Today, we’re providing an overview of common digital transformation challenges in retail companies. Read on to learn about the external and internal factors creating challenges for retailers in their digital transformation journeys and learn how to overcome these challenges.

5 Digital Transformation Challenges in Retail​

Managing Supply Chains Effectively​

Research shows that around 80% of the U.S. population now shops online. In response to this growing demand for e-commerce, retailers are embracing new digital platforms that allow them to bring their physical storefronts into the virtual realm.

To compete in this space, retailers must be able to ship items quickly, which means their inventory levels must always be in check.

Digital solutions, including ERP systems and supply chain systems, can help businesses keep a close eye on their supply chain operations. They can use these insights to maintain accurate inventory levels, identify bottlenecks and inefficiencies, and ensure all partners have access to the resources they need.

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Optimizing Customer Engagement​

The Catch-22 with e-commerce is this: Customers want the speed and connectivity that only AI can provide. Yet, they also want the shopping experience to feel personal and have a human touch.

While this is a challenging line to walk, retailers are finding innovative ways to keep customers engaged.

Tools that incorporate virtual reality (VR) and augmented reality (AR) can help retailers create shopping environments that are engaging and tailored to each shopper’s specific preferences and needs. From virtual dressing rooms and AR displays to e-commerce apps, they’re finding ways to connect with their target audiences on a more personal level.

Navigating Change Management

The retail industry was one of the first niches to embrace digitization. However, this doesn’t mean that all employees in this field have always been on board.

The idea of abandoning current best practices in favor of a new digital system can leave some retail workers stressed. They may even resist the change altogether, refusing to use the new tools.

This is why every enterprise-wide software implementation should include an organizational change management (OCM) plan. In short, OCM focuses on the “people” side of the project, ensuring everyone understands the new software’s benefits and how to use it effectively.

Protecting Customer Data​

Now that it’s easier for retailers to access customer data, the burden is on them to also protect it.

As e-commerce brands expand their digital platforms, they’re becoming more vulnerable to security breaches, including:

• Malware
• Phishing
• Data theft

As more retailers turn to technologies such as AI, machine learning, and the Internet of Things (IoT), hackers are growing more sophisticated and looking for any points of entry available.

(Learn about ERP data security.)

Overcoming Financial Constraints​

For many retailers, digital transformation means creating an e-commerce website. They may also develop an app to make online shopping easier. These are great first steps, but businesses need to go beyond the basics.

If you plan to implement any type of advanced technology, such as AI-powered chatbots, mobile point-of-sale (POS) systems, or AR/VR shopping experiences, you’ll need plenty of room in your budget. The key to securing these funds is to clearly outline the competitive advantage that these resources will provide. Executive leaders are more willing to support projects that have quantifiable benefits.

Next Steps

Is your retail business thinking about going digital? Before you dive in, take the time to consider the obstacles you could encounter. There are more than a few digital transformation challenges in retail.

Our team of consultants can help you start and complete your transformation the right way. Contact us below for a free ERP consultation.

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