“We are in a new world, technology, data, [and] AI is growing exponentially and creating a world like never before. So what we're seeing is all this processing power combined with exponentially growing data, exponentially growing AI to create what I think of as a flywheel of innovation. And that's what powers all these new features that we're pushing into the world. “We take a month-by-month, week-by-week, almost day-by-day look at the retail industry,” said Gary Hawkins, CEO of the Center for Advancing Retail & Technology and author of Bionic Retail: How to Thrive in an Exponential World. says.
Traditional retailers face 'increased risk of system failure' due to legacy technology
Leading retailers are deploying digital transformation strategies to reduce business costs and improve customer experience by offering a variety of digital shopping options. However, many retailers struggle to execute their digital transformation strategies due to expensive and outdated IT infrastructure (also known as digital debt), which has led to widespread adoption of new technologies such as AI and automation. Hawkins explained.
“Traditional retailers…have quite a bit of existing system technology debt. Systems that haven't been updated to the latest releases or that are sitting on the bench just to get to market or get up and running quickly. Some appear to have been manipulated, thus increasing the risk of system failure and compromise. [and] There are other things that go along with it,” he said.
As data needs have evolved, many retailers have developed “numerous point-to-point integrations” that connect different data silos, allowing employees to access data from outside the initial department, Hawkins said. he explained. Over time, he added, these integrations have complicated IT systems and made it difficult for retailers to make widespread changes.
“Marketers suddenly realized… [they] You need data that the distribution has or data that the operation has. So they're asking his IT department to build point-to-point integrations between these disparate siled systems, but what develops over time is, frankly, huge. It's a furball. The key point here is that as retail organizations grow, complexity increases. And we see that as that complexity increases, efficiency decreases. ”
This technology debt is not only a risk to a retailer's business, Hawkins said, but also “prevents them from introducing new features” that improve the shopping experience.
With various data streams siled, outdated IT infrastructure can prevent retailers from offering click-and-collect or other grocery pick-up options or maintaining proper inventory management. He added that if his Wi-Fi in the store is substandard or there is no Wi-Fi at all, it could prevent him from implementing “augmented workforce technology” such as autonomous inventory robots.
Hawkins said retailers using this data silo approach are also reducing the potential for AI to revolutionize the retail industry.
“What we're seeing is AI being added to these siled applications, so that retailers are seeing some benefit from adding artificial intelligence to those capabilities. But the real transformation will come as traditional retailers move to a unified data foundation that brings all their data together and makes it available across the enterprise, enabling them to deploy new AI capabilities much more quickly. It’s easy to implement and start seeing the benefits,” Hawkins added.
Walmart adopts 'platform thinking' to grow business
To achieve their digital transformation goals, retailers need to reimagine their businesses from a place to buy products to a platform that solves consumer needs, said CEO of Consumer Equity Partners and Amazon said Tom Furphy, former vice president of consumables and AmazonFresh.
“It really takes a rewiring and a change in mindset for retailers to buy into this concept of platform thinking. [Retailers] They need to think of themselves as a platform. This is very different from what we traditionally thought of ourselves. This is not an easy transition, but I believe it is essential,” Furphy said.
“I often see retailers that have really good intentions and a lot of great work going on over the years with endless product roadmaps, intertwined systems, and dependent processes. [and] “There's a huge amount of technical debt and it just really prevents retailers in general from innovating as fast as they can, or should,” he added.
Walmart is one retailer that was able to move to that platform approach, but it required significant investment and executive commitment, Furphy explained. As part of its overall digital transformation strategy, Walmart acquired e-commerce company Jet.com in 2016, and three years later hired Amazon and Google veteran Suresh Kumar to the role of global CTO. did.
Now, in addition to offering a variety of digital ordering and delivery options, Walmart is introducing generative AI tools to product search to help consumers find products more easily.
