“According to the 2019 Gartner CIO Survey, retailers are implementing revenue-increasing digitalization strategies by scaling and refining their approach to satisfy customer expectations. Retail CIOs can use this research to benchmark against top performers and identify opportunities not yet pursued.” – Gartner, 2019 CIO Agenda: Retail Industry Insights
Gartner’s 2019 CIO Agenda: Retail Industry Insights, shines a light on insights from retail CIO respondents.
Overview of key findings found in this report:
- Significant movement into the scaling and refining stages of digitalization indicates that digital maturity is progressing in retailers.
- Digitalization is helping to close the gap in revenue growth as the top priority for retailers reflective of the easing pressure in some major markets.
- Artificial intelligence/machine learning is recognized as the top game changer in retail yet is not in retailers’ top five spending priorities.
- Current fulfillment methods remain largely unchanged, with new options likely to add to escalating fulfillment costs.
The State of Digital in Retail: 2019
According to Gartner, “Digitalization is now part of the daily lives of consumers and retailers, who have to scale digitalization efforts in order to make good customer experiences business as usual.”
Gartner found that over the past 12 months, retailers have been:
- Scaling up, in order to gain efficiencies
- Scaling across their organizations through implementing lessons and best practices from one part of the organization into another
- Scaling out, through interconnections with internal and external platforms and ecosystems
According to the report, key scale accelerators that retailers are experimenting with and implementing include:
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- A high-performing digital workplace, with people who are collaborative, agile, analytical, innovative and creative, and have the ability and desire to exploit existing and emerging technologies to deliver excellent customer experiences.
- Scaling physical work through the Internet of Things (IoT), which allows retailers to sense, measure and mediate the increasing number of connected devices. The network effect of IoT converts individual objects to systems of abundant and rich information to support decision making quickly and at scale.
- Scaling relationships and collaboration through building a network of API-driven, interconnected ecosystems. Connections between partners, employees and even competitors are built into vibrant networks that can unlock value for all.
- Scaling people through artificial intelligence (AI), a significant game changer that will augment the capabilities of the human workforce, not necessarily replace them.
- Industrializing for scale through digital business platforms, which enable retailers to create new business models and new marketplaces. A typical digital business platform is a “platform of platforms” — a combination of platforms for customer experience, ecosystems, IoT and internal IT systems, at the heart of which is a data and AI platform. The digital business platforms could be constructed in-house or through collaboration with partners.
Gartner says, “There could be dire consequences for the retailers that indicate that they have no digital strategy (20% in the survey), and a huge catch-up effort for those still in the desire/ambition phase (18%). The pace of change in consumer adoption of digital makes having a digital strategy obligatory.”
Essential Takeaways for Retail Decision Makers
Ultimately, Gartner recommends that retail CIOs who are trying to use digitalization to go from multichannel to unified commerce should hone in on four key focuses.
- Develop new KPIs to ensure digital strategies continue to progress through all stages to become standard business processes.
- Commit to reinvesting revenue from improved business results toward continued digital transformation.
- Use the algorithmic retailing framework as a way to identify and pilot one or more AI projects immediately. Use the lessons learned to develop and scale pilots into full-scale production applications in 2019.
- Be aware that investing in multiple fulfillment methods to meet present and future customer requirements at scale are likely to escalate fulfillment costs, which will be an important consideration before expanding variety.
To read all of the survey’s findings and review Gartner’s key digital takeaways for retail, download the report here!
*Gartner, 2019 CIO Agenda: Retail Industry Insights, 15 October 2018, Robert Hetu