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Digitization Offers Hope to Besieged Retailers

These are especially difficult times for the retail industry.

For starters, several of retail’s marquee names announced store closings or layoffs following a disappointing holiday sales season. Retailers simply haven’t benefited from cheaper gas and a relatively strong overall U.S. job market —retail sales declined 0.1 percent in December from the previous month, according to the U.S. Department of Commerce.

Making matters worse, brick-and-mortar retailers are quickly losing ground to online giants like Amazon. According to a recent article in The New York Times, Amazon captured almost a quarter of all U.S. retail sales growth last year.

The retail industry’s comparatively low IT spending has also placed it at high risk of disruption by technology-savvy incumbents and digital-native upstarts. In fact, according to the Global Center for Digital Business Transformation (DBT Center), retail ranked third among 12 industries studied in terms of potential for digital disruption over the next five years.

Clearly, all of this should send a strong message to the retail industry. Yet, at least from a “digital transformation” perspective, the industry doesn’t appear to be listening. Although 56 percent of retail executives say digital disruption is a board-level or CXO concern, fewer than one-quarter are doing anything about it by actively disrupting their own businesses.

It is not altogether surprising, then, that according to a new Cisco study, retailers captured just 15 percent of their potential Digital Value at Stake in 2015. By comparison, financial services realized almost twice as much digital value.

There are, however, some excellent examples of effective digitization in the retail industry.

Digital Transformation in Retail from Cisco Business Insights

A perfect case in point is F&F, the clothing brand of U.K. grocery retailer Tesco.

F&F needed to address multiple challenges: limited floor space, little visibility into what customers did in stores, and poor customer awareness of F&F online.

Using a combination of in-store Wi-Fi and integrated mobile and tablet access for shop associates, F&F management can now track customer journeys and gain insight into customer behavior. Free Wi-Fi gave F&F the ability to track customer journeys in greater detail. It also provided a means to deliver curated content and context-specific offers directly to customers’ mobile phones, incorporating connected advertising.

Over three months, the number of customers logging onto Wi-Fi increased 50 percent. Customers spent roughly 30 to 50 percent of their physical dwell time online on personal devices, while also engaging with push offers. This engagement changed customer behavior, increasing dwell times and sales.

F&F was also eager to build its online customer base to augment its relatively small physical floor space. Key technologies in the store made this possible. Interactive kiosks allowed customers to order items online and have them delivered to the store or their home. This reduced the number of customers leaving empty-handed because their size or preferred style wasn’t in stock at the store. It also offered a strong introduction to F&F online—and to styles customers might not otherwise have seen. The brand has experienced a steady increase in online sales as a result.

F&F has also piloted “remote expert,” a means of providing virtual access to a style advisor who isn’t physically present in the store. Although associates on the floor are armed with tablets to help advise customers, remote experts offer personal styling advice. Using the same kinds of technology tools as next-generation workers, remote experts employ video conferencing to increase customer engagement—supporting sales, especially on higher-ticket items—and to promote F&F as a fashion brand.

For many retailers, the biggest challenge in becoming a digital business is figuring out where to start. Here are three steps to take:

  1. Evaluate where you are on the journey—are you using digital capabilities to enable operational efficiency, differentiate through improved business processes, or define new business models? There’s a good chance that you already have key elements of the required digital foundation.
  2. Build an investment plan to meet your business objectives. Prioritize the biggest areas of payback and plan short-term gains that can fund ongoing investment.
  3. Finally, use this investment plan to close the gap between the
digital capabilities you need and the outcomes you want. While the fundamentals will remain the same, your objectives and priorities may change over time.

The time for retailers to act is now.

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#CiscoChat Recap: Where Shopping Experience Meets the New Digital Customer

In my first #CiscoChat I hosted together with Anabelle Pinto, we were joined by Gaurav Pant and Sahir Anand from EKN Research to share their perspective and dig deeper into additional findings from Cisco and IDC. We started by defining who the digital consumer is, what type of services they’re looking for and what shoppers want and expect, all while providing the security they need.

Here are a few highlights from the #CiscoChat:

Who is today’s digital shopper?

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Straddling the Fast and Slow Lanes

IT organizations are struggling with how to maintain what they have while also reacting to the rapidly changing needs of the business. Some think this means “transforming” IT into a new, agile organization – instead, we can use “bimodal IT”. But what does it really mean?

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U.S. Army Builds Internet of Everything Infrastructure for the Fighting Force of Tomorrow

Every July, we celebrate on the 4th to commemorate the Continental Congress’ approval of the Declaration of Independence.  This year, the patriotic occasion reminded me of an event held last month when, together with United States Congresswoman Jackie Speier and the president of Sonim Technologies, Bob Plaschke, I announced a partnership with Sonim for the digital transformation of the communications systems supporting the U.S. Army training center in Fort Irwin (California).

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Event Recap: Cisco at the EEI Annual Convention

I had a great time recently at the EEI Annual Convention on June 7-10 in New Orleans, LA. EEI is the Edison Electric Institute, the industry association of the Investor Owned Utilities in the U.S. with international utility membership from all over the world. The Annual meeting is a unique event that includes the attendance and presentations by the CEOs of member utilities. The theme of this year’s conference was “Electricity Matters”, exploring the exciting changes happening all across the electric power industry.

The first day was full of excitement, with presentations from Ted Craver and Energy Secretary Ernest Moniz. Moniz shared his thoughts about the dramatically changing U.S. energy landscape, outlining the recommendations defined in the administration’s Quadrennial Energy Review (QER), particularly relating to grid modernization, resiliency, and infrastructure investment.

EEI Chairman Ted Craver led a thought-provoking discussion with Elon Musk, CEO and product architect of Tesla Motors, who was joined by Tesla Motors Chief Technology Officer and Co-Founder JB Straubel. The three leaders discussed electric transportation, energy storage, and the role of technology and innovation for utilities and their customers. Other sessions on the first day included:

  • Approaches to Grid Security and Resiliency – panel moderated by PPL Corporation Chairman, President and CEO Bill Spence, discussing specific actions and approaches the electric sector is taking to improve grid security and resiliency.
  • The Role of the Utility in the Evolving Distribution Grid – Company leaders, regulators, and consumer advocates highlighted the role of the utility in four areas: planning, design and operation, infrastructure enhancement and customer education and protection.
  • Complying With the EPA Clean Power Plan – moderated by Gerry Anderson, Chairman and CEO of DTE Energy, the conversation centered on the EPA’s Clean Power Plan and highlighted how new and innovative technologies can quickly change a state’s strategy for complying with the new rules.

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