Retail technology is more powerful than ever before: so why are companies struggling to take advantage?

Pioneering technology and, in particular, AI is here to stay and its transforming how retail moves forward. Whether it is Lowe’s announcing their in-store robots, Home Depot introducing augmented reality, or Target adding visual search to their registries, – change is coming. In business operations, you have robots running around warehouses at Amazon, and Nordstrom’s marketers working with an embarrassment of riches at their finger-tips. While flashy on the surface, modern technologies cannot succeed unless there is real human and process change. To truly unlock the value of an implementation, companies must adapt in a new way – create a new mindset.

Previously, the value of a technology implementation was calculated in the numbers of hours it saved because it was purchased to reduce manual effort and the occasional “fat finger.” The first technological wave replaced physical processes and brought about large efficiency gains without changing the way employees thought (scanners at checkout, credit card terminals, scan guns in the warehouse, etc.) For these implementations, the outputs were easy to digest and the improvements were immediate.

The second wave cut out “digital processes, done manually”. Examples include accounting system integration with warehouse systems, B2B integrations through electronic data interchanges (EDI), inventory feeds to websites, etc. These implementations added visibility and accuracy across the industry. The value was clear as uploading spreadsheets and matching POs to invoices was replaced by scripts and exception dashboards.

It did not take a lot of convincing to invest and reap the benefits in the first two waves and retailers and CPGs rallied around these efficiency gains. Business continued as usual, although at a new and breakneck speed.

With expectations from consumers rising, many companies purchase the latest technology to prove they are meeting demands and expect the same gains as before. This approach misses the mark. As Albert Vita, Director of Strategy at Home Depot explains:

 “Random acts of digital tend not to work…Take a step back and make sure you’re asking the right questions to begin with.”

The new wave of technology absorbs data, analyzes, learns and spits out insights. This approach stands in contrast to prior technology that was sold on efficiency gains.  Despite an unclear ROI, these insights can be used to powerful effect if the business is ready to listen to the data. Chloe, Best Buy’s automated in-store picker, provides insights (among other things) as to what was browsed in-store, creating new merchandising segmentation opportunities. Jo-Ann Fabrics boosted online sales by deploying a CRM system to analyze data across its customer base and better serving their high-value customers wanted.

Most organizations, however, struggle to make the leap into modern technology. This is not because the buttons are hard to use but because the mindset required is not there, leading to wasted dollars. As Jason Heller, Partner and Global Lead for digital marketing operations and technology at McKinsey & Co., says:

“Most companies are technology rich but insight and execution poor […] They have the technology, they just aren’t using it properly.”

So, how should a company develop a mindset programmed to act on insights? There are four key concepts to nail:

  1. Educate

Companies must communicate to employees the strategic goals of a new piece of technology, framed within the customer’s experience. By giving the broader and real-world use case, more patterns will emerge along with innovative ideas.

  1. Highlight correct usage

By showcasing the use of this technology and rewarding it (recognition, pilot program, etc.), a company can send clear signals of new expectations associated with the investment. It is also a chance to underscore management’s commitment to evolving.

  1. Information sharing

To maximize the value of modern technology, information and coaching should be shared across company silos as insights can mean different things to different teams. Input from a diversity of experiences can often create the innovative solutions.

  1. Lean on the software vendor

Software vendors are incentivized to have sticky customers and are more than happy to educate (often through “customer success” teams). By sharing internal culture and corporate goals with the vendor, they can be great allies and do some of the heavy lifting.

Companies can no longer ignore the human element required for these new implementations. The game has changed and so must everyone playing it. Admittedly, adding this dimension to a buying decision increases the risk of a purchase, however not embracing this technology is even more risky.

With the widespread change facing them, retailers and CPGs must sharpen their change management skills and communication methods to reshape employee mindsets every time they buy technology.  Otherwise, if they continue as they have in the past, they will be left with shiny and new – but ineffective and lackluster – technology.