Cisco’s latest research finds that digital transformation can enable $500 billion worth of opportunity for retailers, but many are moving too slowly to capitalize on the trend.
The computer networking giant recently surveyed 200 retail executives in the North America, South America and parts of Europe. Nearly half (49 percent) of respondents said their digital investments are being used in the earliest, enablement phase of the process, pouring funds into mature technologies that bolster their current capabilities, boost operational efficiency and enhance IT agility.
Only 29 percent of those polled are investing in the next phase, creating competitive differentiation. Another 22 percent are at the stage where they are unearthing new revenue streams and exploring new business models, the third and final phase.
Perhaps the most startling statistic is that store owners are largely missing out on a major opportunity to increase the bottom line.
Only 6 percent of retailers are focusing their digital investments on employee productivity, a $187 billion opportunity according to Cisco. Not only do productivity-enhancing technologies improve collaboration among sales associates, increase their efficiency and improve the checkout process, it has beneficial spillover effects in terms of customer service. By prioritizing employee productivity, retailers can deliver better shopping experiences and increase customer loyalty.
Curiously, Cisco’s data suggests that many retailers’ efforts to create exceptional customer experiences may be working against them.
Although customer experience represents a $91 billion opportunity, investing in the category at the expense of employee productivity and other technologies could prevent them from attaining digital transformation’s operational and workforce benefits. More than a third (37 percent) of respondents said they were spending most of their digital investments in a bid to improve customer engagement.
Regardless of the path retailers follow along their digital transformation journey, it’s one worth taking.
“The shakeup caused by digital disruption is already underway with many major retailers announcing the closure of hundreds of their brick and mortar stores in recent months, in order to better compete in a landscape where physical and digital channels are increasingly converging,” said Kathryn Howe, director of U.S. Commercial Digital Transformation at Cisco’s Retail and Hospitality Industries division, in a statement. “Yet, there remains a tremendous opportunity, with the potential for retailers to generate more than $506 billion in value that can be achieved through digital transformation.”
As tempting as it is to focus on customers, it also pays to look inward. “Retailers need to make more progress in digitizing their workforce and their core operations in order to execute on the innovative customer experiences they want to deliver, and to position themselves for success in the new retail landscape,” continued Howe.
Pedro Hernandez is a contributing editor at Datamation. Follow him on Twitter @ecoINSITE.