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Feb 24, 2022

Retailers must Capitalise on the Pandemic

Driven Momentum to Accelerate their Digital-led Business Transformation

The pandemic forced retailers to progress “years in months,” with omnichannel and quick-commerce becoming central to business models faster than most had anticipated. Recent data confirmed that there’s no turning back from the seismic change we’ve witnessed, with 30 percent of total sales in the U.K. in November happening online [1], and “click and collect” expected to represent 13.9 percent of online sales this year [2].


Similarly, in Germany, online retail sales during the 2021 Christmas trading period were expected to hit 23 billion euros, a 31 percent increase year-on-year [3]. Across Western Europe, there are also now around 30 companies currently competing in the “quick commerce” market for groceries, many of which were established within the last year [4] to meet consumer demand. Retailers wanting to stay relevant in this fast-moving environment must act now to ramp up their digital strategies for 2022 and beyond. A&M recommends considering the following priorities:

  • Bringing innovation from the lab to the masses by operationalising digital at scale across the business

  • Finding the right balance between organic investment and partnerships to speed up transformation

  • Leveraging first-party data to personalise the shopping experience

  • Creating more – and better – data to support assortment, supply chain and pricing decisions

  • Exploring new revenue streams, such as retail media

This article provides a snapshot of what some of the leading retailers in two major European markets, the U.K. and France, are doing to digitally transform their businesses.


Cutting through the hype

When it comes to digital transformation, it’s critical for decision-makers to separate the hype from reality that will deliver a return on investment (ROI). For example, a global survey of 3,000 executives by the Massachusetts Institute of Technology (MIT) in 2020 [5] revealed that only 10 percent of firms deploying artificial intelligence (AI) are reporting benefits from increased revenue or cost savings.


One reason behind this trend is that few companies are truly configuring their organisation to use AI or other cutting-edge technologies. To achieve effective execution of their digital plans and unlock value, companies must commit to new business processes, as well as organisational and cultural change. Training should play a big part in this effort to make the interaction between humans and technology more effective, while freeing up the workforce to focus on higher-value tasks and more strategic activities. These are necessary steps to move from a successful proof-of-concept to a fully deployed initiative that can deliver ROI. Another important consideration for retailers is to find a balance between organic, in-house investment and strategic partnerships with pure tech players. Turning to “new economy” partners to cover specific capability gaps can help advance companies’ digital strategy in a quicker and more cost-effective manner. However, this should be defined carefully by each business according to the specific stage of its digital transformation and strategic goals.


In the U.K., incumbent grocer Sainsbury’s has partnered with gig-economy platform Deliveroo to offer rapid delivery from local stores. French supermarket group Casino is leading a similar initiative with the German delivery firm Gorillas, promising instant delivery of Monoprix and Franprix products ordered via the app. Casino has also bought a stake in the German start-up to expand the collaboration.


Data takes the stage powering retailers in their role as digital ecosystems

Traditional retailers are also harnessing big data via partnerships to unlock insights and personalise the customer experience, maximising as well as opening new revenues streams.


In September, French grocers Casino and Intermarché [6] started a joint venture designed to bring their innovative data retail services offering to food manufacturers. Also in France, Carrefour recently launched a retail platform, providing brands with customer insights based on data collected from the group’s 80 million clients around the world.


Large retailers in the U.K., including Boots [7] and Tesco [8], are also looking to capture brands’ advertising money through the recent launch of their own media networks.

As companies continue to capitalise on the wealth of data drawn from customers, monetising media estates – from physical shelves to mobile phones and computers - is the next step for retailers increasing their role as digital ecosystems. As with retail media, it has the potential not only to boost a company’s core business but also to create new revenue streams that will support the profitability of the overall group.


Large-scale data has the power to ignite opportunity in buying, pricing and supply chain management

With massive amounts of data and cheaper than ever compute and storage, analytics, AI and intelligent automation are the cornerstones of the intelligent enterprise. In retail, decision making powered by data can revolutionise all areas within the business, from buying and assortment to pricing and supply chain management.


Big data analytics can suggest more relevant assortments to specific stores – tailoring merchandise to the preferences of a wealthier neighbourhood or a less affluent one. Data can also help retailers move away from mass promotions by offering the right level of discount for the customer at a certain time of their buying journey, based on historical data, seasonal trends and patterns of online behaviour.


Crucially, smarter, crisper data also helps reduce the effects of immediate issues facing the industry such as supply chain disruptions and labour shortages. AI algorithms and advanced analytics being used in supply chain management are effectively streamlining processes and reducing costs, with impacts on both customer satisfaction and bottom-line.


Critical to mastering a digital effort – be it a targeted project or an enterprise-wide transformation – is to put the customer at the centre and the business at the helm and move away from prototype and hyped solutions. Focusing on operational processes and training may not be high-tech, but it is what will help businesses accelerate their digital journey and quickly reap the rewards of their investment.


A&M: Leadership. Action. Results

A&M has worked with some of the largest European and global retailers to stabilise financial performance, transform operations, drive growth and accelerate results through decisive action.


We provide clients facing, or at risk of digital disruption, with practical advice on how every aspect of a business can be digitally enabled sustainably, and at scale to deliver long term value. We have evolved digital into a unique proposition that is built on data and analytics, customer and workforce experience, sales and marketing, and new digital business models in a way that strongly complements our existing service offerings and turnaround, results-driven heritage.











 

Copyright: A&M

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