CEOs scaling back some omnichannel services survey finds

Internet Retailing

1st Mar 2017

A survey of 350 global CEOs reveals that digital transformation is well underway in retail with nearly half of those surveyed having a defined digital strategy in place.

The fourth annual survey from JDA Software Group finds that 69 per cent of executives plan to increase their investment in digital transformation over the next year.

The top areas of digital investment in 2017 include mobile apps (85 per cent), big data (86 per cent) and use of social media data (85 per cent), while the Internet of Things and automation are lower on the list but gaining momentum.

“The investment in technologies underscoring digital transformation was a major undercurrent within this year’s survey results, which is no surprise, since retail CEOs understand just how important it is to invest in the technology that will improve the customer experience,” Lee Gill, JDA Software Group’s vice president of global retail strategy, said.

“The next wave of results also reveal the continued balancing act retailers are struggling to maintain with delivering superior omnichannel execution and profitability, all while meeting the demands of the modern shopper, and keeping pace with the digital transformation underway across the supply chain.”

This has led to a shift away from pureplay online retailing based on price to an omnichannel model based on customer service, according to JDA’s vice president of retail industry strategy APAC Patrick Viney.

“If Australian retailers invest in ‘digital-aware’ supply chain capabilities, they could be more than competitive as the next wave of digital technologies rolls in. It’s a big if, however, given the high prevalence of planning and execution issues we see with current digital retail strategies,” Viney said.

Omnichannel too complex

One of those execution issues involves omnichannel, which many retailers have found to be too complex or expensive and are choosing to scale back. Only 12 per cent of CEOs surveyed, down from 19 per cent in 2014, provide a seamless shopping experience across channels. And only 10 per cent of those surveyed say they’re able to make a profit while fulfilling omnichannel demand.

Retailers are decreasing investments in fulfilment options that have become costlier and less profitable, including same-day delivery (reduced to 33 per cent, down from 43 per cent in 2016), and providing specific delivery time slots (down to 27 per cent vs 48 per cent in 2016).

Meanwhile, the survey found that retail CEOs are increasing their investment in click and collect, with 51 per cent of respondents saying they offer the service, or plan to, in the next 12 months – up from 47 per cent in 2016.

Buy online, ship to store has picked up steam in the past year with 48 per cent of retail CEOs investing in it, or planning to, over the next 12 months.

“We are witnessing unprecedented change sweeping across the Australian retail industry that continues in earnest as retailers reimagine their strategies to achieve profitability as well as transform the customer experience, making it seamless and personalised, no matter how they shop,” Viney said.

“Supply chain complexities and cost in the region will continue to challenge our retailers and the difference between winners and non-winners will be how much, or how little, retailers understand their customers moving forward,” he concluded.