Here’s Why Some Retailers Are Succeeding Digitally — and Why Others Aren’t

Digital leaders in retail benefit from leadership-level engagement and a tech-friendly enterprise culture, riding those advantages to a 6 percent CAGR revenue growth compared with their laggard peers not as committed to digital investments, a new study revealed.

In NSU Technologies’ 2018 Retail Industry Digital Adoption Survey sponsored by Software AG — which tapped 100 retailers across nine verticals including fashion, food and health and beauty — digital leaders more often had boards that included members with technical expertise, confirming the importance of digital directives trickling down from the top.

The good news, however, is that an increasing focus on digital initiatives in response to tech-smart consumers is helping retail IT budgets to expand. The next calendar year is expected to bring larger IT budgets for 79 percent of respondents, 80 percent of which generate annual turnover north of $1 billion.

A good deal of retailers can’t fully get their digital undertakings off the ground as a result of setbacks and escalating costs. Three quarters cited these factors as the key reasons their projects have not come to fruition. For half, however, confusion regarding critical requirements has presented a problem. Nearly one-fifth said delays stem from their lack of digital expertise. In fact, the question of digital talent continues to be a pressing issue for retailers, as just 25 percent felt their people have what it takes to execute a digital initiative. The remainder are making use of managed services providers, outsourcing digital deployments and working with external contractors, the survey said.

“Retail Digital Leaders are already investing in key enabling technologies such as artificial intelligence, Big Data, Agile and DevOps as well as the Internet of Things (IoT) to meet the changing demands of today’s discriminating, empowered shoppers,” said Oliver Guy, global industry director for retail at Software AG, which counts online clothier Kiabi, Staples, 7-Eleven and Lidl among its clients.

Guy noted that digital leaders are bullish on their investments in areas like advanced analytics, IoT and big data, adding that 87 percent of respondents that operate brick-and-mortar fleets are particularly interested in IoT technology. Respondents — 69 percent of which are U.S.-only and 38 percent of which operate more than 1,000 stores — noted that of all the top technologies on their lists, analytics is the most difficult to deploy enterprise-wide.

For now, blockchain remains a low-priority digital consideration for most of the surveyed retailers. Six percent are developing blockchain projects, though there is interest in the distributed ledger technology from another 19 percent.

Editor’s Note: This story was reported by FN’s sister magazine Sourcing Journal. For more, visit SourcingJournal.com.

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