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The Digital Transformation of Retail

Retail comes at the forefront of digital transformation where all the traditional chains attached to it are broken. Today, competition has gone beyond the conventional, encompassing online media and its effects are ever increasing day by day.

Ozan Ercan
Pre-Sales Manager

December 27, 2016


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Online shopping was far beyond anyone's wildest imagination, when Jeff Bezos founded Amazon.com, a website that sold books online in 1995. As we are arriving at year 2017, we see that online shopping is now a part of our lives as we witness the increasing number of people benefiting from this opportunity. Starting as a simple book selling site, Amazon and other competitors in the market are now fiercely competing against one another to bring all the products from A to Z to our doorstep.

During the last twenty years, the retail market has undergone a serious shift with a focus on digital transformation. Large companies like Kodak, Nokia, Blockbuster, who did - or could - not follow up with this transformation and did not update their business models properly, have come to the point of disappearing. One of the underlying reasons for this transformation is the changing customer needs and preferences. Although we have talked about digital transformation with such great importance, online shopping is still under 10 percent and people still prefer to shop at brick-and-mortar stores. With the changing needs, a brand new shopping model called "ROPO" has emerged, openly called "Research Online-Purchase Offline" which means to research online and to buy from the store... As a result of this transformation, brick-and-mortar stores won't just yet be disappearing but with the current expectations of the new generation it won't be long.

There will be an average of 50 mobile apps on a user's phone.

Then, what about the players in the retail industry?

Most of them will probably survive through the transformation successfully. We can see that almost all chain retail stores have started online sales, which will follow in smaller stores. The most successful firms in this process will undoubtedly be the companies that best understand the needs of their customers and respond in the most appropriate way. Because all retailers have to live by the famous motto "a customer is a benefactor."

By virtue of digital transformation, customers have the opportunity to shop as widely as never before. They can easily decide where, when, how, what they want to buy. Thanks to smartphones in our pockets, we have the opportunity to shop for 24 hours a day, 365 days a year. Well, what do consumers of 2017 expect from the digital transformation of the retail industry? These expectations are as follows under five main head points:

1) Buy the Right Product, at the Right Place and at the Right Time: Consumers want to buy the product they wish, wherever and whenever they wish for it. It is the responsibility of retailers to respond to consumer's needs here and this requires some serious effort. According to various research findings, 44% of the consumers buy online and lean towards a same day delivery option. 62 percent of consumers like the idea of buying the product online and returning the product to an actual store. This makes it very clear that retailers need to bring the online and the physical stores world together, that is, the omni-channel of the future.

2) Making More Effective Decisions Through Online Knowledge: Today's mobile users prefer the new shopping model ROPO (search online, buy offline) while deciding to buy. 85 percent of smartphone users make an online search when making a purchasing decision in the store and these online searches affect the purchasing behavior of almost 77 percent. 55 percent of respondents state that Internet and mobile access transformed the way they shop.

3) Using Mobile Applications and Mobile Sites for Online Shopping: According to several researches conducted in the marketing world, about 50 mobile applications are installed on an average user's smartphone, but 5-7 of these applications (Facebook, Whatsapp etc.) are predominantly used. Despite difficulties, the idea of winning customers through a user-friendly and secure mobile application is quite appealing for many firms. In the realm of mobile shopping, tablets outrun smartphones. 81 percent of mobile shoppers prefer tablet while the smartphone shop rate is around 52 percent.

4) Using Social Media for Product Search: Through the power of social media, word-of-mouth marketing has become a main source for online shopping. According to a study conducted by Barilliance, 31 percent of e-commerce sites' 2014 turnover rates achieved was due to personalized product recommendations presented to customers. In this regard, it is also worth mentioning that Amazon is the groundbreaking pioneer and the number one brand in the world. Click-through rates for personalized referral products are 5.5 times higher than other recommended products. Social media giants like Facebook and Twitter plan to add a BUY NOW button to integrate with certain brands to buy products over social media without directing consumers to different venues.

5) Buying Special Discounts, Coupons and Product Information for Individuals: The booklets showing discounts on products and discounts appealing to every segment of society have already vanished. New-generation consumers want to see discounts tailored to their personal taste and interests. 64 percent of Millennium generation consumers are making discount coupon searches on their smartphones before shopping. According to a survey conducted by DigitasLBi, 71 percent of consumers are happy to receive a special discount message on their phones. Furthermore, these people agree to be included in the permissive marketing lists that are the nightmare of the SMS world in order to receive customized special offer messages.

In summarizing the 6 main points; the future of the retail industry begins today. It is projected that companies that will be successful in this area will be open-minded companies that make the customer the focal point of customer-personalized communication. Firms that can offer customers a successful buying experience at a high rate through all channels will be ahead of their competitors in the sense of customer loyalty. Research reveals that customers do not hesitate to share their information with companies that value personal communication and understand their needs. Who will have the "say " in the future of the retail industry, I am curiously waiting.

Tags: RetailDigital Transformation