Yes, we see retailers starting to drop the view of 'technology as a cost saver'. Those leading the way are becoming what I call tech-enabled retailers. They see excellence in technology as the critical factor to achieving excellence in their core business capabilities. Technology excellence means two things - scale and speed. Retailers are good at using technology to scale, but most haven't adapted to be able to use technology at speed. While some are doing this, for others it means making deep changes to how technology is run. This can be frightening, and requires courage to confront. Shop Direct in the UK is a great example of using technology to drive business model innovation. They integrated a credit service into their app, so prior to checking out customers can securely check their balance as well as pay their statement without leaving the app.
Below: In addition to checking and paying their credit statement, Shop Direct shoppers can take a photo of any colour or pattern and bring up similar items in the Shop Direct catalogue.
Inside Retail: What are some key tech trends you're currently seeing in the UK?
I've seen a lot of experimentation around delivery platforms. Large retailers are chasing more flexibility and control in technology, so they're starting to use cloud-like approaches. In some cases this is as simple as using public cloud, in other cases they're building their own modern elastic infrastructure. The UK's online grocery market is the globe's second largest, so Britons have high expectations when it comes to their grocery experience. Supermarkets have been investing in coordinated service design across channels, which then helps to reveal the roadmap needed to unlock these experiences. Apparel has a different set of challenges. John Lewis is experimenting with visual search and image recognition to help customers find the right product and reduce returns. Others invest in artificial intelligence to provide higher quality service.
Inside Retail: To what degree are leaders accepting the role of technology and the need for investment? Richard Umbers from Myer and Don Meij from Domino's Pizza Enterprises are two local retail leaders that clearly value technology investments.
Retailers are great at being merchants, understanding customer needs and desires, and managing their inventory well. Very few CEOs have mastered the ability to harness technology to enrich this customer experience. Richard and Don seem to know that to be successful, they need to weave technology into the fabric of their business. Domino's saw the need to move from being a product creator to being a technology-led business. They rapidly digitised their customer experience and moved the bulk of customers from telephone to online. Then they empowered customers to create their products, and recently introduced on-time cooking, a location-based algorithm that helps Domino's optimise quality. We are now coming up to the anniversary of the original dot-com boom. There is now a generation of leaders who have grown up running major businesses entirely online, and can help lead transformation for more traditional retailers.
Below: Domino's on-time cooking initiative shows customers how their order is progressing and notifies them when to leave to pick it up.
Inside Retail: Are retailers implementing new technology solutions quickly enough?
Many retailers feel that they need a comprehensive plan before they can start implementing changes. By the time the original plans get delivered, they are often irrelevant. Most retailers experiment with the online front end, however for a digital strategy to be valuable, it needs to go much deeper, across and through channels. To challenge the status quo on this, retailers need to tackle core technology enablers as well as tackle experimentation culture. Choose a big opportunity, and redefine how work is done to execute in small increments. When Gap needed to optimise pricing across geographies in a new way, it took them one-fifth the time of typical technology. This gave them the courage to adopt a new framework to tackle other capabilities rapidly and continue to evolve their engine. The business mindset should move away from 'replatforming' to adding value 'between the seams'. Creating these 'Platforms for Growth' is the foundation required to enable modern retail.
Disclaimer: The statements and opinions expressed in this article are those of the author(s) and do not necessarily reflect the positions of Thoughtworks.