Digitization guide: How retail companies become digital

Digital change is one of the key challenges in the retail industry. It is also a must in order to sustainably increase efficiency in the company, reduce costs, increase sales and remain competitive.

There is no ONE way, because companies differ in size, degree of digitization, company structure or also with regard to external factors such as customer requirements and special features of the industry. In addition, the digital transformation itself is difficult to grasp. Small and medium-sized retailers in particular quickly reach their limits in digitization processes and struggle with uncertainties. where to start And how to proceed?

With our guidelines, we want to offer you a guide with which you can initiate change processes and start your digitization project.

1. Analyze processes, identify potential

A comprehensive analysis at the beginning of the project reveals your own level of digital maturity. It is essential to consider the degree of digitalization in your own industry and the status quo of individual competitors. It can also be worth taking a look beyond the immediate market environment in order to identify digital trends and uncover potential for your own business.

It is also important to take a close look at the most relevant processes in your core business. This applies to the backend processes, for example in warehouse and goods management, as well as those processes that are geared towards the customer and can be experienced directly by him. For example, many processes at the point of sale can often be improved: the collection of customer data, advice on the sales floor, the checkout process are just a few examples. Every retailer should also check whether important sales channels are missing and touchpoints should be supplemented in order to better reach customers, be it online channels or stationary branches, showrooms or pop-up stores.

It can also be worthwhile to analyze processes that have already been digitized. Is it going bumpy here? Can synergies be released with other areas? Analogue processes that actually work can often be digitized and optimized. Think about it: Where are unnecessary costs incurred? Where do media discontinuities arise? Which processes take up too much time? Where are the hurdles between employees and departments?

Review of the IT infrastructure

Of course, software solutions are central to digitization projects.

• Which systems do you already use? What features are missing? Do the systems communicate with each other or are they isolated solutions? What data is available and in what form?
• What digital interfaces are there with suppliers, service providers and customers?

Typical business areas with optimization potential

• Customer relationship: How do you reach your customers? Is there a CRM? Do you even know your customers? Which channels do you use for customer communication? What do customers expect from you? How is customer service organized?
• Warehouse & logistics: Are inventories recorded and updated automatically or do you still have to enter data manually? Are rearrangements easy to carry out? Do you keep having too much/too little inventory? Where are the goods shipped from? Is that efficient and sustainable?
• Returns management: Why is your return rate so high? Is the product presentation defective? How is the product quality to be rated? Can you track if there are any packaging issues?
• Suppliers: Do you get all relevant information and product data? In which form? Is a quick data import possible?
• Accounting: Is invoice verification digitized? Where and how does the relevant data converge?
• Customer touchpoints: Where do you reach your customers? Do you use all relevant touchpoints? How are these linked? How do branch processes work, e.g. B. the checkout, from? What customer data do you collect?
• Internal processes: Can employees exchange information quickly and do they have access to all important information and tools?

Important: This list is intended as a guide. It is not absolutely necessary to convert all processes and completely rebuild the business model. Digitization is never an end in itself, but should always offer added value for your company. To achieve this, you should set digitization goals.

2. Clearly formulate project goal(s).

Digitization serves to streamline processes, save time and costs, or increase sales. Think customer-centric and consider which steps actually make sense for your business.

For your digitization project, it is important to set priorities and formulate concrete goals. Because: Unclear project goals or vaguely defined project scopes often lead to resources being wasted and projects dragging on or even failing.

3. Determine personnel and technical requirements

Get your employees on board at an early stage – from all hierarchical levels. On the one hand, to sensitize them to the digitization projects. On the other hand, they can provide valuable insights and impulses during the process analysis, since they can carry out tasks on a daily basis and identify strengths and weaknesses quite quickly. For example, workshops are available for this.

For project implementation, you should set up a digital team that will review the goals, adjust them if necessary, and drive the project forward. It can be advisable to bring external IT service providers and consultants on board in addition to your own employees, who not only have know-how but also direct solution proposals. Make sure that responsibilities are always clearly defined.

To determine the personnel and technical requirements for your digitization project, answer the following questions:

• How well trained are your employees and how can you use their expertise?
• What competence gaps are there in the team and how can these be closed - through additional specialists, further training or external service providers?
• Which systems do you want to use in the future? Which ones do you absolutely need in order for important processes to run? Which components should be added later? And which ones are "nice to have"?
• Which IT partners can you support?
• How do you ensure IT security and data protection?

There are IT systems that allow them to scale their business and gradually integrate the systems they need. In the future, rely on solutions that grow with your company and are flexible enough to adapt to rapidly developing business processes and changing customer requirements. In order for the project to run as smoothly as possible, you must also consider downtimes of the systems or individual processes in advance.

4. Costs and financing options

In addition to the human resources, the budget must be determined, possibly together with your IT service provider. Factor in costs for one-time purchases as well as monthly fees and ongoing maintenance costs and the like.

You should also include any training budget or additional personnel costs and consulting fees here. The costs are offset by the potential savings that digitized processes bring with them.

Also consider possible funding programs. For example, the "Digital Now" program launched by the Federal Ministry of Economics and Climate Protection (BMWK) supports small and medium-sized enterprises (SMEs) if they invest in digital technologies or the qualifications of their employees.

5. Plan implementation

Before the practical implementation, you should create a concept that contains the fields of action, necessary resources and a timetable.

You should communicate this plan to all employees, for example as part of a meeting or workshop. This paves the way for the actual implementation, but at the same time it can take away the worries and reservations that experience has shown are associated with change processes.

External partners, customers or other stakeholders may also be affected by these processes. You should therefore inform them in good time about possible failures or innovations.