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 Digital Transformation in the Retail Industry

Digital Transformation in the Retail Industry — Embracing the Future of Shopping

It is by no means an exaggeration that digital transformation is a necessity rather than just a method of running one’s business. One cannot expect to stay in the fierce competition for long if they are reluctant to use the latest technologies to update one’s business. From marketing to delivery to customer support and so on, you need to be as efficient and quick as you can be. Global investment in digital transformation is estimated to stand at $6.8 trillion in 2023. So why would companies spend so much on digital transformation? Read this article to learn the answer. But first, let’s take a step back and start with what we mean by digital transformation.

What Exactly Does Digital Transformation Mean?

Digital transformation could mean different things for different business owners, depending on the type of business and the most vital features of that business that need to be transformed. A few examples help clarify the topic. If your company wants to boost the customer experience, AI or cloud computing might be the answer. Machine learning could help restructure your supply chain. Today’s technologies can make a difference by helping you easily predict your next month’s demand. Simply put, you will stay at the top of your game if you choose the right people for your digital transformation.

Two concepts that can help you understand digital transformation are digitization and digitalization. Digitization is very simple. We’ve all done it before. It means you convert analog data into digital. That happens when you scan a picture or document and store it on your laptop. However, if digital technologies lead to changes in business processes, that is called digitalization. This could mean a platform to optimize the launching of your new product. Such efforts are sure to cause improvement on every level and, of course, a much higher annual income for the company and everyone involved.

Digital Transformation in the Retail Industry

The Changing Retail Landscape

Retailers are sure to benefit from a quality digital transformation. Think of all the new ways your customers can learn about your company, contact you, and make a purchase. These things can happen through your website, social media page, phone app, or chatbot. If you haven’t done that already, it’s time you start using a subscription-based business model.

One of the first benefits you gain is a better understanding your customer’s needs and preferences. Digital feedback is much easier to pile up, organize and turn into useful information once you use the right AI tool. Then you will know what demographics are a better target for your marketing campaigns. Other beneficial consequences are an increase in your customers’ engagement and, ultimately, getting a higher number of loyal customers. A further step can be to use Conversational AI to automate online customer interactions, but more on that later. All right, so more customers and more revenue. What else can I expect from digital transformation?

Digital transformation can revolutionize the performance of your workforce as well. A quality CRM system can assist your employees to perform more quickly and efficiently. Your CRM will easily provide your employees with customer details, sales, customer behavior, and more. Use Big data analytics and instruct the relevant department based on the results in real time. If done properly, digital transformation can lead to better internal operations. This means making use of data-driven decision-making, optimized workflows, and a more efficient supply chain. With the help of an Enterprise Resource Planning (ERP) system, the above processes are much easier than one may think. 

You must transform your mentality along with your business, and always remember that almost any manual task slows down your business. Now let’s review some of the paths to digital transformation.

Key Technologies Driving Digital Transformation in Retail

Key Technologies Driving Digital Transformation in Retail

E-commerce Platforms

While keeping your brick-and-mortar store, you can significantly benefit from creating an online shop. How necessary is that shouldn’t need much persuasion? Remember the situation during the pandemic? [Did you know that 79% of companies increased their investment in digital transformation during the pandemic?] And everything is moving online anyway. However, without a good platform, you may find managing your online business harder than it initially appears. Create a user-friendly website, handle online payments, manage stocks, etc. We’re talking about a long list of things here. 

Hopefully, eCommerce platforms will make it easy to bring all those tasks together and make them manageable and affordable. This way, in case of any failure in the whole process, you could quickly address it. The time saved by using an eCommerce platform can be spent on other tasks, like improving your marketing campaigns or adding new products to your supply chain. 

Mobile apps

Mobile apps are one of the latest trends in changing the retail business landscape. Consumers are hooked to their smartphones, and the right app can help them search for your products, get rewards points, learn about deals and offers, and make easy transactions. Statistics show that 63% of smartphone users have reported they are more likely to buy products recommended through apps. Other figures suggest that over 50% of installed shopping applications are used at least once a week. Retailers who take advantage of such opportunities will stay caught up.

Artificial Intelligence (AI) and Machine Learning

This is probably the most complex but also important part of your digital transformation. Without the power of a quality AI tool, you may struggle to reach your potential customers. There is no denying that business insights provided by AI and machine learning are unmatched. Take marketing strategies as an example. Marketing strategies are best devised when they are driven by AI analytics of customer data. AI is key when it comes to making the right choices in personalized recommendations. Digid’s nextgen automation solutions make your workflows even smarter and faster by integrating ChatGPT into the mix.

Your pricing strategies are another area that can significantly benefit from artificial intelligence and machine learning. Not to mention all the money you can save by using AI to automate demand forecasting and supply chain management. We should add to that something which could often go unnoticed: how AI is the perfect tool to detect fraud and prevent unnecessary losses in retail.

The vast benefits of AI and machine learning should not come as a surprise to anybody. In 2022, 35% of US retailers said they were using artificial intelligence to run their business businesses.

Internet of Things (IoT)

Using the Internet of Things (IoT) in retail business is called “smart retailing.” With IoT, your business can track and manage the location, condition, and movement of your assets and inventory at any place in the world at any time. This can prove a game changer for your retail business. By connecting your staff, systems, and devices, you can stay assured that everything is under your control. Optimize your inventory management and supply chain operations once and for all.

To sum up the main applications of IoT in your retail business, remember that data collection and sharing need to be as fast as possible. Second is that this process needs to be automated for the best result. That means you can monitor and manage each and every part of your business as it is happening.

Enhancing the Customer Experience

Digital transformation makes the customer experience a personal and unique journey. Your services and offers should be adapted to meet the preferences of every single customer. You must tune in to their mindset at any given time and accommodate their desires in the style which they prefer. Figures indicate that 35% of retail business owners think that digital transformation has helped fulfill their customers’ expectations. It’s well known Amazon has often been praised for its innovation and success in revolutionizing customer experience. 

So what are some of the most common ways digital transformation can lead to a better customer experience? Digital transformation can create a seamless omnichannel that bridge the gap between online and offline shopping. Another important factor is how modern AI systems perform personalization and targeted marketing based on customer preferences and behavior.

Digital transformation will lead to a more quick and more convenient experience through features such as one-click ordering and same-day delivery. Other helpful services include chatbots, virtual assistants, and social media engagement.

Optimizing Operations and Supply Chain

Many companies underperform when it comes to using the full potential of digital transformation to change supply chain performance. One study found that the average supply chain has a digitization level of 43%. Interestingly figures show that companies that invest substantially in digitalization can add an extra 3.2% to their annual revenue! Let’s review some of the ways operations are optimized. 

New technologies enable your business to streamline its inventory management, saving a lot of time and money. You can also increase efficiency by predicting the demand using data analytics. As mentioned before, IoT will enable you to enhance your supply chain visibility and efficiency through real-time tracking and automation.

Other benefits include optimization of pricing and promotional strategies based on market trends and customer insights. Even your order fulfillment and logistics can be optimized by using robotics and automation. All these types of optimizations mean more efficiency and, naturally, higher annual revenue.

Overcoming Challenges and Considerations

There is no doubt that digital transformation brings extraordinary results for any retail business, but implementing it is by no means without a challenge. In this section, we will review some of the possible difficulties you may encounter during different stages of digital transformation. 

Siloed Decision-making

Sometimes, different departments inside a company make disconnected decisions and need a unified vision. In cases like this, your workforce may need some training and time before they learn how to adapt to a more unified and digitalized environment. 

Legacy Systems

Companies may face a little resistance to implementing more modern and robust platforms. But they need to leave behind their comfort zone to have a chance to stay in the game. Legacy systems are usually too slow and inflexible and result in hindering your competitiveness. They are also more risky in the face of security breaches. 

Security Risks

A common mistake in going digital is to rush things. This can give a company huge problems, as making quick decisions on which digital solutions to adopt can cause security risks. It is going to require time and a team of experts to make sure which platforms and tools are least vulnerable to cybersecurity risks.

Digital Skills

Digital transformation could mean that almost everyone within your company needs to have some level of digital knowledge and skill. Even your non-technical workforce needs to adapt to the new digital workflow. This probably means you need to recruit competent experts to work in areas like digital marketing, analytics, cloud, cybersecurity, and so on. Your non-technical workforce may only need a few limited training sessions to adapt to the new digital environment. 

Success Stories

Digital Transformation in IKEA


The number 1 furniture industry in the world, IKEA was around long before e-Commerce platforms, but once they prioritized digital over their offline stores, their sales tripled in a short time! Without going digital, IKEA probably couldn’t have stayed on the top for so long.

Digital Transformation in Starbox


Regarding food-and-drinks retail, there may be no digital transformation success story better than that of Starbucks. The company launched its mobile application at a very early stage back in 2009, and it soon proved to be a huge success in attracting more customers and building strong brand loyalty. Earning loyalty points within the app was a great innovation by Starbucks that certainly paid off. Today more than 12 million people in the US alone use this app. 


H&M is a Swedish clothes brand that has recently tried interesting experiments with mobile technologies and virtual shopping. One example of the above is called the “Perfect Fit app.” The app enables customers to make their own digital avatars with the selfies they took. Then they can try new clothes on the avatar, and the avatar size is surprisingly accurate! The app can also use algorithms to find similar clothes for you.


The digital world is only going to get bigger and more sophisticated, and those who resist it will most likely regret their choice. Our best suggestion is to get a team of experts in digital transformation and let them guide you through the changes your company needs. They can create a digital roadmap so your business can grow much faster. Remember that every cent you spend on technology infrastructure will come back to you manyfold in the future. So don’t hesitate to take the digital step before it is too late. Your business is begging you to embrace this crucial change now.

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