Retailers, Digital Window Dressing is Killing Your Business


A GROUNDSWELLOF DIGITAL TECHNOLOGYFrom personal shopper apps to virtual showrooms, retailers worldwide increasingly tout their latest digital bells and whistles. For retail executives, the challenge is knowing where to invest to keep up with competitors.


INITIAL EXCITEMENT, BUT THEN WHAT?Digital tools like “smart” fitting rooms can be great. But, consumers generally respond to these initial rollouts because of their novelty.

• With total U.S. sales expected to grow 26% over the next five years, but earnings only 8%, retailers need to look for long-term solutions.


GOING BEYOND BELLS AND WHISTLESStaying competitive starts with instead adopting disruptive technologies across the entire business – front and back office – and only those that benefit your specific client base and reason for being.


AVOID DIGITAL WINDOW DRESSING Many digital tools are “nice to have” but don’t make up for a lack of competitiveness in core areas such as price, assortment, and customer service.

Examples of digital window dressing include:


SHOPPERS TRY THESE PROGRAMS —BUT FEW STICKThe issue? Most loyal customers spent money at these retailers for reasons these digital initiatives had nothing to do with, like one-stop shopping and low pricing.


SHORT-TERM FIXES TOLONG-TERM EARNINGS GAPSBased on Accenture research, retailers that focused on digital window dressing saw:

• A 36% decrease in share price over the past five years• Driven by a 17% decrease in sales and a 31% decrease in Earnings Before Interest

& Taxes (EBIT)

Chronic sales-to-earnings gaps make quick-fix digital boosts tempting. But, smart retailers only invest in digital strategies that fit their customers’ specific needs rather than one that includes all the latest tools as a matter of course.


THE DIGITAL PROFITABILITY EQUATION

Using digital technologies to drive operational efficiencies —while not an exercise that attracts consumer attention — tends to improve a company’s competitive position.

Accenture analyzed multiple retailers that invested behind the scenes. They saw:

• A 104% increase in share price over the past five years

• Driven by 46% revenue growth and a 59% increase in EBIT


THREE KEYS TO MAINTAINING A STRATEGIC DIGITAL PERSPECTIVE

Determine how well you’re performing relative to competitors on key dimensions, in both physical and digital channels. Customer needs can vary dramatically by channel, category, and trip.

1. Challenge conventional investments by conducting primary research to understand what matters most to your customers.



Only make digital investments that truly serve your customers’ needs in a differentiated way.

2. If a digital investment does not align with your company’s reason for being, avoid it.



Accenture research shows a 1-point increase in a retailer’s profitability index correlates with a 1.3% increase in revenue. Without looking across the business, you will struggle to bend your cost curve and create fuel for growth.

3. Invest in technologies across the business, front- and back-office.

Learn more about how to make strategic digital investments and avoid short-term fixes and with our full report:

@AccentureStrat Follow us on LinkedIn


RETAILERS, DIGITAL WINDOW DRESSING IS KILLING YOUR BUSINESS

JOIN THE CONVERSATION:

https://www.accenture.com/us-en/insight-retailers-digital-window-dressing-business?c=strat_smcmpfy17ss_10000014&n=smc_0517

Retailers, Digital Window Dressing is Killing Your Business

Retail

Transcript of Retailers, Digital Window Dressing is Killing Your Business