To keep up with rising customer expectations, Australian retailers are reportedly investing heavily in digital capabilities – with global investments tipped to grow 3.6 percent in the next 12-months.
When compared with other industries, the retail sector has traditionally been slow to adapt. Now, thanks to increasing competition and rising consumer expectations, the industry is leading the charge towards a digital savvy future.
At the Gartner Symposium/ITxpo, which kicked off on the Gold Coast on Monday morning, Gartner said that the global retail sector will spend an estimated USD$203.6 billion on digital tech in 2019. This means retail will go from being one of the smallest investors in IT solutions to the biggest.
Looking a little closer to home, Australian retailers are expected to spend A$4.9 billion on technology products and services in 2019, a 3.2 percent increase from 2018. The New Zealand sector is also forecast to grow its spend by three percent over the next 12-months, with a projected spend of NZ$779 million.
Speaking at the conference on the Gold Coast, Molly Beams, senior director and analyst at Gartner said that the role of a retail Chief Information Officer within a business is changing.
“Retail CIOs used to be tasked with minimising risk and cost. Now, they are held accountable for business results,” she said. “They are prioritising ROI and other measurable business impacts. Retail CIOs are investing in analytics for both near-term benefits like decision making and to prepare for innovations such as smart machines, AI and augmented reality – all of which require robust datasets.”
Cue’s CIO, Shane Lenton is a perfect example of this, with his responsibilities over the last 12-months including a heavy involvement in the development of new tech. This has included the company’s new ‘Style Finder’ shopping feature and in-store order fulfilment capabilities.
According to senior director and analyst, Thomas O’Connor, global retail sales are slated to rise by 4.8 percent, while consumer confidence in the industry remains high.
“In retail, there is only one battle that matters – the fight for the customer,” he said.
By 2023 O’Connor, and the team at Gartner, believe Amazon and Alibaba will hold 40 percent of the global retail industry’s market share, up from 33 percent in 2017. In light of this, he believes the landscape is changing, but peaceful co-existence between online and bricks-and-mortar retailers is possible.
“There are many ways for retailers to differentiate from e-commerce giants, and therefore profitably coexist,” O’Connor said. “We think that yes, there will be a robust retail industry. But the rules of the game are changing rapidly. Different kinds of retail businesses will continue to arrive and challenge the status quo.”
O’Connor claims the key to success for both pureplay, in-store and omnichannel retailers is to focus on customer experience, transformative technology and measuring the success of their digital transformation.
“Get even closer to your customers using new digital capabilities such as advanced analytics and AI to segment customers by behaviours and validate their evolving wants and needs,” he said.
However, O’Connor also notes that retailers shouldn’t just invest in tech for the sake of it, instead, they should make “clear strategic choices” to adapt their capabilities, paying close attention to how consumers are evolving. “Transformative technology must only be scaled once it has been established there is a clear consumer want for it,” he said.