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The Digital Era is Here to Stay – Will You Lag or Lead It?
While in lockdown, many businesses had to face the music and radically change the way they operated. This, in turn, has driven a wedge between the leaders and the laggards in the age of disruption.
As the world is slowly emerging from the pandemic, the acceleration of digital commerce has separated the leaders from the laggards. It’s now more important than ever for retailers to stay in line with the rest of the world, otherwise, they may be left behind.
In a study from McKinsey Global Survey, executives noted that their businesses accelerated the digitisation of customer and supply chain interactions. The survey outlined distinctive changes that businesses have implemented or adapted, which include:
- Changing customer needs or expectations
- Increasing migration of assets to the cloud
- Increase in remote working and/or collaboration
- Increasing customer demand for online purchasing and/or services
Furthermore, ‘nearly all’ of the respondents stated they have stood to at least temporary solutions to meet the new demands of shoppers last-mile logistics and customers.
These changes were made ‘much more quickly’ than businesses had thought possible. As rapidly adopted technology takes over for businesses in a post-COVID world, what have been some of the most significant changes, and how long can we expect them to stay?
The Force Behind Driving Tech Change
It’s no surprise that the pandemic forced businesses to reassess the tech offering they used, and optimise them to remain agile and stay competitive in a volatile landscape. What specifically changed in business, and how did these executives adapt?
According to the McKinsey Global Survey, there were multiple catalysts for the developments in digital offerings, some of which include the adoption of online retail by consumers, the increase in remote working and the need to migrate assets to the cloud.
“For some industries, changes like digitisation of supply chains, cloud adoption and remote working are here to stay, simply because they work and in a lot of cases they improve productivity,” said Joshua Emblin, Territory Director APAC of commercetools.
“As the world becomes inoculated to the virus and the restrictions implemented as part of the global pandemic recede, we will see a return to travel and office working as well as mass gatherings in public spaces like shopping centres return. Digital transformation and the new learned behaviours will still exist and those who have implemented them correctly by meeting consumer demand will rise to the top of their respective industries and verticals.”
The pandemic has, unsurprisingly, changed the way businesses and consumers interact with retail, both online and in-store. For Joshua Emblin, the adoption of online shopping and contactless delivery goes beyond just technological changes; it’s a profitable sales channel that benefits customers at the same time.
“People who had previously never shopped online out of fear or necessity have become comfortable with the process, and now we don’t think twice about not having to sign for parcels or having them left in a safe place,” he told Power Retail. “I think businesses have also realised this is often a more profitable sales channel than a physical space, so we will see retailers push towards flagship stores in key locations to merchandise the full product range, and digital channels offering more convenience for smaller impulse purchases with same day and next day delivery.”
Of course, these are not the only reasons to invest in tech advancements in a post-pandemic landscape, as Emblin explained. “I hope to see retailers and brands understand the opportunity of digital transformation and it no longer being ‘Just about e-commerce as a sales channel’ but more about ‘How can I use technology to overhaul and improve existing business processes?’ as the shift to this mindset is what is really going to set your business apart from the competition,” he said.
The Importance of Staying Ahead
While adapting to consumer changes and development in technology is a natural progression as a result of a major worldwide change, there are many factors that can hinder or slow these adaptations and developments.
Interestingly, just over half of the Survey respondents said that these changes were not a top priority before the pandemic, and a further 14 percent said a lack of leadership alignment hindered the implementation of said changes.
The report also reported that nearly one-third of B2B and consumer-facing businesses cited a failure to prioritise as a ‘barrier’, and nearly one-third of B2B businesses said that a ‘fear of customer resistance to changes’ was this barrier. In contrast, only 24 percent of consumer-facing businesses cited this as being the barrier.
What were some of the other hindrances for businesses to adapt to this new normal? According to the report, B2B executives explained that organisational and tech issues are the second most common reasons why digitisation can slow.
This can include an insufficient IT infrastructure, organizational silos impeding commitment to an executive of these changes, as well as the size of said changes ‘shocking’ the system, thus hindering the implementation.
Despite these hindrances, it’s imperative that businesses find a way to adapt to the ‘new normal’ before they are left in the dark.
Emblin offered advice to retailers to prevent the chance of slipping behind. “Never stop reviewing your strategy,” he told Power Retail. “What you have previously put in place as ‘good enough’ because times are changing quickly and your planned 3-5 year horizon probably doesn’t appear now as you had planned it.”
How can retailers establish this review of strategy, and remain agile in a time of volatility? “Consider being lean, being more agile in your thinking and having the systems and processes in place to incorporate this new strategy and way of thinking,” he suggested. “The advantage here for digital stakeholders is the board is less likely to say no to additional funding for key digital transformational projects going forwards.”
Innovations and its Irreversible Staying Power
With many innovations in modern time, once a new technology or optimised service is introduced, it’s hard or impossible to go back to what it was like before. The same goes for businesses.
According to the report from McKinsey Global Survey, of the changes mentioned throughout the study, an overwhelming majority of businesses believe that these changes will stick through the recovery, and will last for the long term.
In fact, the report found that businesses are most likely to report a ‘significant increase’ in areas including remote working, changes in customer behaviour and preferences for remote interactions.
Furthermore, an overwhelming number of respondents believe that these changes will stick, and act as an integral part of the ‘Next Normal’.
It’s not just a change in consumer behaviour that is driving these adoptions – supply chains have shifted significantly. For customer-facing businesses, one of the largest disruptions during the pandemic included Last Mile Delivery, resulting in implementing crisis-related structures that will most likely last for years to come.
A surprising take away from the report found that nearly one-quarter of companies believe that they will decrease their physical footprints in the future, with more technology-related changes as well as remote work and customer interactions to take place in the future.
What surprised Joshua Emblin about this report? “As someone who has worked with cloud based software for the last 5+ years and being such a big proponent of the benefits, I was surprised by how many businesses were still holding on to on-premise and managed hosting providers, and were only accelerating this strategy now,” he told Power Retail. “That said, I am pleased to see this shift in momentum happening in the market as part of this ‘next normal’.”
When asked what some of the biggest challenges and opportunities are for e-commerce businesses in a post-COVID landscape, Emblin explained that meeting consumer expectations isn’t just a challenge in this current environment, but it’s also important to be nimble and speedy in the process.
In fact, according to Emblin, ‘many’ businesses and brands that commercetools is currently working with are “reporting challenges with internal systems and legacy tech stacks inhibiting growth, and frustrating business users and end consumers concurrently.”
What about opportunities? “[The] biggest opportunity for e-commerce businesses at the moment is being able to quickly pivot into a new, but related category to serve demand that previously didn’t exist as we navigate this new normal,” he told Power Retail. “Examples such as switching to remote working meant the home office and fitness categories exploded, with physical retailers unable to get products to their store network quick enough. E-commerce businesses who could source stock and deliver quickly thrived during the lockdowns and ensuing closures.”
In the new age of online dominance, having a safety plan for the next global disruption is imperative, and if businesses want to stay agile and adaptable, staying on top of the changes in technology, customer behaviour and logistics are crucial for a sustainable future.
Learn how retailers can keep up to date on latest innovation trends in playbook from commercetools.