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Why digitalization in retail industry is especially important right now

# Why digitalization in retail industry is especially important right now

Why digitalization in retail industry is especially important right now

Table of Contents

Andrii Kuranov


Andrii Kuranov

Content Manager

Category: Business
5 min read

Today, almost all major brands have embarked on a digital transformation. Some are focused on the comprehensive implementation of A.I. and Machine Learning in business processes. Others use solutions that will allow them to recognize their customers in any communication channel, to know about all their calls to the company, improve the quality of customer service and optimize cost of extra staff and inefficient services.

You may read more about why digitalization is so important today and how to build a successful digital transformation strategy in our previous articles. However, in this one we will try to explain why digital transformation is especially important for the retail industry and how to crank it best.


What is digital transformation?

Digitalization is deep business transformation, involving the use of digital technologies to optimize business processes, increase company’s productivity and improve customer experience. Often, the main goal of digitalization is to satisfy the needs of the consumer, which are changing along with the development of technology, namely, the creation of a more comfortable and efficient interaction between client and company.


Digital Transformation in retail: why it is so important right now

According to a study by the Center for Digital Transformation of IMB Business School, 40% of leading companies in the industry will lose without digital transformation in next 5 years.


Retail is one of the sectors most interested in digital transformation, according to BDO.

At the same time, one should not assume that the digital transformation is akin to natural disaster. In fact, this path opens up many new prospects! Particularly, the following benefits apply to retail:

  • Retailers can provide customers with many purchase and delivery options;
  • Customers can access stores from anywhere in the world;
  • Social media is an advertising platform;
  • Advanced technologies such as artificial intelligence, augmented reality and virtual reality can be used to improve the retail customer experience;
  • Retailers can use data analytics and machine learning to make important business decisions;
  • Personalized digital solutions attract customers to retail.

You can get these benefits using some specific tools. Let's take a closer look at them.


Digital transformation tools in retail: how to hook customers with non-standard features


Virtual and Augmented Reality

Augmented reality technologies provide an opportunity to study, inspect, “try on” and test a product online almost the same way it happens in real life. For example, Amazon uses augmented reality technology to reduce the percentage of return on goods purchased online. Today, the problem of returns is one of the most serious in online retail. On average, online shoppers return a quarter of all purchased items. For offline retail, this index is 8%. Solutions developed on the basis of augmented reality technologies help users get more information about a product before buying it. In their turn, Amazon and other major players in the online trading market are able to reduce the percentage of returns and costs associated with it, increasing customer satisfaction and NPS.

AR technologies in action using a virtualized fitting room as an example!

Moreover, the border between virtuality and reality may soon disappear almost completely. Imagine, the bride couldn't only try on a wedding dress online - now she's able to see how it looks on her in insutuition where celebration will be hold. The happy owner of a new motorcycle could not only try on a helmet, but also understand whether it will be convenient for them. For virtual experience like this buyers are willing to pay more.

Speed up!

Amazon’s Prime Air instant delivery service has proven to online merchants that users are not ready to wait for several hours to get their order, and even more so - for days. To outperform the competition, Amazon Prime Air began offering goods delivery to any location in just 30 minutes.

A PwC study shows that in 88% of cases users are willing to pay more for delivery if the goods are brought to them on the day of order. Moreover, it is important for most buyers to receive goods no later than two hours from the time of payment.

Digital transformation is changing not only the speed of purchasing goods, but also the retail customers requirements to the level of service. The owners of online stores should remember: the user is likely to go to another site if the delivery conditions do not suit them. While opening an online store, it is important to pay attention not only to the assortment formation and automation of accounting, but also to the organization of storage and delivery of goods, as well as the convenience of online payment.


Modern retail customers are dynamic and mobile. Sure, they want quick delivery and payment convenience, but there are also personalized offers. Those who successfully satisfy the listed needs of users will be able to get competitive advantage by integrating modern digital tools into their services.

Studies in the USA and Great Britain have shown that 70% of buyers expect more personalized service from brands, and they are ready to share their personal data. People want to use convenient interfaces to compare prices, brands, models and configurations, delivery and payment conditions, taking into account personal needs - all on one screen. That's why A.I. technology is being implemented more and more in online retail. Today, users are dictating to business which improvements they expect. And they themselves tell brands how much they are willing to pay for the transformation of consumer experience. Willingness to overpay for fast delivery and convenient service is vivid proof.

Large retailers have learned to extract information from a variety of sources: social networks; IoT sensors developed based on A.I. and Deep Learning, chat bots, instant messengers, analyzing data from the call center. Personalization of user experience is an important trend that will develop and gain strength over the coming years.

Social shopping

Users prefer a “seamless” brand experience. In the era of digital transformation, such a trend is becoming more apparent. Digital trends such as visual product searches and social shopping are growing rapidly.

Imagine while walking down the street, you’ve noticed a beautiful dress on a girl passing by. Having photographed it using a smartphone, you start a search in pictures and instantly find Instagram blogger posts that recently showed similar dresses on their pages. By clicking on the ‘Buy’ icon in blogger’s profile, you immediately order your favorite item online. All this is the merit of artificial intelligence and machine learning algorithms.

You can successfully sell goods without even having your own trading platform, and receive comprehensive information about customers by collecting data from social sources. The Stitch Fix startup experience demonstrates it. The company offers its subscribers services to create an individual image and help in choosing a wardrobe.

Clothing and accessories will be delivered to customers home. In the usual sense, Stitch Fix does not have its own online store. There is a mobile application for stylists. Pinterest is the platform to contact consumers, and the main communication channel is email, where the client sends an email with wishes to the stylist. Machine learning algorithms process this heterogeneous and poorly structured information, and the mobile application aggregates user data and becomes the stylist's main working tool.

It is these decisions that mark a new milestone in the history of social commerce, when disparate user data is combined into a huge ecosystem to maximize personalization and improve customer experience.


In the near future, we will continue to observe how small retail chains are fiercely fighting for survival and trying to compete with Amazon and other retail giants. The winner is the one who will be able to allocate resources and make a bet on choosing the right digital transformation strategy in relation to their business processes. An integrated approach to the development of a digital solution can be an excellent help in such situation. In particular, it is worth paying attention to contracting companies that have custom software solution service in their arsenal. This service involves not only writing code, but a digital solution that converts goals, needs, requirements into an IT product that can give a competitive advantage. Having built the development process in this way, the business owner will receive the most comprehensive approach to development. In the future, it will not only save resources, but also get a really high-quality product.