Digital transformation looks to be the top priority this year for a vast majority of merchants, as about 69% of retail executives say they plan to increase their investment in emerging technologies, according to a survey from PwC and JDA Software.
Mobile-enabled applications (85%), big data (86%) and use of social media data (85%) are the top technologies survey respondents are investing in or plan to over the next 12 months, while automation and the Internet of Things are lower on the list for investment but gaining momentum as they are perceived as true game changers.
About 52% of survey respondents have either not defined or not started implementing a digital transformation strategy, though progress varies by region. About 58% of Chinese retailers say they have started implementing such strategies, while in the U.S. the figure is just 40%, with 19% of U.S. retailers struggling to or choosing not to define this strategy at all.
"Digital transformation" has become an umbrella term for the investment in and adoption of almost any new technology innovation, but it's not just about the technologies. It's also about getting retail organizations into strategic and operational shape to compete at the top of their games, no matter what direction their sector evolves in.
That's a big challenge to be tackled even before strategies for adoption of new technologies are put into action. As Retail Dive reported after the NRF Big Show 2017 last month, not a lot of retail organizations are run by what you would call "digital natives" — those that have digital instinct and knowledge bred into them by virtue of age or relevant experience, even though the group of customers they desire most to win over are digital natives.
Hearing that so many retail execs feel digital transformation is their top priority this year is not surprising, just as it would not have been surprising to hear that the same was the case in the last couple years, and would be no more surprising to hear that it is still the case for the next couple of years. The more interesting thing is that many U.S. retail execs, according to the survey, still have not defined or begun implementing digital transformation strategies, and some of them appear to be really struggling.
We sense there is a lot of hand-wringing going on here, with executives understanding they need to pursue certain agendas pertaining to certain technologies, like investing in some solution capable of analyzing their piles of data and turning it into something useful, but not being sure how to go about it, or how to connect the dots between different technology investments. Could outsourcing IT projects or broader programs be part of the answer? Probably for some retailers, but not for all.
To get on the move with digital transformation, it is more likely that retailers need to do their best to transform themselves from digital immigrants to full-fledged digital citizens, or they need to hire more digital natives to show them the way. Then, they need to listen to them. Some retailers are doing this through their innovation labs, but maybe it is time for the organizations at large to become more like the units they have created and set aside to conduct their science experiments.