Is Digital Transformation The Key To Competing With Amazon?

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I recently had the opportunity to sit down with Amy Kenly, Vice President in Kalypso’s Digital Innovation Practice. Kalypso is a global consulting firm that guides some of the world’s largest brands on their path to Digital Transformation. While their experience spans high technology, life sciences and industrial manufacturing, a large portion of their clients are in retail as the industry shows increasing interest in new technologies.

While the retail industry outlook doesn’t seem as dire as it once was, it’s more important than ever for retailers and brands to execute to really thrive. In my recent articles, I’ve written about the investments retailers and brands should consider for the funds from their corporate tax savings. My conversation with Amy uncovers some additional perspectives for retailers to consider.

GP:  We’re seeing a lot of conflicting reports on the current state of the retail industry, with some claiming it’s a Retail Renaissance, and others saying we’re still in survival mode. What’s your view?

AK: Everything seems to be moving in a positive direction for the retail industry. The NRF has predicted 3.8 to 4.4 percent growth, which is strong. What continues to be challenging and volatile for traditional retailers is capturing their share of the growing revenue.

Innovative startups like Stitch Fix and Trunk Club, for example, are capturing a growing percentage of retail sales, as are new direct-to-consumer business models that put suppliers in direct competition with retailers. With the closing of Toys R Us for example, Mattel – who used to distribute through Toys R Us – is now going direct to consumers.

This is making it very difficult for big, traditional retailers who are trying to find ways to differentiate themselves. While Walmart and Target are focused on figuring out e-commerce, which is good, it’s not a differentiator anymore.

Further, while larger retailers have a renewed commitment to private brands and new differentiated products in line with consumer demand, it can be harder for them to pivot toward new, digitally-enabled business models. We’re seeing them starting to acquire startups instead. Walmart ’s recent acquisition of Bonobos as well as Target ’s acquisition of Shipt are good examples.

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