The continued spread of the Coronavirus has impacted the whole world. If the pandemic is not controlled quickly, the world economy is likely to face the risk of a global recession. It has eventually stopped the growth of the retail industry and affected offline retailers profoundly.
The COVID-19 outbreak has reduced customer volumes in the retail industry of various countries over the last few months and dived many businesses into operational complexities. The pandemic has forced the retail industry to transform and rethink their models digitally. Retailers are thinking about how they should respond to this immediate change. They want to understand how they can use technologies to find innovative ways to build up new business models and drive more revenue.
Therefore, looking at all the aspects of digital transformation in the retail industry is essential.
Before we explain how retail businesses can digitize their operations for better customer experience and more revenue generation, let’s understand what is digital transformation and what does it mean to transform the retail industry.
What is Digital Transformation in Retail Industry?
Digital transformation is entering into every field and industry that we know today, starting with mass media, education, healthcare, finance, banking and more. Organizations go digital to improve their services and facilities to bring up the satisfaction level of their customers. The idea behind digital transformation in retail is based on the needs and requirements of customers.
While deciding about going digital, retailers think about how they can use emerging technologies to find new ways to drive revenue and create innovative business models. As digital tools and technologies emerge, they are going to have a considerable impact not only on the services offered by the company but also its organization of the workflow.
Digital transformation for retailers is about thinking beyond marginal improvements. It is about creating a connected engagement facilitated by the use of technology. It is not only about data intelligence, agility, customer centricity, new value propositions and innovative, but also about reducing costs, enhancing efficiencies and streamlining processes.
When thinking about the digital transformation in retail, retailers have to re-consider every aspect of their business, from sourcing to inventory management, employee management and training and customer experience management.
Digital transformation in retail can navigate customer retention and satisfaction by offering customers the services and products they need. Big data analytics, location-based services and mobile apps have brought a significant transformation in the way retailers conduct business. However, the path to digital transformation may have to face various challenges.
5 Advantages of Online Advertising for Retailers
Digital measures not only offer advantages for online product sales, ads via social media and Google can also be used optimally for stationary trade. This type of online advertising offers several advantages over traditional offline media such as print (flyers, newspaper ads, brochures) or TV commercials:
Quick accessibility of information
Suppose you see a Facebook Ad that interests you – what do you do? It’s simple: you click on it. And are automatically redirected to a page that gives you more information about the product and the company , and possibly gives you the opportunity to purchase the product right away . This is exactly one of the great strengths of online advertising: you get all the information you need within seconds. As a result, the bounce rate is much lower and the probability of buying something is higher.
Secific targeting with little wastage
Unlike traditional marketing efforts, social media or Google ads allow you to target the exact audience you want, resulting in significantly lower wastage. Online advertising not only reaches local customers who already know your business, but can also help you tap into new customer bases.
The algorithm of popular social media platforms has a supporting effect here, as users are shown exactly what they might be interested in based on their consumption behavior. Let’s assume that you sell a lot of products that carry a “vegan” or “organic” label. Then you can assume that mainly people who are interested in these kinds of products will buy from you. Facebook offers you so-called interest targeting for this and plays your ad only to users who are interested in these topics.
Better measurability of your advertising
Using concrete key figures such as impressions, conversions, CPC (= cost-per-click) or the CTR (= click-through-rate), you can evaluate the efficiency of individual campaigns. You can collect these clearly in a dashboard such as Google Data Studio and compare them regularly. In the case of advertising via flyers or newspaper ads, it is difficult to evaluate the success of the measures.
We’ll tell you how you can also measure the success of your online campaigns in-store in another blog post.
Constant optimization possible
Not only can the ads be measured and evaluated in terms of their success, you can also continuously optimize them to use the available budget as efficiently as possible.
Less budget needed
Ads via social media or Google are a lot cheaper than advertising via traditional media. With just a few euros, you can already reach thousands of potential customers. The advantage here is that you only pay for ads that your target group actually sees and don’t “waste” budget on people who see your ad but are not enthusiastic about these product categories. For a small ad in the newspaper, on the other hand, you pay several hundred euros and also accept high wastage.
4 Tips for Digitization in Retail
We will show you how to position yourself online and thus digitize your business.
Create your own website
Having your own website gives customers the opportunity to find out more about the company and products. Nowadays, a website does not have to be programmed expensively. You can also create it yourself inexpensively, for example with the help of a modular system . In a next step, you can also integrate an online store directly via the same system . Always make sure here that your website is mobile-friendly , because many users prefer to surf the Internet with their smartphone rather than with a computer.
Create Google My Business entry
All you need to set up Google My Business is a Google account. Set up your Google My Business profile and use the free opportunity to inform existing or new customers about your location, opening hours as well as offers, such as a delivery service. The information will be displayed in your business profile in Google Search and on Google Maps.
Establish a social media presence
Social media channels like Facebook and Instagram are perfect for doing organic marketing as well as running ads . Create a profile for your business and build your social media presence. This will help you increase brand awareness , as well as attract new customers and build customer loyalty. For recognition, make sure you have consistent branding between your website and social media presence.
LocalUp software for social media ads
Place ads on social media and Google. Our software is perfect for successfully setting up local marketing campaigns while keeping the manual effort of your campaigns to a minimum . LocalUp is ideal for product promotions, social recruitment and lead generation. Especially companies and brands with many point-of-sales benefit from individual ads per location and the automation of complex campaigns.
What are technologies that help in digital transformation of retail industry?
1. Data Analytics
As the retail market is becoming more and more competitive with each passing day, nothing has been more crucial than the ability to optimize business processes when satisfying customer expectations.
Data analytics is nowadays implemented at all stages of the retail process, keeping track of all emerging products, forecasting sales and predicting future demand.
Data analytics can also be used to optimize placements of offers and products via the heat-mapping of customers. Using analytics, customers who are interested in specific products based on their past purchases can be identified quickly and effectively. It helps in finding the appropriate way to handle such customers via targeted marketing campaigns. This is what data analytics deals with.
Following are some of the strategic areas where retail players identify how data analytics can help them drive more revenue and growth to their business
Predict Future Performance
It is also one of the significant areas when looking into data analytics in retail businesses, as every customer interaction has a significant impact on both existing and potential relationships. Executing the idea without knowing about it entirely can be risky because a wrong decision could lead to a prolonged or quick loss.Retail players can predict the future performance of different products based on the customers’ existing interests and likes.
Demand Prediction
When retailers get an understanding of customers buying trends, they focus on areas that would have high demand. It involves collecting demographics, occasion-based and economic parameters to create a good image of buying behavior across the target market. It helps in effectively managing inventory.
Trends Forecasting
With data analytics tools, retailers can have a better understanding of the current trends of their businesses. Data analytics algorithms can be used to forecast future trends based on buying data. Forecasted trends tell us what needs to be promoted to increase the revenue and what does not need to be promoted.
Customer Identification
Identifying customers is also essential in data analytics because it helps in selecting which customers would tend to like a specific product. Due to this, most of the retailers depend on recommendation engine technology, data fetched via transactional records and online and offline loyalty programs.
Data analytics is a proactive approach whereby retail players can use past data to forecast expected sales growth by looking at customer behavior trends. It helps retailers stay on the competitive edge and gain significant market share.
2. Artificial Intelligence (AI)
Artificial Intelligence is being implemented in retail in new ways across the entire service and product cycle – from construction to post-sale customer service interactions. But as a retail player, you will require answers to the following essential questions:
- How are retail companies using AI technologies to stay ahead of competitors?
- Which AI applications can automate and augment the retail process?
- What innovations are considered as potential game-changers over the next ten years?
IBM surveyed 1900 retail and consumer product companies across 23 countries, out of which 85% of retail firms are planning to implement intelligent automation in the supply chain by 2021. Retailers believe that implementing AI can lead to a 10% annual growth.
Let’s understand how AI contributed to digital transformation in retail industry.
Better Customer Service
AI can revolutionize the retail industry by enabling webshops that help retail companies in promoting their products or services based on the customer’s behavior and buying history. It is essential to realize that seamless customer service can help run a business successfully.AI can help make customer service effective and better by analyzing customers’ data and behavior. Offline stores can also leverage the potential of AI in a number of ways. What if you visit a store and you come across a friendly robot instead of a salesman. Customers can ask as many questions as they want from the robot, instead of talking to a salesman. It ensures the least contact with a human being, ensuring no risk of spread of the infection post-COVID-19 outbreak.Also, AI-enabled robots will feed the data and analyze it to identify customer likes or dislikes and predict future sales. For example, if a customer is looking for a moisturizer, they can ask your robot for product recommendations based on the skin type. Therefore, the overall experience gets interactive for customers.
Better Data Accumulation
AI can help retail firms accumulate a massive amount of customer data. With collected data, AI can help create a personalized shopping experience for the customers by drawing conclusions. If you have the customer data, you can understand what do they like the most.It helps create an engaging experience for users based on their likes and interests. Moreover, retailers can forecast how well a product is likely to perform in the market by learning from past experiences.
Chatbots for Customer Support
AI-enabled chatbots enable retail players to engage consumers. Using chatbots, retail companies can manage thousands of queries simultaneously without needing a large workforce.Chatbots are designed to answer queries, offer instant support and provide shopping recommendations. With a combination of AI chatbots and human beings, retail brands can handle customers effectively and provide customers with a proper resolution of their problem.When customers get quick and personalized attention, they get engaged with the brand deeply, enabling improved customer loyalty.
The above use cases are not fantasy, but many retailers have started experimenting with these technologies. AI will be ruling the retail sector by helping brands become more customer-centric in retail operations.
Conclusion
Digitization is unstoppable and in order to be able to survive on the market with your company in the future, you should rely on digital marketing measures as soon as possible. Companies that have taken care of their online presence are emerging from the Corona crisis as winners.
One thing is clear: Online advertising can be a good complement to traditional marketing via print or TV, as campaign targets can be targeted more specifically and potential prospects can be addressed more directly. The best practice examples already show how valuable digitization is for stationary companies and that it pays to be open to change and new marketing strategies.
