10 companies leading digital transformation in retail (2024)

10 companies leading digital transformation in retail (1)

The rise of online shopping has forced the retail industry into a state of crisis, with more than 11,000 stores expected to close in 2018 -- up from 9,000 in 2017, according to a Cushman & Wakefield report.

"These days, retailers are forced to become innovative," said Brendan Witcher, vice president and principal analyst at Forrester. "The challenge is, where does the line between being a good retailer and being a good innovator get drawn? Too many companies take their eye off the ball and the basics of what they need to focus on in innovation."

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Virtually all retail companies now have a digital strategy, Witcher said. The remaining challenges to transformation are in softer elements: Culture, organization, and lack of skills, he added. "Implementing technology is easy when compared to the challenges of change management that need to happen to go from being a traditional retailer, to becoming a digitally led retailer," Witcher said.

SEE: IT leader's guide to achieving digital transformation (Tech Pro Research)

There is no shortage of companies investing in technology to attract and retain customers, said Brian Solis, a principal analyst at Altimeter and author of the report Leading Trends in Retail Innovation. However, for many, "innovation" actually means "iteration," Solis said, meaning that instead of doing new things that create new value, they do the same things but more efficiently.

"Investing in mobile, cloud, or things like augmented reality or new payment systems all improve the customer experience, but I think retail is really struggling in understanding the customer of tomorrow right now," Solis said. "Where I've seen some of the greatest innovation on that front is when companies really try to understand, 'What do we not know?'"

Retail also tends to lag behind other industries when it comes to digital initiatives because projects must be operational before most companies will get on board, said Ananda Chakravarty, a senior analyst at Forrester.

"With retail being so dependent on the margins, there are only so many dollars available for things like R&D and innovation in general," Chakravarty said. "They know they're competing against companies like Amazon with multi-billion dollar budgets dedicated solely to innovation and research and development. It's not something that's ignored -- it's more of, 'How much can we put out there without reducing our day-to-day?'"

Despite the challenges, a number of retailers have embraced the changing landscape and are making strides in digital projects that tap technologies like artificial intelligence (AI), augmented reality (AR), and the Internet of Things (IoT) to radically transform their business and gain new customers. Here are 10 companies that are leading digital transformation in retail.

SEE: Digital transformation: A guide for CXOs (Tech Pro Research)

1. Sephora

Beauty retail chain Sephora has leveraged digital projects to not only survive but thrive in today's retail economy, taking pole position as the no. 1 speciality beauty retailer in the world. The company has used technology to offer a number of unique offerings to customers on their mobile app as well as in the store, as I reported for ZDNet's sister site TechRepublic.

While other cosmetic companies rely heavily on department store sales, Sephora offers customers a number of tech options that allow them to personalize their shopping experience by trying on makeup virtually using AR, matching their skin tone to a foundation with AI, and sampling a fragrance via a touchscreen and scented air.

"Sephora is diversifying its approach to digital transformation by focusing on the areas where other companies are struggling," Solis said at the time. "Specifically, the company has studied digital customers to understand her needs and beauty and social aspirations, how she feels and shops, and more, so they adapted models, processes, and resources internally to compete with purpose."

2. Lowe's

Home improvement chain Lowe's began using AR and virtual reality (VR) testing in its stores with the debut of its 3D virtual Holoroom in 2014, which allows customers to design a room on a computer and then tour it in VR. The company later launched the Lowe's Vision app and View in Your Space feature, which use AR to help customers visualize what the store's products would look like placed in their own home. The In-Store Navigation app helps customers navigate to the products they need in the store.

All of these apps aim to solve a common customer problem: How will you know if something looks good in your space?

"It makes a lot of sense for a company in the do-it-yourself space and other types of spaces as well," Chakravarty said. "There are some niche markets there for that."

3. Home Depot

"Home Depot is doing a fantastic job with their omnichannel capabilities," Witcher said, as the company has successfully facilitated its online sales growth through its brick-and-mortar stores.

With Home Depot's approach, customers can purchase products online and choose to have them shipped either to their home or to their local store for pickup. A buy online and deliver from the store option can get customers their products the next day in a two-hour delivery window. They can also buy products online and return them to the store.

Like Lowe's, Home Depot also introduced wayfinding within its app to help customers more easily navigate store aisles and find what they are looking for. The company reported sales of $23.9 billion for Q4 2017, a 7.5 percent increase from the year before.

4. Walmart

In some Walmart stores, Bossa Nova robots move throughout the store, scanning shelves and alerting managers to the state of inventory in real time. Offering fast information about how products are performing within stores and across locations can help the retailer build a predictive inventory model and keep prices competitive, ZDNet reported.

"These are powerful tools they're using for things like inventory management, and being able to do that in an automated fashion without engaging the sales reps or associates inside the store, giving them more time to actually engage with customers," Chakravarty said.

5. Lolli and Pops

Candy and gift retailer Lolli and Pops may be small compared to others on this list, but it has a powerful digital project underway, Chakravarty said. The company recently introduced Mobica, a facial recognition loyalty program powered by Intel. Customers that opt in to the program can walk into a store, and a camera will recognize their face and send that information to an app on the sales associate's tablet. With that data, the associate can access the individual's taste profile, allergies, and other information, and be able to offer personalized product recommendations via AI-enhanced analytics.

6. Kroger

Grocery store chain Kroger is using in-store analytics to personalize shopping for customers, Chakravarty said. The company is now using predictive behavior modeling to personalize promotions and tailor pricing for its Plus Card members, which has led to a growing digital customer base. As of Q1 2017, growth in mobile visits outpaced overall digital growth, according to the company. Kroger also recently debuted its ClickList service, which allows customers to order groceries online and pick them up at the store.

7. Fabletics

Fabletics is using a digital dressing room tool called omnicart to help identify new customers and create a more personalized experience for them, Witcher said. The tool allows store associates to scan products that a shopper is trying on in an in-store fitting room into an iPad. If the shopper is a Fabletics member and the retailer has their email address on file, the clothes will automatically be placed into their online shopping cart.

After the shopper tries on the clothes, she gives the fitting room attendant feedback on the iPad. If they select "did not like" or complete a purchase in store, the item is removed from their online shopping cart. Otherwise, it will stay there, if they want to purchase it later.

Customers who shop with Fabletics through multiple channels like this are 3.2x more profitable for the company than those who only shop on one channel, according to the company president.

8. Macy's

In 2016, Macy's began rolling out an RFID initiative to track every item across its fleet of stores and fulfilment centers. When the company first expanded RFID to its fashion departments, its sales volume grew more than 200 percent, according to some estimates -- which was not a surprise, as inventory accuracy can increase item availability, leading to sales increases.

"It reduces shrinkage and waste inside the store, in addition to improving the ability for associates to track particular products and inventory," Chakravarty said. "It's a powerful tool."

9. Best Buy

Best Buy has been working with partner 3C Interactive to tap a growing communication protocol called Rich Communication Services that can enhance basic text messages with product images, maps for in-store pickup, and more details on purchases. This creates a more seamless interaction between in-store and online communication.

"They're finding different ways of connecting with the customer through the mobile device," Chakravarty said.

10. Neiman Marcus

Department store Neiman Marcus founded an innovation lab in Dallas, TX, in 2012 to test new technologies. The store has since rolled out Memory Mirrors -- giant video screens and cameras that allow shoppers to see outfits in 360 degrees and compare clothing options side-by-side -- in some locations.

The retailer also launched the Snap Find Shop visual search feature in its app, which allows customers to take a photo of a shoe, handbag, or clothing item and find a similar style in the store's product line using AI.

These projects and others seek to alleviate pain points for customers and make the shopping experience easier and more fun. "It's almost like Innovation as a Service, where they tackle challenges and also look at new opportunities where they can have an effect," Solis said.

Also see

10 companies leading digital transformation in retail (2024)

FAQs

What companies are going through a digital transformation? ›

10 Examples of Digital Transformation Companies
  • Brick by Brick: Lego.
  • Delivery by Data: DHL.
  • Smart City through Sound Transit.
  • Digitization with Disney.
  • Power to the Players: GameStop.
  • From license to cloud: Adobe Creative Cloud.
  • Banking reinvented: Hanseatic Bank.
  • Earth-shaking transformation: Caterpillar.
13 Jan 2022

Which industry is leading in digital transformation? ›

Semiconductors, electronics, pharmaceuticals, energy and chemicals, and logistics are the five sectors leading the digital transformation of the manufacturing industry, a report by World Economic Forum showed.

What is digital transformation in retail? ›

Put simply, digital transformation is the idea that businesses should utilize new technologies and business models to motivate their employees to be more productive and to provide value for customers.

What is the best example of digital transformation? ›

A great example of digital transformation is UPS. The American shipping and supply chain management company used digital tools to synchronize its operations and logistics strategy to better meet customer demand.

What are some examples of digital transformation? ›

Examples of digital transformation are:
  • Transitioning into a remote-first workspace.
  • Using design thinking to analyze and optimize the customer journey.
  • Implementing automated customer service.
  • Using AI-driven insights to improve sales efficiency.
  • Automating employee performance management.
29 Apr 2022

What are the key trends in digital transformation in 2022? ›

Distributed cloud will be an emerging digital transformation trend in 2022 as more and more businesses move to the cloud. The distributed cloud gives businesses the power to connect data and applications across multiple locations, allowing for faster innovation and better resiliency.

What are the three 3 main components of digital transformation? ›

There are three essential components of a digital transformation: the overhaul of processes. the overhaul of operations, and. the overhaul of relationships with customers.

What are the 3 factors of successful digital business transformation? ›

A closer look at customer experience can reveal whether transformation initiatives are paying off.
...
8 Factors for Successful Digital Transformation
  • Orientation. ...
  • People. ...
  • Processes. ...
  • Objectives. ...
  • Structure. ...
  • Insights & Intent. ...
  • Technology. ...
  • Execution.

Why is digital transformation important to retailers? ›

A multichannel experience: A multichannel sales approach is a hallmark of digital transformation in the retail industry, providing a more intuitive and personalized way to shop for its customers. Multichannel retailing increases customer retention and customer experiences for both retailers and customers.

What is impact of digital transformation on retail industry? ›

Multiple forces give rise to internet-based retailing's dynamic growth. These forces include more and better information availability about a product, larger assortments, greater transparency across vendors from the consumer's perspective, and potentially lower prices because of lower fixed-cost operations.

What digital devices are used in retail? ›

In this post we take a look at some of the ways in which retailers are tackling this challenge.
  • Interactive Fitting Rooms. ...
  • In-Store Wi-Fi. ...
  • Mobile POS Systems. ...
  • Sales Staff Tools. ...
  • Integrating with Social Media. ...
  • Beacons. ...
  • In-store Kiosks. ...
  • Electronic Price Tags.

What are the 5 domains of digital transformation? ›

Taken together, we can see how digital forces are reshaping five key domains of strategy: customers, competition, data, innovation, and value (see figure 1.1).

What is KPI in digital transformation? ›

Digital Transformation KPIs are indicators of the progress towards achieving DX goals. This way, businesses can track how their activity affects the digitization processes.

What are some digital examples? ›

Examples of digital media include software, digital images, digital video, video games, web pages and websites, social media, digital data and databases, digital audio such as MP3, electronic documents and electronic books.

What is the latest digital transformation? ›

7 Digital-Transformation Trends to Watch
  • Blockchain. Blockchain has been around for years and is already used in different industries outside finance industries. ...
  • Data protection and security. ...
  • Hybrid workplace. ...
  • Artificial Intelligence (AI) ...
  • Automation. ...
  • 5G. ...
  • Digital banking.
8 Apr 2022

What are 3 examples of digital devices? ›

Here, the examples of Digital Devices,

LED TV. Computer Keyboard. Digital Clock. Proximity Switch.

What is an example of a digital business? ›

Examples of Digital Business

Netflix is a good example of a company that switched from e-business to digital business. Originally, Netflix used technology to manage an inventory system and mail people DVDs, providing an experience that was more convenient, but ultimately fairly similar to movie rental stores.

What is a digital transformation strategy? ›

A digital transformation strategy is the approach to remodeling the enterprise to incorporate digital technology across appropriate facets to achieve everything from greater efficiencies and collaboration to improving delivery speed and customer satisfaction.

What are the top 5 digital transformation trends? ›

The new trends in digital transformation include hybrid work, intelligent search, AIOps and machine learning, customer data platforms (CDPs), and integrated Agile, DevOps, and ITSM platforms.

What are the benefits of digital transformation? ›

What are the Key Benefits of Digital Transformation?
  • Increases Customer Satisfaction. ...
  • Drives Data-Based Insights. ...
  • Enables Software Monetization. ...
  • Enables High-Quality User Experience. ...
  • Encourages Collaboration & Improves Communication. ...
  • Increases Agility. ...
  • Limits Human Error. ...
  • Encourages an Environment of Employee Excellence.

What is the future of digital transformation? ›

The future of Digital Transformation consists of some crucial aspects. The access to remote operations is expected to be enhanced. The concept of employee well being is expected to become an organisational priority. Digital twin computing capacity may enable predictive analytics.

How can digital transformation be improved? ›

  1. Increase budget for research and development of digital transformation systems. ...
  2. Hire competitive talents that will fit the current skill requirements. ...
  3. Develop user-friendly digital systems. ...
  4. Use data analytics to improve current digital systems implemented by businesses.

What are the key trends in digital transformation in 2022? ›

Distributed cloud will be an emerging digital transformation trend in 2022 as more and more businesses move to the cloud. The distributed cloud gives businesses the power to connect data and applications across multiple locations, allowing for faster innovation and better resiliency.

Why is Walmart digitally transforming? ›

Walmart is also turning technology into a revenue stream, Kumar noted. Its Adobe partnership, for example, enables Walmart to offer its cloud-based pickup, delivery and fulfillment services to retailers. This summer, Walmart also started selling its white-label delivery platform to other businesses.

What is the next big digital transformation? ›

Cybersecurity is another major digital transformation issue that companies face in 2022. With great data comes great responsibility and to retain their reputation and the customer's trust, businesses need to be able to protect their databases from breaches and attacks.

What are the top 5 digital transformation trends? ›

The new trends in digital transformation include hybrid work, intelligent search, AIOps and machine learning, customer data platforms (CDPs), and integrated Agile, DevOps, and ITSM platforms.

What are the three 3 main components of digital transformation? ›

There are three essential components of a digital transformation: the overhaul of processes. the overhaul of operations, and. the overhaul of relationships with customers.

What are the 3 basic foundations for a successful digital transformation? ›

Just as in building a house, sustainability and successful digital transformation is based on three fundamental elements, good architecture, solid foundation, and a consistent fit-for-purpose supporting infrastructure.

Why Walmart supply chain is so successful? ›

Walmart's supply chain management strategy has provided the company with several sustainable competitive advantages, including lower product costs, reduced inventory carrying costs, improved in-store variety and selection, and highly competitive pricing for the consumer.

What is digital shopping at Walmart? ›

This feature allows customers to scan items in store using the Walmart app and add them directly to a registry, making it seamless whether shopping online or in-store.

What type of technology does Walmart use? ›

Walmart has continued to leverage technology, such as machine learning, cloud powered checkout and pickup capabilities to offer more convenience and enhance the overall shopping experience for customers. To learn more about Walmart's recent innovations, visit corporate.walmart.com.

What are the top 10 technologies in IT industry? ›

Top 9 New & Trending Technologies in 2022 You Should Know About
  • Artificial Intelligence and Machine Learning.
  • Data Science.
  • Full Stack Development.
  • Robotic Process Automation. Best Machine Learning Courses & AI Courses Online.
  • Edge Computing.
  • Virtual Reality and Augmented Reality.
  • Blockchain.
  • 5G.
27 Jul 2022

Who are the big 4 technology companies? ›

Amazon, Apple, Google and Facebook are the US tech companies that make up the 'big four', and together they're worth $4tn (£3.1tn).

Which company is No 1 in technology? ›

2019 list
RankCompanyEmployees
1Apple132,000
2Samsung Electronics309,630
3Foxconn667,680
4Alphabet98,771
12 more rows

What are the benefits of digital transformation? ›

What are the Key Benefits of Digital Transformation?
  • Increases Customer Satisfaction. ...
  • Drives Data-Based Insights. ...
  • Enables Software Monetization. ...
  • Enables High-Quality User Experience. ...
  • Encourages Collaboration & Improves Communication. ...
  • Increases Agility. ...
  • Limits Human Error. ...
  • Encourages an Environment of Employee Excellence.

Why digital transformation is important now? ›

Digital transformation is the process by which companies embed technologies across their businesses to drive fundamental change. The benefits? Increased efficiency, greater business agility and, ultimately, the unlocking of new value for employees, customers and shareholders.

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