What is Industrial Transformation and How is it Changing Retail?

With the gaining popularity of eCommerce and the recent COVID-19 pandemic has brought in whole new dynamics to how the retail industry has shaped up.


As we know, the retail business is all about how consumers and businesses purchase goods and services. Businesses in healthcare, manufacturing, transportation and healthcare all engage in retail sales. Although their area of specialization differs, they all have one thing in common. That is selling their product to their customers. And to do that effectively, they need to improve their processes, products, and of course, customer experience. Needless to say, digital retail transformation is inevitable to do business effectively.

What is an Industrial Transformation in Retail?

Every industry is going through digital transformation to improve its services and facilities. The retail industry is not lagging behind too. It has been embracing the digital transformation to level up its game. With the emergence of new technology and tools, there are going to be new dimensions to the workflow and processes.

While thinking about industrial transformation and digitalization in retail, a business has to re-think every aspect of its business from how they do the sourcing to their inventory management to employee management to managing their customer expectations. New technologies like big data analytics, mobile apps, and location-based services add new dimensions to the retail landscape.

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New technologies like big data analytics, mobile apps, and location-based services add new dimensions to the retail landscape.

The challenges

However, it is not as rosy as it seems. Like any changes and transformations, this industrial transformation also needs to go through its share of challenges. While the challenges are manifolds, some of the top challenges are:

Commitment: Know that digitalization doesn’t mean just having a new website or an app. While many retail companies are enthusiastic about the ideation, they often lack the leadership team’s strong commitment to implement it. One needs to allocate a budget, give assurance to follow the initiative until the implementation stage, and not just leave it in the ideation stage.

Change management: Opposing to changes is natural, especially when it challenges the status quo. Many departments within a retail business interact with their touchpoints differently, thus following different standards or metrics. It is also challenging to take ownership as retailers have their doubts and thus unwilling to implement or accept the new way of working.

Technology infrastructure: An organization needs to have a strong technological foundation to have successful digital transformation. Not just that, an organization also needs to identify the right technology to maximize its Return On Investment (ROI), which is often challenging.

Retailers might not be ready: Finally, not all retailers are technically strong or have the capability to handle the entire digital transformation themselves. Although outsourcing the digital transformation process is an easy solution, retailers need to choose their technology partner carefully to create a seamless transformation journey for their customers and operational transformation.

While there are challenges, retail companies should work towards negating the challenges to implement digitalization successfully. Self-assessment is a great way to analyse the business’s weaknesses and strengths and where one needs to focus. While having a strong change management strategy in place will certainly be helpful, businesses also need to pick the right partners to collaborate with.

What has Prompted the Transformation

For the last few years, the industrial transformation, or should be it be more apt to call it a digital revolution, has given rise to digital commerce, or eCommerce. While the whole retail industry has been seeing a shift with the gaining popularity of eCommerce, the recent COVID-19 pandemic has brought in whole new dynamics to how the retail industry has shaped up. While retail industries were slowly embracing the online platforms, the pandemic has pushed more retail businesses to adapt to the digital transformation.

The Rise in Smartphone Usage

Close to 3.8 billion people, i.e., half the global population, will be using smartphones by the end of 2021. According to Smashing Ides businesses that switch to Progressive Web App technology see engagement to increase from 20% to 250%.

Enterprise Resource Planning (ERP) Integration to Build Trust

Data reveals that 81% of users feel unsafe to purchase from sites they do not know. This could mean loss of sales and losing customers in the long run. ERP integration can be a good way to provide useful information to your customers like products, pricing, shipments status, etc.

Automation is the Way Forward

Automation has penetrated every industry, and it is no wonder that it has forayed into the retail industry too. With new technologies like chatbots, automated checkouts, and drones, the retail industry is going through a revolution.


Increase Number of Internet Users

With the economic affluence and evolution of 3G, 4G, and public Wi-Fi systems, billions and trillions of internet users are now globally connected to the world wide web. Mobility solution is the centre of the next big revolution in the retail business.

Digital Infrastructure

Emerging technologies coupled with powerful analytics tools, predictive learning algorithms, visualizations, and access to bid data play a crucial role in the transformation of the retail industry.

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It is important to note that drones can remove delivery cost by 86% while warehouse robots can reduce manual labour cost by 70%.

Technologies in the Industrial Transformation of the Retail Industry

Data Analytics

As the industry sees steep competition, data analytics is implemented in every step of retail business to predict future performance, optimize price, demand predictions, forecast future trends, pick out the highest return on investment options, customer identification, etc.

Artificial Intelligence

Artificial intelligence is used across the different steps of a retail business. A survey done by IBM reveals that across 23 countries, 85% of retail companies are planning to implement artificial intelligence by 2021. AI can revolutionize customer experience by helping companies promote products based on customer preference and past purchase history.

Not just that, AI bots can analyse the data and predict future sales. For example, a bot can make recommendations based on customer preferences. Suppose a customer wants to buy a cell phone. The bot will ask questions like if the buyer wants a camera specification and so on and make personalized recommendations.

Virtual Trial Rooms

Retailers who deal with clothing and attire can use virtual trial rooms and digital mirrors to give them a physical store kind of feeling. A customer can mix and match different attire with a touch-based and gesture interface to make a purchase decision.

Internet of Things (IoT)

IoT is playing a big role in the transformation of the retail business. For example, during the pandemic, we have seen how robots can deliver products without a workforce. For example, OSHbot, the latest robot employee of Lowes, helps customers to pick products. It also provides product information in two languages. Automated checkouts and smart shelves are some other applications of IoT that retail businesses can leverage.

COVID-19 and Its Impact

Since the pandemic hit us in 2020, we have seen many changes in consumer goods preferences. While everything moved online, there has been a shift in the spending pattern among consumers. At the same time, there has been the emergence of new purchase channels. While retailers are looking for ways to match these changes, they also explore different options to increase their operational efficiencies. For example, they introduce or connect their existing business to CRM, PIM solutions, ERP, WHM, and eCommerce platforms. While these are some of the immediate changes that we can notice, other changes are more gradual. For example, investment in data analytics augmented reality, and robotics are now looked upon by retailers with more importance. While it will take time to see the changes, it is definitely a positive step for the retail industry to predict future demands and find ways to work more efficiently and remotely in the coming days.


Consumer behaviour is changing rapidly, which is driving the demand for easy shopping experiences. Retailers now need to pay attention to quickly loading websites, personalized choices, responsive User Interface, keeping all relevant product information up-to-date, safety assurances, and many more. Retailers now constantly need to keep in mind to make their consumers feel safe in an online purchase as any unpleasant customer experience can mean sales loss and revenue loss. This means that retailers are now constantly focused on accelerating innovation and driving digital transformation initiatives through the retail industry.

As the competition rises, retailers need to adopt a multi-channel presence. Remember, consumers are still reluctant to enter public places, which means retailers need to offer alternative delivery options. Simultaneously, the onus lies with the retailers to make the consumers feel comfortable and offer a unique shopping experience.

Key Drivers of Industrial Transformation in the Retail Industry

The expectations of the consumers are going continuously. The omnipresent consumer does not care much about the channels, which push retailers to be omnipresent and leverage all the available channels.

The COVID-19 has affected the retail industry badly, but one that is emerging out prominently is transformation is inevitable, especially IoT enabled retail solutions and several data-driven solutions that will make the shoppers feel safe, protect the employees, and help companies save and manage costs.

Digitalization is definitely a proven way to reduce cost, and thus the only way forward for the retail industry.

From smart displays to the digital ambiance, this digital transformation is the solution to feed the demanding consumers’ growing appetite.

Speed, time, and transparency are the key to level the supply chain game, which is only possible through digitalization.

Some of the Key Trends

Systems Integration

One of the critical trends for digitalization that we see in the retail industry is systems integration. As we know, data is critical for predicting future demands, identify new opportunities, and quickly react to them. Connecting software means easy data transfer, so the business can track all the incoming data from all directions. Data integration will help retailers to understand the different aspects of data better, from inventory management to employee productivity, to operational efficiencies. There are several benefits of having a connected system. It helps retailers understand how customers are reacting, the bestselling products, and making customized recommendations to the consumers. Additionally, retailers also need to ensure that the data flow is seamless between the systems. For this, retailers need to adapt to 3PL(third party logistics provider), supplier database, ERP, PMS (property management system), etc., to ensure there is correct display of prices, generate better inventory projections, make a personalized recommendation based on purchase history, etc.

Automation

Automated workflow is penetrating the retail industry in a fast-paced manner. From making recommendations to the consumers to auto checkout facility, automation is a key player in this transformation journey.

Artificial Reality and Virtual Reality

As consumers shift their interest towards online shopping, retailers are keen to offer a physical experience while shopping offline. Retailers thus have the perfect opportunity to adopt AR/VR to offer a more immersive online experience. As Deloitte mentions, while consumer-focused products can be benefited from using virtual and augmented reality, there is already some success in the makeup, automotive, and furniture industry.

Are You Ready to Start the Digital Transformation in Your Retail Store?

The shopping journey of retail consumers is evolving. As a retailer, you need to keep in mind the consumer’s growing demands while keeping a check on cost, fostering relationships, and streamline the internal processes. If you are planning to implement digital transformation for your retail business, it is high time you do so. Remember, digital transformation does not mean just a web app or an Ecommerce site. It also means improved inventory, supply chain management, alternative shipping options, and more. Remember, when your digital transformation becomes an inseparable part of your business, you are going to make a mark in the industry.

Chayanika Sen
Chayanika Sen
Over a decade of experience in Corporate Communication Chayanika writes on Human Resources, Recruitment, Marketing, Employer Branding and Thought Leadership.

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