Converged Retailing: Do You Know Your Worst Enemies?

EKN Research recently conducted a survey of 45+ grocery retail executives to benchmark their perception, priorities and preparedness related to the digital transformation in grocery. The study clearly showed an urgent need for a new, converged strategy, but it also brought to light some deceitful mindsets that could be slowing down your digital transformation. Here’s how to tackle them.

The recent results of a retailer study by EKN Research were consistent with earlier findings and showed that the demand for a new, converged strategy is clearly recognized among retailers. Retailers’ worst enemy, however, is far closer to home they might think. These crucial mindset errors could be sabotaging the results of your digital transformation:

1. The Me-Too Syndrome
Unsurprisingly, when asked about the most important driver for their digital initiative, a majority of the retailers interviewed cited these three reasons: the pressure they are feeling from the lack of growth; increased competition; and heightening shopper expectations. 30% ranked ‘driving overall growth’ as most important, whereas 40% mentioned ‘competitive pressure’ and ‘customer expectations’.

While broader shifts in consumer behavior and the emergence of newer competitors must instill a sense of urgency in grocery retailers, they must also ensure the pursuit of a digital strategy isn’t shaped by competitive parity alone.

More importantly, when prioritizing digital capability building investments, they must look first to what furthers their customer experience strategy rather than blindly following competitors.

2. The Channel-Centric Approach
Urgent demand for a fresh, converged strategy is clearly recognized among grocers as well as other retailers. However, even as stores are aiming to improve overall growth, competitive differentiation and customer experience through digital strategies, they are being held back by a deeply channel-centric organization culture:

Digital cannibalizing store sales is retailers number 1 concern. Whether digital initiatives help them create and capture new value, or simply shift dollars from one pocket to another, is retailers’ primary concern. This is further exacerbated by an organization structure that impedes digital integration across channels. With separate P&Ls, store and eCommerce teams often find themselves at odds with each other especially as relates to the impact of digital initiatives on the supply chain and store labor and productivity.

Furthermore, existing KPIs risk driving channel-centric behavior. As clichéd as it may sound, there is a strong correlation between ‘what gets measured’ and ‘what gets done’. Unless they clearly define success in terms of customer or operational goals, retailers will be unable to measure how they’re doing and whether they’re succeeding. Further, they will struggle to align different parts of the organization to a common goal. Retailers continue to prioritize channel-centric KPIs such as channel sales and conversion, over either customer metrics such as customer lifetime value (CLV) or those that measure the impact of one channel on another.

3. The Observation Mode
Lack of a unified commerce capability creates massive blind spots. One of the fundamental building blocks of moving to a more integrated experience across channels is the ability to provide a unified experience to the customer be it on the web, mobile or in the store. This is by far the biggest gap between where retailers wish they were, and where they are from a technology perspective: 98% of retailers rate being able to provide an integrated commerce experience as important or very important, but only 29% are currently equipped for it

–> New strategy requires new mindset – here is your checklist for success:

As capabilities such as buy online, pick up in store become table stakes, focus on experiences that deliver a frictionless, converged experience.
Accelerate investments in these four critical capabilities: single cart across channels, unified pricing and promotions, personalization, delivery and logistics.
Focus on defining a differentiated customer experience valued by your customer demographic.
Utilize the higher frequency of customer interactions in grocery as an opportunity to know more about shoppers and build a stickier experience through personalization.
Prioritize Converged Retailing use cases that combine the power of mobility and customer data, especially for in-store experiences.

A shift in mindset is needed from driving growth in any one separate channel (potentially at the cost of another) to driving customer engagement and overall growth: studies consistently show omnichannel customers spending more time and money with your brand.
Focus on metrics that track your overall success: total retail sales, total customer engagement, digital influenced store sales and total customer lifetime value.
Identify and aggressively invest in digital capabilities central to delivering a truly unified customer experience.
Fine-tune or re-architect processes and systems to ensure flawless execution.
Change your intentions to actions by finding the right technology partner for your digital transformation (contact us here for a game plan).

Digital Foodie provides a fully customizable SaaS platform used by major retailers and brands. For retailers, the platform provides all the tools needed to run modern, on-demand operations including click-and-collect and home deliveries.

Learn how the reshaping of consumer expectations is rapidly disrupting the food service industry and how you can maximize value from digital strategies: Download the study here.

Converged Retailing: Do You Know Your Worst Enemies?

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