Retailers struggle to make digital profitable, says research

Only 3% of UK retail CEOs are making a profit from digitally transforming their businesses.

The new research found global and UK retailers are struggling with the demands of omnichannel.

The survey of 350 global retail CEOs, conducted by JDA and PwC, reported 69% plan to increase their spend on digital technologies to improve customer experience. With 76% investing in clienteling, 76% improving mobile and beacon initiatives, while 79% will spend investment on mobile devices for store staff.

Big data, mobile apps, Internet of Things and using social media data are also top priorities for retailers over the next 12 months.

Other impacts on profitability include customer returns, according to 85% of UK respondents, while 28% plan to scale back plans for same-day delivery due to lack of ROI. The survey concluded that 57% of retailers will plan to increase charges for online orders, as well as raising minimum orders for free home delivery and click & collect.

"While retailers have increased fulfillment options over the last year to meet consumer demands, as click & collect becomes a staple and ‘buy online, ship to store’ emerges as another fulfillment capability, retailers now need to balance the effectiveness and profitability of the fulfilment channels they offer with customer satisfaction," said Lee Gill, group VP, global retail strategy, JDA. "Because if shoppers experience a problem with home delivery or in-store pickups, that is a lost sale – and customer – that retailers can’t afford in a highly competitive market,"

More worryingly, more than 52% of global retail CEOs and 47% of UK respondents have yet to even begin the digital transformation of their businesses.

"The investment in digital technologies was a major undercurrent within this year’s survey results. This is no surprise, since retail CEOs understand just how important it is to invest in the technology that will improve the customer experience, particularly in store. However, when you consider the amount of time and money global retailers are set to spend on digital technology," added Gill.

"The report findings also reveal the continued balancing act retailers are struggling to maintain with ensuring omnichannel excellence  and profitability – all while meeting the demands of the modern shopper and keeping pace with the digital transformation underway across the supply chain."

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