Four key barriers to digital transformation in retail and how to overcome them
21 September 2018
Last week I had the opportunity to be part of a PwC workshop with a group of retailers and suppliers - all with an interest in accelerating digital transformation in their organisation.
Discussions were always going to be interesting. Four common barriers emerged and naturally the conversation moved on to ways in which these barriers could be overcome. I’ve outlined below my observations on both:
Barrier #1: Lack of internal skills
The lack of available relevant skills is seen as a key barrier to transformation, and was also identified in our recent report - Brave New World: Leading Through Digital Transformation. Discussion with the workshop team showed a perceived disparity between firm leaders - who see external hiring as the way to address the problem - and their managers within their businesses, who believe training existing staff is the way forward. The reality is both aspects are needed - hiring new people while supporting and evolving your current team. New talent may bring fresh thinking, but this can only flourish in an environment where innovation is supported by knowledgeable and enthusiastic peers. Getting your office-based tech teams out to the retail front-line regularly is also invaluable - nothing stress tests and aids learning more than using the system yourself in the real world.
Barrier #2: Getting the right supplier partnerships
The group talked about the difficulty of finding the right suppliers to help with digital transformation, which can sometimes be explained by a lack of knowledge in the capabilities of suppliers. The 75 retailers we canvassed in our report made their position very clear - 55% wanted suppliers to speak up and make their capabilities heard. Once capabilities are known, it’s important to agree a clear brief, with jointly agreed KPI’s. Joint supplier/retailer investment in a project also creates a mutual incentive for success. Finally, plan to learn from your supplier partnerships - using external expertise to develop your internal capabilities.
Barrier #3: The constraints of legacy systems
Many workshop participants were working with an existing infrastructure and this mirrors the findings of our report where ageing legacy systems were also the 3rd most often cited barrier to transformation. My recommendation is to turn this on its head – don’t make assumptions about what the existing system can’t do, but instead look at what it could do, which will help identify the real gaps in capability. Legacy system constraints are too often pigeonholed as an IT problem. By re-positioning this as a broader business opportunity, constraints are much more likely to be overcome. Many of the workshop team advocated setting up a “Skunk Works” (a small team that innovate radically outside the normal research and development channels) alongside business as usual, creating a centre of digital innovation where anything is possible, but which doesn’t disrupt day to day running until it is ready to go.
Barrier #4: The business case
Gaining sign-off for tech investment is notoriously difficult - how do you prove a return on investment when it’s never been done before? The first recommendation from the group was being bold enough to stop work if the project doesn’t fit with business strategy - be prepared to fail. Another way to think of this is to ask yourself if the investment will improve the experience for staff or customers or if it improves efficiency. If the answer is yes to either of those questions then it is worth fighting for. If not, you may want to think again.
To find out more on what it takes to create digital transformation in retail please download our joint report with Retail Week - Brave New World: Leading through digital transformation