Digital transformation (DX) is one of the most powerful tools retailers have to beat their competitors and better serve their customers. By strategically deploying the right technologies, retail companies can boost their profitability, increase customer satisfaction, make their business processes more efficient, and reap a variety of other benefits.
Unfortunately, digital transformation initiatives don’t always go as smoothly as planned. A number of roadblocks and missteps can trip you up along the way. Without a change-oriented mindset, the right DX strategy, and a commitment to embracing these new technologies, your digital transformation project will simply magnify your organization’s existing problems.
This is the second article in a two-part series exploring digital transformation in the retail industry. Below, we’ll examine some tips and best practices to avoid common digital transformation pitfalls and set your retail business up for success.

1. Start slow and small.

Retail giants like Amazon got to where they are only after decades of sustained growth. While competing with these industry titans is a noble goal, retailers must realize that they can’t scale their business overnight. Trying to be too ambitious and bite off more than you can chew will only set you up for failure.
Instead, your digital transformation roadmap should begin with a series of small, carefully planned steps. Start with a pilot project that can be tested relatively cheaply and quickly, and will serve as a proof of concept for larger initiatives. This will allow you to see what works for you, learn from any mistakes you make, adapt your approach if necessary, and scale from there.

2. Focus on the customer experience.

In an era of digital transformation, the customer remains king. Every project you undertake as part of your DX strategy should consider how the changes will impact and improve the customer experience.
For example, your digital transformation initiatives should help guide customers to the purchases they want to make rather than overwhelming them with a sea of variety. Some fashion brands offer AI or human “stylists” (whether online or in-person) that help make recommendations about interesting products.

3. Don’t get distracted.

When searching for inspiration for digital transformation projects, it’s important not to get sidelined by the latest, shiniest technology. Some examples include:
Drone delivery: Amazon first announced its Amazon Prime Air service in 2013, which would deliver small packages to your doorstep in less than 30 minutes in major cities. As of writing, however, the service has yet to materialize for the general public. If drone-based delivery is an avenue you want to explore, start small with a pilot project (no pun intended).
The metaverse: Some retailers are already making “real estate” purchases in the much-hyped metaverse, a rich virtual world where users can socialize and interact in ways that mirror reality. For example, the fashion company Ralph Lauren has created a digital installation showcasing its brand in the metaverse platform Zepeto. However, the profitability of this venture is as yet unknown, and you need to be careful about investing too much in a potential boondoggle by trying to get ahead of the curve.
Cryptocurrencies: With the rise of Bitcoin and other cryptocurrencies, some retailers are experimenting with accepting these novel forms of payment. Luxury fashion store Gucci, for instance, has announced it will soon take Bitcoin, Ethereum, Dogecoins, and other digital currencies in select stores in the U.S. Before committing yourself and diving in head-first, however, you should take the time to understand what cryptocurrencies are and their value as a retail payment method.
Of course, this isn’t to say that retailers can’t see any benefit from adopting these cutting-edge technologies. Rather, you should simply know what you’re getting into and first focus on the fundamentals that can offer big wins — for example, a big data analytics platform or chatbots to shorten customer service wait times.

4. Don’t neglect in-person shopping.

Brick-and-mortar retail has undergone dramatic changes in recent years due to events like the rise of e-commerce and the COVID-19 pandemic. Nevertheless, in-person shopping will never disappear entirely — in fact, its role has merely evolved alongside online shopping. According to PwC, nearly 40 percent of consumers make a purchase at a physical store at least once per week, versus 27 percent who shop online.
Given the advantages of in-person shopping, such as no delivery fees and trying the item before you buy, it would be a mistake for retailers to neglect or abandon their brick-and-mortar stores. Instead, savvy companies are combining their physical and digital storefronts to deliver an optimal and seamless shopping experience.
When getting started with digital transformation in retail, it’s important to avoid some of the biggest DX pitfalls that have befallen other companies. By learning from those who have already been in your shoes, you’ll be much more likely to set your own retail business up for success.
That’s exactly why DigXchange was founded. DigXchange is a forum for business and technology executives, leaders, and educators to share their knowledge, ideas, and experiences in digital transformation. We host a series of webinars, conferences, and other events where participants can learn from the digital transformation successes and failures of their peers.
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