Are Nordic retail organizations becoming digital businesses or are they just applying digital veneer?

Digital Disruption

Published 12. March 2015, by Antti Karjaluoto and Arto Makkonen

Are Nordic retail organizations becoming digital businesses or are they just applying digital veneer?

In September 2014, Tomas Nyström wrote about Breaking out of the comfort zone: it’s time for Nordic retailers to harness digitalisation to create unique customer experiences and solutions. In this article he stated that fierce competition from international e-commerce sites, as well as from global brands landing on local shores, forces Nordic retailers to move fast to understand what digitalisation means for their own operations. A high priority must be blending the digital and physical worlds to drive superior experiences for their customers – with the customer as the focal point.

Recently, we conducted additional analysis to see how far Nordics’ top retailers have progressed in their digital transformation. In order to measure the digital maturity of the Nordic retailers, we used the Digital Index model developed by Accenture to benchmark how far the top retail companies have progressed in their digital transformations. The progress of companies was measured against three success factors; Digital Strategy, Digital Servicing and Digital Enablement. These three areas are further defined by multiple sub-categories.

In our research we analysed in total 45 Nordic retailers across Finland, Sweden, Norway and Denmark by using a scale from 1 to 4 (1 lowest and 4 highest score). Our findings confirm the fact that it is really time for Nordic retailer to harness digitalisation, as in average Nordic retailers are far beyond the average scores across all the digital index dimension of the global top 30 retailers (Figure 1).

Figure 1. Nordic retailer's digital index scores compared to global top 30 retailers.

Call for action

In our analysis we identified 9 Nordic companies who qualify as the Digital Leaders of this region based on the combined impact of their digital index score and financial performance.

The leaders have understood the importance of being part of their customers’ lives through a consistent and seamless omni-channel experience. For example, a modern shopper explores the products and availability on her tablet, drops by the store for some showrooming and finalizes the order from her mobile after having checked some additional details.

The leaders know their customers, actively seek their feedback and also reward them for their loyalty. At the same time, the retailers learn business critical information about their customers, purchasing history and aspirations.

Being relevant is key. A global retailer sought big data analytics to improve its recommendation engine for sales through multiple channels, including mobile devices. After implementation in one channel, the analytics-powered solution helped the retailer enjoy a multimillion-dollar boost in e-Commerce revenues in only three months.

Today’s leading retailers understand that the efficiency and relevance of the brick-and-mortar stores is measured in experiences per m2, and there are many ways to delight customers who pay a visit to the store. Interactive displays greet the customers and help them find relevant products. The retailers use indoor location services to detect users entering the store. Their customers receive personal and targeted promotions in the store. Their sales associates know when loyal customers enter the store and can deliver focused, personalized assistance.

The competitiveness gap between digital leaders and digital laggards is getting wider. Which path will your business take?