated processes, can lead to innovation and give your company a competitive advantage.
DJ: How disruptive has Amazon been for the retail sector?
Ryu: “The Amazon Effect” is a phenomenon that describes the overall effect that the digital marketplace has had on traditional forms of commerce like brick-and-mortar stores. The industry is changing, along with consumer expectations. Because of this, it’s clear that Amazon and other companies like it have had a lasting effect on retail. More and more retailers who’ve not kept up with changing customer demands close brick-and-mortar stores, and online-heavy holidays like Black Friday have proved to be windfalls for digitally savvy companies.
DJ: How can stores address customer needs with digital technology?
Ryu: A couple of weeks ago, Walmart announced a 43 percent increase in e-commerce sales that was, in part, fueled by investment in digital assets like its online marketplace, new partnerships with brands available online and increased locations for online grocery order pick-up.
Customers want convenient and quick retail experiences. Because of that, more companies should and will start to take a page out of Walmart’s book and invest in assets that improve the customer’s overall experience.
DJ: Do retailers need to consider business-to-business collaborations?
Ryu: Sometimes, it makes sense for a company to develop their own proprietary digital assets to fulfill a client need. Back to the previous example, one of Walmart’s latest digital investments is in an “Intelligent Retail Lab,” or a space that it will test use cases for AI to improve both employee and customer in-store experiences.
But other retailers may want to “outsource” these efforts to more specialized companies through mergers, acquisitions or business partnerships. One example of this is Target’s partnership with the grocery delivery company, Shipt. In this instance, Target needed to respond quickly to changes in the market and in customer needs, so rather than develop, test and roll out a solution internally, they made a strategic acquisition of a company where the technology already exists.
DJ: Can retailers use technology to make employees more productive?
Ryu: In the competitive rush to provide quality products and services to customers, retailers can often overlook their employees. But this sector of the business should not be taken for granted; with the unemployment rate at a low 3.7 percent, retailers are only going to find it harder and harder to find and retain quality employees as they now have the pick of the litter when it comes to employment options.
Because of this, companies should place an equal emphasis on the employee experience, starting with the sourcing and hiring process all the way through everyday operations on the store’s floor. Streamlining these processes through AI, automation, changes in policies, etc. will provide your employees with a more positive experience, whereby increasing their productivity.
