OVERVIEW
Digital bells and whistles may be sexy, but they're not always savvy.
While most retailers have made forays into the digital realm to better compete, when they invest just to “keep up” in the digital race, their efforts are akin to digital window dressing rather than a core strategic move. Some of the glitziest digital apps—from personal shopping to virtual showrooms—don’t make sense for all retailers.
To remain truly competitive, retailers must instead adopt disruptive technologies across their business—front and back office—and only those that benefit their specific client base. These are the investments that can enable growth, profitability and consumer trust.
Digital window dressers saw a 36% decrease in share price over the past five years.
KEY FINDINGS
- Window dressing is a short-term fix to a long-term earnings gap. Chronic sales-to-earnings gaps make quick-fix digital boosts tempting. But, Accenture analysis of several large retailers shows digital window dressers saw a 36 percent decrease in share price over the past five years.
- Playing the “Me too” game can be a retailer death sentence. Wise retailers only invest in a digital strategy that fits their customers’ specific needs. For large multichannel retailers, the brick-and-mortar store will continue to make the largest revenue contribution until at least 2026.
- Don’t forget the variable in the digital profitability equation. Companies who focus solely on customer experience are missing a key variable—the back office. Using digital to drive operational efficiencies—while not sexy--tends to improve competitive position. Accenture analyzed multiple retailers that did so--they saw, on average, a 104 percent increase in share price over the past five years.
Customers want consistency but their wants may vary online versus in store.
RECOMMENDATIONS
To keep digital investments strategic, retailers should:
- Challenge conventional investments by conducting primary research to understand what matters most to your customers. Needs can vary dramatically by channel.
- Avoid digital investments that don’t align with your company’s reason for being.
- Invest in technologies across the business, front and back office. Without looking across the business, you will struggle to bend your cost curve and create fuel for growth.
DIGITAL WINDOW DRESSING
“Challenge conventional wisdom. Conduct research and figure out what the customer wants and how you are positioned relative to the competition in key dimensions of the customer experience and then tailor your investments to what really matters to your customers.”
DANIEL SMYTHE
Managing Director, Accenture Strategy
HIGHLIGHTS
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