Transforming the Customer Experience

The retail industry is a leader when it comes to vision-driven digital transformation. Around one-quarter of firms are making investments in digitalization by prioritizing business needs thanks to analytical insights.

However, our data illustrates that many retail companies remain outside the vision-driven quadrant. Disruption is imminent, and those who are not using a vision-driven approach put themselves at considerable risk.

Customer expectations are at an all-time high, and this leaves little room for error during the digital transformation process. If retail firms execute their digital transformations sub-optimally, survival will be incredibly difficult in the face of digital disruptors across the brick-and-mortar, as well as the digital ecommerce playing fields.

>Digital Transformation in a Highly Competitive Market

Top Concerns for CEOs in the Retail Industry

For Retail CEOs, there is an urgency to understand customer expectation and demand. Digital savvy millennials have changing preferences in the retail space, and it is becoming harder to create product differentiation through personalization. Along with shifting demographics and growing global influences, here are the top six concerns that pharma CEOs will need to address as the industry accelerates into the digital era.

Constant Innovation

Constant Innovation

Retail product-service portfolios must be in a state of continuous improvement and innovation to remain competitive. Wide product selections are less desirable, with fewer choices at a higher quality or value being more desirable for consumers. This is demonstrated with German retail giants like Aldi and Lidl, who make significant profits despite offering some of the lowest product costs to consumers. Services must be provided digitally, such as with returns and customer support to increase buyer confidence and drive sales revenues. Supply chains must also grow and scale to match logistical demand in the digital realm.

Global Expansion

Global Expansion

Borders between continents and countries are being broken down, enabling retail companies to reach all four corners of the globe. Retail firms that deliver localized services will experience greater competition from this globalized market, with price and convenience being the priority for consumers. Similarly, global retail firms can no longer rely on reputation and brand image to sell products or services, requiring a total transformation of the value chain.

Market Saturation

Market Saturation

The market is saturated with nearly identical products and services, making it difficult for retail companies to differentiate and stand out. This lack of differentiation means customers solely focus on getting the best price. Retail firms must increase their engagement with customers, transforming the customer experience to add value across their product-service portfolio.

Security and Compliance

Security and Compliance

Retail companies are handling massive quantities of customer information and payment data. This comes with the responsibility of cybersecurity and data protection, where frameworks like PCI-DSS and GDPR complicate operational management. Reputation and brand image is also on the line, with a successful security breach or malware attack putting the entire business at risk of consumer exodus.

Finding a Niche

Finding a Niche

The retail sector is incredibly competitive, and these market conditions make finding a niche difficult. This necessitates a vision-driven approach for retail companies, reinventing product-service portfolios and the customer value proposition to remain competitive.

Strategizing Across Channels

Strategizing Across Channels

Marketing teams must adopt cross-channel strategies to reach a wider target audience. Product personalization is increasingly commonplace and desirable for consumers, along with loyalty and reward programs that leverage emotional responses to drive repeat sales.

The Most Successful Digital Transformations Are Powered by Analytics Capabilities

Our benchmarking services are powered by over 1.5 million data points in addition to our primary research and data collection capabilities. With access to leaders across more than 40,000 companies in various size segments, industries, and geographic locations, we can quickly gather additional data to address how your business is performing against the competition.

A graph showing which industries are investing the most in digitalization.

Source: Trasers

Data analyzed in this report comes from 4,000+ responses. For the retail industry, data from 356 companies have been used.

Our retail industry experts can offer insights into the following sectors:

  • Retail Chains and Stores

  • e-tailing

  • Food Production and Processing

  • Consumer and Agricultural Goods

  • Service Providers

  • And More


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Digital-First Retail Firms Lead the Charge

The retail industry is a melting pot of digital innovation. This is due to the high prevalence of enterprise-level digital transformation, where market competition is driving continuous innovation across retail product-service portfolios. Private equity and venture capital firms are supporting new disruptors to rapidly develop and deploy their products and services in the cloud, with data-driven processes that augment and improve the customer experience (CX).

Incumbents can no longer rely on reputation and brand image, with a loss of product momentum resulting in a feedback loop of lost sales and widespread customer exodus. Retail industry players must be aware and remain sensitive to the changing status quo, leveraging technology and data-driven business models to remain competitive.

Only 7% of Companies Are Delivering on Their Transformational Initiatives

Our research has shown that 30% of companies will fail to survive this decade due to an inability to evolve digitally. To address this negative trend, we have developed the Digital Enterprise Evolution Model™ (DEEM).

Digital Enterprise Evolution Model™

An image showing the stages of analytics capability evolution.

Copyright © 2021 Trianz

DEEM allows our clients to recognize digital evolution patterns, implement benchmarking and prioritization strategies, and initiate application management protocols to satisfy stakeholder and market requirements.

Reimagining the Retail Customer Value Proposition

The retail industry is in the midst of a reimagining of the customer value proposition. This necessitates comprehensive analysis of customer sentiment for retail firms to be able to make the right business decisions. As product-service lifecycles grow shorter due to rapid innovation, e-commerce disruptors are well-positioned to absorb heightened demand among consumers. Additionally, retail firms are losing their place in the value chain as manufacturers adopt direct-to-consumer (D2C) sales models. This necessitates action from incumbents, delivering new value to preserve their place in the retail chain.

Digital-first retail companies use technologies like the cloud, artificial intelligence (AI) and machine learning (ML), as well as automation with flair to outcompete incumbents. Venture capital support also enables net-loss operations in the short-to-midterm, growing the customer base at the expense of profitability. This allows for disruptors to shift and add new product-service portfolio items, as well as adjust prices to leverage this new customer base.

Great risk comes with the potential for great rewards, and incumbents are hesitant to take these risks. These legacy firms must invest in digitalizing their operations to remain competitive and retain industry leadership. Interconnected product experiences and a complete transformation of the value chain will be essential.

Vision-Driven Retail Strategies Leave Little Room for Error

For retail firms that reside outside the vision-driven quadrant, there is a lack of urgency around digital transformation. These firms may digitalize certain aspects of their operations in a fragmented manner, but even then, sub-optimal execution is undermining the value of these initiatives. This highlights the need for end-to-end digital transformation strategies that encompass all areas of the business for retail players.

Around half of retail companies are planning significant investments in cloud technologies, creating a digital foundation equipped to support new technologies and approaches across their wider operations. Retail firms also report investments in advanced analytics functionality and robotic process automation (RPA), driving greater efficiency and cost-reduction to compete in the digital era. For retail incumbents, digital transformation is fast becoming a mandatory process to remain relevant in the face of digital disruption.

Research and Development Is Raising the Retail Bar

The retail industry is aligning more closely with the high-tech industry in terms of research and development. Research and development is a significant area for retail companies, with digitalization in the context of process digitalization and robotic process automation (RPA) being the focus. Advanced analytics will also play a huge part in generating insights to guide retail business decisions, with significant investment across the industry already taking place.

For retail incumbents, this increases the urgency for vision-driven digitalization of the product-service portfolio and underlying business operations. For retail firms who fail to digitalize and consequently sit outside the vision-driven quadrant, there is a significant risk of being forgotten in favor of new digital disruptors.

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Trianz enables digital transformations through effective strategies and excellence in execution. Collaborating with business and technology leaders, we help formulate and execute operational strategies to achieve intended business outcomes by bringing the best of consulting, technology experiences and execution models.

Powered by knowledge, research, and perspectives, we enable clients to transform their business ecosystems and achieve superior performance by leveraging infrastructure, cloud, analytics, digital and security paradigms. Reach out to get in touch or learn more.


State of Digital Transformation
Worldwide 2020 Report

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