The growing importance of IT in an omnichannel world

How do retailers carry out a digital transformation of their existing IT systems whilst simultaneously transforming the cost of delivery?
3 September 2018

Consumer demands are evolving at an ever-increasing pace. Source: Shutterstock

The trading environment for UK retailers is particularly challenging right now, with an estimated 1,100 stores having closed this year alone.

And Brexit, both from a currency and consumer uncertainty point of view, has not helped matters. Recent headlines have seen some of the sector’s stalwarts struggling for survival or, even worse, failing.

Sports Direct, for instance, has purchased House of Fraser for GBP90 million (US$116 million), and industry pundits have been lining up to tell owner Mike Ashley that he must make major changes to both its product proposition and store environment to entice shoppers back.

This will require significant investment, something which the department store chain has been starved of in recent years.

Consumer demands are evolving at an ever-increasing pace and those retailers that can’t (or won’t) keep pace are counting the days to oblivion.

Consumers demand a shopping experience that is frictionless across and between all of the channels they shop in. Anything less, particularly for the generation Y onwards, is unacceptable.

Today’s consumers demand a frictionless, omnichannel shopping experience. Source: Pixabay

Many retailers understand this and there is a drive to meet Millennials’ requirements, but unfortunately for long-established players, the legacy of disparate IT systems and a myriad of intricate integration makes this transition very complex and costly.

To keep pace with consumers’ demands, they must walk a difficult tightrope, noted Huw Thomas, Managing Director of PMC. How do they carry out a digital transformation of their existing IT systems whilst simultaneously transforming the cost of delivery? All whilst improving existing service levels and system stability.

The digital transformation is all about enabling the frictionless omnichannel experience that consumers demand, along with providing greater personalization; an ever-increasing complexity of payments, enabling mobility in-store (for both consumers and store staff) whilst re-engineering the supply chain to deliver anywhere any time.

The cost transformation part of the journey is equally challenging and necessary as it can often provide a source of income to support the digital transformation activities, Huw Thomas commented.

IT departments need to lower the overall cost of delivery of existing and new systems whilst transitioning their IT to the new world. Selective outsourcing to get access to additional skills and to free up existing resources to concentrate on digital transformation is an effective way of achieving this.

Whatever retailers brand their change activities as, project customer, single view of product, price, promotion, etc, one thing that is abundantly clear is that all roads lead back to IT.

Digital transformation activities may well be led and sponsored by other parts of the business, but it is absolutely pivotal that IT plays a critical and central role in this transition.

Retailers may not reflect the importance of IT within the corporate governance structure, but failing to put it at the center of this revolution will undoubtedly lead to them going the way of Toys R Us, Maplin and BHS.