In today’s article, we’re gonna take a look at six trailblazing companies and how their digital strategies have permitted them to keep their brand relevant in fast-changing times. Join us for the dive into digital transformation success stories!
If years ago it was perfectly possible for a company that had a great product and marketing team to be on top of its game without fear of being outplayed by a younger, smaller and ‘more digital’ rival, then, not today. In the digital era, the business landscape is evolving and changing faster than ever. On the lookout for ways to remain competitive, the companies are turning to digital transformation.
While we can give promises that digital initiatives will improve the operational efficiency and drive growth, it’s always better to look at real-world success stories for some inspiration. A few months ago, we already covered the remarkable digital transformation strategies of those companies. This time, it’s turn of another six well-known brands who have changed the face of retail for good.
Thriving in the digital age is closely related to innovation and digital transformation strategies. While many companies are still struggling with how to channel their digital ambition, there are others whose strategies stand out and who thanks to embracing new technologies have strengthened their empire. In this post, we are going to take a look at the digital transformation success stories of Walmart, Target, Sephora, H&M, Nike and Walgreens.
1) Walmart becomes the third-largest IT spender in the entire world
Walmart has gained some fame when it comes to telling digital transformation success stories. There’s hardly an article on the topic that doesn’t mention them, and there’s a reason for that. In fact, the numbers speak for themselves, during 2018 fiscal year, Walmart spent a total of 11.7 billion in technology investment, which made it the third-largest IT spender in the entire world behind Amazon and Alphabet.
Walmart has also been building up its tech team: 1,700 technology employees were hired in 2018 and 2,000 more jobs were to be added to its nine tech centers by the end of 2019. On top of that, Walmart appointed a new CTO and CDO: Suresh Kumar, a former Amazon’s vice president of worldwide retail systems and most recently Google’s vice president and general manager of display, video, app ads and analytics.
All that indicates that it’s not about re-platforming e-commerce business anymore, it’s about re-platforming across the board and deploying transformation strategy across all aspects of the business from supply chain management and delivery to the overall customer experience.
For shelf inventory Walmart uses shelf scanning robots in 350 stores. These robots are able to identify which stock keeping unit is in its slot and the price that goes with that slot. This robotic system will help to avoid poor inventory performance that lead to lost sales and increases the accuracy rate of demand forecast.
Electronic shelf labels, which would permit to make price adjustments automatically is another proposal that Walmart is testing. Walmart’s new Intelligent Retail Lab – or “IRL” – is a store infused with AI that allows to gather information about what’s happening inside the store through sensors, cameras and processors with the focus, once again, on the product inventory and availability. Controlling and guaranteeing the the freshness of the products is something that AI can really help with.
We have already written about Walmart in the context of blockchain success cases, where in partnership with IBM, they are urging the suppliers to track the produce using this technology to guarantee food.
Walmart has set the bar high for all the retailers, putting time, energy, resources and talent behind developing technology and integrating that with the core business practice. It is not just a competitive advantage for retailers. It’s a requirement.
2) Target focuses on personalization and customer loyalty
Target is the second largest retailer in the United States. Kicking off its digital transformation initiatives back in 2014 has brought them some outstanding results. Since then, data and analytics have become the company’s major priorities.
The Target app, with its over 27 million users, is one of its main tools in capitalizing on personalization and customer loyalty. The app is also a source of insights on user preferences, behavior trends, and shopping habits. Their engineers are now building on voice, AR, AI and VR to provide greater utility for their customers and integrate richer shopping experiences. The objective is to build a holistic digital strategy that offers deeper levels of personalization and engagement across every guest-facing part of their ecosystem.
They are also rethiniking their brick-and-mortar stores and searching to offer a more holistic in-store experience. In that quest, the company has remodeled hundreds of stores. They are rolling out a “Drive Up” service, where the clients’ can drive up in a designated parking place and their online orders are loaded into their car in just about three minutes. Which might not seem like much, but is something that one of Target’s biggest competitoirs, Amazon, can’t offer today.
And as the revenues show, Target’s digital strategy is bearing fruit: its efforts drove $5 billion in sales for 2018. A driving factor behind this transformation has been the appointment of Mike McNamara, a former leader of the British grocery chain Tesco, as the CIO of Target in 2015. In January 2019 it was announced that McNamara will also lead the Enterprise Data Analytics and Business Intelligence team, in addition to his leadership of Target’s Technology Services. So we can be certain that the retailer has still quite a few digital tricks up at its sleeve.
3) Sephora blends digital and in-store shopping experiences
Sephora’s digital strategy merges the digital and physical shopping and unites them for the common good of the shoppers. Sephora was one of the first in beauty retail to understand how to leverage data to drive a more customer-centered experience.
Sephora started with personalized email campaigns sending out behaviorally-targeted communications. It’s recorded that the new campaigns led to a 80% higher open rate. When they discovered that customers often use their personal smartphones to search independent product reviews or recommendations while in the physical store, Sephora developed a mobile app designed to emulate the knowledge of a personal shopping assistant. The client can scan the product using the Sephora app for ratings and reviews but also for looking up past purchases, viewing her wish list or managing gift and loyalty cards.
The next step in their quest to craft a unique customer experience, was to add to the app a tool powered by augmented reality – Virtual Artist – so that customers can virtually try on makeup products. Color Match, a AI feature, assist the customers finding the right color shade for their skin tone via an uploaded photo. Now, the industry-leading chain of cosmetic stores has its own research laboratory in San Francisco that develops new products making use of augmented reality, artificial intelligence and RFID technology among others.
All in all, Sephora’s digital strategy is to provide the customers with tools to help them feel confident in making a purchase. Whether it’s in store or online doesn’t matter. This manifests in Sephora merging the digital and in-store teams to realign themselves to the profile of today’s multi-channel shopper. Combining the two teams, has permitted the company to build 360-degree customer profiles and trace customers’ precise offline and online behaviors.
We can conclude that it’s thanks to Sephora’s data-driven decisions that, for the past decade, they have managed to stay a dominant leader in the retail marketing space.
4) H&M connects virtual shopping with the physical conveniences
The Swedish mass-market brand of fashion clothes and accessories doesn’t need much introduction around the world. However, the rise of digital-focused competitors like Asos obliged H&M to get out of its comfort zone and dramatically change their strategy.
They started experimenting with mobile technologies and their search for ways to improve the virtual experience of finding, trying on, and purchasing clothes led them to the search by image function and smart product recommendations. The first one permits the users, for example, to recreate their favorite influencers’ outfits by uploading and searching by image. The similar recommendation engine will offer the users available options if the product they we’re looking at is sold out.
Another initiative worth mentioning is the Perfect Fit app, a feature that will permit the users to create their own personalized digital avatar based on the selfies and information they provide. The avatar can be used to try on clothes while shopping online, as it will have approximately the same body proportions as the owner.
And the change of strategy has paid off: in October 2019, H&M reported that its online sales had gone up by 30% as the result of integrating online and the store. And even if there’s reason to celebrate, there’s no time for that: as the fashion retail continues to shift rapidly, the transformation has to continue to meet the customers’ ever-increasing expectations.
5) Nike relies on its state-of-the-art mobile application
The footwear and apparel retailer is another company that drives its digital transformation with an emphasis on mobile. Nike is enhancing and expanding its digital ecosystem through a combination of computer vision, machine learning, and recommendation algorithms.
Its state-of-the-art mobile application allows the customers to scan their feet and find a shoe that fits the best. Nike Fit uses the customer’s smartphone camera to create an ultra-precise scan, which collects 13 points of data and builds a map of both feet. The same app is is used to gather data to improve the design of future products. Enhancing customer experience takes once again the center stage of the digital strategy.
Moving forward, Nike plans to invest in new digital member services, data and analytics, demand sensing technology, technologies such as RFID that enable Connected Inventory across the marketplace, and in a new editorial content engine.
The results are showing: in 2019, digital was Nike’s fastest growing channel in each and every geography.
6) Walgreens adopts a mobile-first mentality that also drives in-store traffic
The pharmacy store Walgreens might be 118 years old and operate as the second-largest pharmacy chain in the United States, but they have still managed to stay at the cutting edge of digital innovation. They have adopted a mobile-first mentality that also drives in-store traffic and helps to build customer loyalty.
Differentiated and personalized, that’s the customer experience Walgreens is aiming to deliver. This approach works especially well for beauty and skincare products which are inherently personalized. Their app is somewhat similar to Sephora’s, where each client receives personalized offers and discounts.
Among other things, in the app, the users can refill prescriptions by scanning the barcode. A function that appears to be very well received by the customers, for example. in the first quarter of 2018, 20 percent of refill script requests were done digitally. The users can also use the app to organize a video chat with an online doctor or set pill reminders to manage medications on their Apple watches.
Walgreens’ digital transformation was also fostered by the a new intranet and collaboration strategy that encouraged recognition and has increased communication and engagement of the employees.
What is digital transformation success and how do we measure it?
To drive some conclusions from those six stories, we ought to look at the criteria we apply to decide whether a concrete digital transformation strategy has resulted in a success. In the graphic below, we can consult the six metrics that organizations can actually measure around digital transformation.
Not surprisingly, as you might have concluded from the success stories already, customer satisfaction takes the center stage, followed closely by web traffic and productivity. The overall customer experience is also among the criteria, giving evidence of where the companies should place the focus of their digital transformation efforts. An efficient digital strategy that paves the way to success, works on all the mentioned aspects.
Implement digital transformation strategies to your company’s processes and secure your place in the future of business!