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Digital Transformation Benchmark - 2012Insights for the Retail Industry
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Digital Transformation in the Retail Industry
Starting with the arrival of eCommerce in the late 1990’s, few industries have had as much experience with digital disruption as retailers. Still, after a decade of managing digital competitors and changing customer expectations, the retail industry faces fresh challenges. mCommerce (mobile) and sCommerce (social) are the latest incarnations of digital disruption in the industry, and some players have already begun leveraging these technologies.
Figure 1: firms’ positioning in the Digital Maturity Matrix
Interpreting the
Digital Maturity Matrix
• The vertical axis measures “Digital Intensity,” i.e. firms’ digital practices
• The horizontal axis measures “Transformation Management Intensity,” i.e. the management practices implemented by the firms around digital transformation
For more information, read the MIT Center for Digital Business and Capgemini Consulting Research Report “Digital Transformation: a Roadmap for Billion-Dollar Organizations” (2011)
Learning 1: The focus for retailers is on the customer experience, less on operations or collaboration
Companies that responded to our survey highlighted customer relationships and revenue growth as two areas where they perceive Digital Transformation most impacting their performance. Accordingly, retail firms are using digital technologies to personalize the sales experience and enable customer self-service. A majority of companies also highlighted using analytics to target marketing more effectively (65%) and to
personalize marketing communications (54%).
Overall, retailers have done less in operational applications of digital. Relative to other industries, they reported lower scores for digital employee collaboration, remote working and executive communications. Similarly, many retailers are not using technologies like instant messaging or video conferencing to improve operational processes. This may reflect the current priority of the “store floor” and autonomous local staff (see Figure 2). However, it may also present
Asia & Oceania North America Northern EuropeSouthern Europe Average
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an opportunity to explore new models that would take better advantage of cross-store collaboration.
Figure 2: worker enablement
Legend:
• Red bars represent the percentage of companies disagreeing with each statement (answers 1, 2 and 3 on a scale from 1 = strongly disagree to 7 = strongly agree) in the industry; green bars represent the percentage of companies agreeing with each statement (answers 5, 6, or 7).
• Grey marks represent disagreement (answers 1, 2 or 3) or agreement (answers 5, 6 or 7) across all companies in our study.
Learning 2: The industry’s Digirati leverage social media and mobile with customer more than other retailers
Overall, retailers appear to be using social media and mobile at least as much as other industries. In each measure of how retail firms use these technologies with customers, scores were slightly higher than cross-industry averages. Yet, only about a third or retailers are using mobile with customers, and less than half use social media for tasks other than monitoring reputation or promoting products/services.
The retail industry’s Digirati are using social media and mobile considerably more than other firms. This suggests that both mobile and social media could
represent entirely new channels for retailers or, at the very least, important components to consider in an integrated, cross-channel customer experience. As noted in Capgemini’s 2012 Digital Shopper Relevancy Report, 60% of digital shoppers continue to expect a cross-channel experience that includes physical channels.
Integrating mobile and social media into that cross-channel experience may present an opportunity for retailers. According to our study, it appears that some retailers have already begun making headway in building cross-channel consistency, with scores slightly higher than the cross-industry average.
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72%
69%
64%
35%
58%
54%
35%
27%
Our employees can collaboratedigitally with their colleagues as
needed
When appropriate, our employeescan perform their work duties from
any location
Digital technologies improvecommunication between senior
executives and employees
Our employees actively shareknowledge through collaborative
community platforms
15%
20%
20%
43%
31%
31%
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Learning 3: Retail’s vision for radical Digital Transformation is often limited
Some retail companies have clear plans for Digital Transformation. 56% of the companies surveyed reported having a high-level digital roadmap – 13 percentage points higher than the cross-industry average. More than half said that roles and responsibilities for digital
initiatives within their organizations are clearly defined. Yet, most retail companies did not say they had a vision that was radical, shared among senior executives or integrated across organizational units (see Figure 3). This suggests that many retail companies are prepared to deliver a digital vision that is more evolutionary or siloed than transformational.
Figure 3: digital vision
Legend:
• Red bars represent the percentage of companies disagreeing with each statement (answers 1, 2 and 3 on a scale from 1 = strongly disagree to 7 = strongly agree) in the industry; green bars represent the percentage of companies agreeing with each statement (answers 5, 6, or 7).
• Grey marks represent disagreement (answers 1, 2 or 3) or agreement (answers 5, 6 or 7) across all companies in our study.
Learning 4: New business models focus on enhancing the industry’s core business of physical channels
Only 27% of companies reported transitioning from physical to digital products and services (versus a 45% average across all industries). Instead, digital technologies allow most retailers to connect with new customers
that were previously unreachable with traditional approaches. Most retailers have been able to launch new businesses based on digital technology, yet companies observed less cannibalization than average. This suggests that new, digital business models are complementing (rather than competing with) retail’s core business.
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32%
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Senior executives have a digitaltransformation vision that involves
radical changes
Senior executives share a commonvision of how the business should
change through digital technologies
There is a high-level roadmap fordigital transformation
Senior executives have a digitaltransformation vision that crosses
internal organizational units
Senior executives and middlemanagers share a common vision of
digital transformation
44%
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37%
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Our survey data shows that some companies in the retail industry are currently transforming the customer experience and enhancing their core business models through Digital Transformation. Our analysis reveals some additional areas for retail firms to consider in developing their digital maturity:
- Reassess vision – Many retailers that responded to our survey did not recognize a “vision that involves radical changes” within their firms. They also did not show strong responses for that vision being shared among executives or integrated across the business. Moving forward, retail firms may want to review their vision for Digital Transformation, either to validate that they are on the right path or to develop greater consensus around a leading-edge vision of the future.
- Leverage social media and mobile with customers – The retail industry’s Digirati leverage social media and mobile technologies with companies more so than other firms in the industry. This may be evidence of opportunities for other retailers to begin using these technologies to enhance the customer experience.
- Develop consistency across channels – According to Capgemini’s 2012 Digital Shopper Relevancy Report, customers expect an integrated channel experience that includes traditional physical channels. Building on established work in cross-channel consistency could prove an important factor for success.
- Enable internal collaboration – Retail firms today show below-average usage of digital collaboration, knowledge sharing, or tools like instant messaging to enhance operations. This may reflect a store-centric model of internal operations. However, given the geographic spread of many retail firms, there may be potential to leverage these practices and tools to enhance operations and worker productivity.
Acknowledgments
We would like to extend our sincere thanks to the executives who took the time to respond to our survey.
Contacts
For more information, please contact:
Global
Emmanuel RILHAC [email protected]
Belgium China Finland France India
Robert VAN DER EIJK [email protected]
Nongfei ZHU [email protected]
Sami FINNE [email protected]
Laurence JUMEAUX [email protected]
Romain DELAVENNE [email protected]
Netherlands Norway Spain Sweden USA
Armijn BEEK [email protected]
Steinar SIMONSEN [email protected]
Fernando RODRIGUEZ [email protected]
Anneli SAMUELSSON [email protected]
Ken TOOMBS [email protected]
United Kingdom Germany, Switzerland, Austria MENA
Michael PETEVINOS [email protected]
Ralph BECKER [email protected]
Jawad SHAIKH [email protected]
About the Research on Digital Transformation
This analysis is based on data collected during the second year of our joint research program with the MIT Center for Digital Business.
For more information about the research, please contact:
• Didier BONNET Managing Director and Global Head of Practices at Capgemini Consulting [email protected]
• Patrick FERRARIS Global Leader of the Technology Transformation Practice within Capgemini Consulting [email protected]
Rightshore® is a trademark belonging to Capgemini
Capgemini Consulting is the global strategy and transformation consulting organization of the Capgemini Group, specializing in advising and supporting enterprises in significant transformation, from innovative strategy to execution and with an unstinting focus on results. With the new digital economy creating significant disruptions and opportunities, our global team of over 3,600 talented individuals work with leading companies and governments to master Digital Transformation, drawing on our understanding of the digital economy and our leadership in business transformation and organizational change.
Find out more at: http://www.capgemini-consulting.com/
With around 120,000 people in 40 countries, Capgemini is one of the world’s foremost providers of consulting, technology and outsourcing services. The Group reported 2011 global revenues of EUR 9.7 billion. Together with its clients, Capgemini creates and delivers business and technology solutions that fit their needs and drive the results they want. A deeply multicultural organization, Capgemini has developed its own way of working, the Collaborative Business ExperienceTM, and draws on Rightshore®, its worldwide delivery model.
Learn more about us at www.capgemini.com.
About Capgemini
Capgemini Consulting is the strategy and transformation consulting brand of Capgemini Group. The information contained in this document is proprietary. © 2012 Capgemini. All rights reserved.
