Survey: Top priority of CEOs is...

Digital transformation is CEOs’ number one priority this year.



To make this a reality, chief executives are investing their capital in the Internet of Things (IoT), big data, robotics, and augmented reality, according to “CEO Viewpoint 2017: The Transformation of Retail,” a report from JDA Software Group and PwC.



The study, which tapped more than 350 global retailers, revealed that 69% of executives plan to increase their investment in digital transformation over the next year to better understand and connect with their consumers.



Despite these plans, more than half of respondents (52%) have not yet defined or started implementing a digital transformation strategy. Globally, Chinese retailers are more likely to be implementing their defined digital transformation strategy (58%) than the U.S. (40%), with 19% of U.S. retailers struggling to or choosing not to define this strategy at all.



In the short-term, mobile-enabled applications (85%), big data (86%) and use of social media data (85%) are the top technology priorities currently or within the next 12 months. While automation and IoT are lower on the list, they are gaining momentum as they are perceived as true game changers. Social media and big data are also highly valuable in delivering deep insights of customer information, allowing retailers to create credible shopper segments, while gaining insight into shopper preferences.



As omnichannel retailing continues to mature, retailers’ attention has shifted to execution and profitability. Execution continues to lag in areas of order fulfillment. Profitability is also still a challenge, with only 10% of companies able to make a profit while fulfilling omnichannel demand.



Similarly, only 12% of CEOs surveyed, down from 19% in 2014, provide a seamless shopping experience across channels. These retailers are finding their omnichannel offerings to be too complex or expensive and are choosing to scale back, the study reported.



For example, 74% of respondents believe that the cost of customer returns is impacting profits to some extent. Retailers in the U.S. are less likely to experience profit erosion from customer returns than other markets.



CEOs are increasing their investment in buy online, pick up in-store (BOPIS), with 51% of survey respondents saying they offer or plan to offer BOPIS in the next 12 months – up from 47% in 2016. BOPIS

has picked up steam in the past year with 48% of retail CEOs investing in this service or planning to in the next 12 months.



Conversely, fulfillment options that are becoming costlier and less profitable are areas where CEOs are decreasing investments in 2017. These include same day delivery (33%, down from 43% in 2016), and providing specific delivery time slots (27% vs. 48% in 2016).



The rising costs of order fulfillment are also pushing executives to increase charges for online orders (57% plan to or will make this change in the next 12 months), increase minimum order thresholds for free standard home delivery (62% plan to or will make this change in the next 12 months) and raise the minimum order value for BOPIS (55% plan to or will make this change in the next 12 months).



“While retailers have increased fulfillment options over the last year to meet consumer demands, as BOPIS becomes a staple and buy online, ship to store emerges as another core fulfillment capability, retailers now need to balance the effectiveness and profitability of the fulfillment 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.”