NIX Solutions on Digital Transformation of Retail Business in a New Reality

Denis Yakovenko, Regional Director of AppDynamics in the CIS, talks about the digital transformation of retail, changing consumer habits and how the quality of digital services affects business. NIX Solutions translated this Retail-Loyalty’s article so that you could read it too.

We are witnessing a radical transformation of the retail industry: the usual shops “around the corner” and the sellers behind the checkout are being replaced by online points of sale and virtual consultants. Today consumers choose brands based on the quality of the digital service and the convenience of the mobile app. Therefore, it is more than ever important for retailers to comply with market standards and digital realities of the time.

Retail moves online

Digital technology is having the greatest impact on the retail industry. Over the past year, Internet retail has grown by 18%, which is more than 2 trillion rubles ($ 26 billion). Such changes in the industry are caused at once by a whole complex of factors. For example, the growth of online sales is influenced by restrictions on duty-free import of goods, price competition, the general economic situation and the financial well-being of buyers. Also, the most important impetus for the transition to online retail can be considered the introduction of a self-isolation regime and a massive transition to a remote mode of work.

Companies need to understand that the users requirements for digital services will grow along with the online sales. According to AppDynamics’ study, 70% of consumers admitted that they are not ready to put up with problems in the operation of online applications, as they did 2 years ago. Today, customers rely on the speed and convenience of online shopping, as well as on the provision of customized offers from brands. According to the study, 70% of consumers would like their digital experience to be more personalized.

Intuitive, user-friendly services that are responsive to user needs are now paramount to retail success. The experience of online retail shows that even after the opening of stores and the lifting of restrictions on movement, customers are in no hurry to give up online purchases. Accordingly, the level of use of digital services remains significantly higher than that before the introduction of the self-isolation regime. According to the results of the global study on the impact of the COVID-19 pandemic on the IT industry, The Agents of Transformation Report, the vast majority of organizations in Russia (92%) have already reconsidered their digital priorities. Retail is changing faster than many other spheres and is going through an active transformation towards omnichannel, that is, it is moving towards a business model with full synchronization of its offline and online channels of interaction with consumers.

Application crash = client loss

Retailers need to continually improve their digital products to stay competitive and meet rising consumer expectations. Even if you offer an innovative product and invest a lot of money in marketing activities, service disruptions and slow online services can lead to customer churn. In addition, according to the AppDynamics study, 84% of surveyed consumers are not inclined to notify the support service about problems that have arisen, and 64% of respondents that have experienced a negative experience using the company’s service will never recommend its products to their friends.

Over the past two years, the number of consumers for whom a mobile app matters more than a brand has doubled, from 23% in 2017 to 46% in 2019. Negative online experiences affect the perception of the company and its products generally. Dissatisfied customers are more visible and more difficult to control in the digital space, as people simply close sites or applications, then leave negative reviews. Then they initiate brand discussions on their social networks, sometimes without even trying to solve the problem with specialists. As a result, a lack of focus on digital customer experience can seriously damage a company’s reputation.

Prevention of failures as a factor of success

Problems with digital services can be detected early, before consumers encounter them. To do this, the company needs to monitor and control the performance of its business-critical applications by implementing reliable IT solutions to manage infrastructure and assess all elements of user interaction with services. Using machine learning technologies, APM (Application Performance Management) automatically warn of problems, determine the cause of failures down to a single line of code and provide deep analytics of user experience.

For example, KIABI, a major apparel retailer, uses a wide range of online services as part of its multi-channel strategy. When implementing the APM solution, the company aimed to quickly detect and eliminate errors, as well as ensure high page loading speed in the application. The company was able to reduce troubleshooting time by 50% by integrating an application monitoring system and real-time analysis of the entire production chain. Professionals now spend less resources and time on preventing disruptions and can concentrate on more strategically important tasks.

The integration of technology into the business model is becoming a success factor for the retail market players. Already in 2018, the global research “The Agents of Transformation Report” revealed the demand for highly qualified IT professionals who can provide digital business transformation, create a deployed infrastructure and perfect interaction with customers in the digital space.

Retailers are playing in an extremely competitive market, and in order to gain leadership, you need to continuously meet expectations and maintain customer loyalty. In the context of increased requirements for online services and a situation where the primary user experience directly affects business results, it is especially important for representatives of the domestic retail business to use all available opportunities for real-time data analysis and optimize the performance of their websites and mobile applications, evaluating them with the point of view of end users.