Digital transformation has hit traditional retailers hard. Walk through the high street of virtually any town, and you’ll see shuttered premises that are testament to an industry shaken to its core by eCommerce. In Switzerland, retail sales are essentially flatlining. Online sellers, meanwhile, are doing a brisk trade. Performance far outstrips that of bricks-and-mortar stores. Since 2010, non-food retail has lost almost 8 billion CHF in sales volume. Online sales have flourished over the same period, growing by 3.2 billion CHF[1].

 

The experience mindset

Despite compelling evidence that digital is the way forward, many traditional retailers, concerned about decreasing footfall in physical stores, remain reluctant to embrace the opportunities of new technology. Yet there is a bright future for retailers that shift to an “experience” mindset, and effectively blend physical and digital worlds. It isn’t so much the point of sale that matters – it is the point of experience. In a digital economy, the success stories in retail will be the companies that move beyond a product-centered business, instead focusing on creating a physical presence with the convenient, immersive experience which users are accustomed to online experiences. The forerunners are already using technology such as AI and VR to engage, inform and entertain, offering smarter faster in-store service, and exciting, interactive environments personalized around individual customers.

 

Back to basics?

According to Cognizant research, retailers struggle to provide a consistent shopping experience across channels, with a significant gap between the services retailers offer, and what customers actually use. So, retailers embarking into this new world should engage afresh with the same basic questions as any startup: what do we want to be? What is our value proposition? Who are our customers?

A fresh look at the value chain is also needed. In today’s retail ecosystem, new online marketplaces and interactions have ousted retailers from their traditional role as the prime connection between brands and consumers, and this creates an imperative for retailers to engage differently with consumers.

Cognizant can help retailers navigate a path to new business models and access the exciting new opportunities made possible with digital technology. For more information, read the Cognizant whitepaper Retail’s Next Frontier, or visit the Retail section of the Cognizant website.

[1] Study by Swiss Distance Sales Federation and GfK consumer research company 2017

Thomas Weber

Thomas Weber

Client Partner Retail Consumer Goods at Cognizant

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