6 Companies Leading Digital Transformation in Retail

Like many industries, retail is undergoing digital transformation. Retail businesses and ecommerce platforms are employing a wide variety of techniques that empower a better customer experience, more effective marketing campaigns, and advanced data analytics.

Adoption of digital transformation is essential as retailers navigate numerous challenges, and some organizations have been very successful. As such, it helps to look at a digital transformation case study to understand how strategies become actionable. Discover six digital transformation success stories for inspiration.

Why Is There a Need for Digital Transformation in Retail?

Most recently, the COVID-19 pandemic proved the benefits of digital transformation in retail. The public health crisis compounded the demand for ecommerce and omnichannel solutions, indicated the complexity of the supply chain, and altered consumer behavior and expectations. It’s no wonder 97% of executives claim the COVID-19 pandemic accelerated digital transformation at their organizations.

Why is digital transformation so important in retail? For one, it contributes to a better customer experience. Customer expectations have shifted dramatically in retail. In this digital age, consumers are becoming more informed about their options. They increasingly prefer online to in-store shopping and prioritize authenticity in their products.

By leveraging digital technologies, retail businesses can personalize customer experiences to increase satisfaction. Digital tools also support better operational efficiency, and, alongside an improved customer experience, they enable retailers to maintain a competitive advantage.

What Are the Key Technologies Used in Digital Transformation in Retail?

Investment in digital transformation is expected to continue increasing as retailers and e-commerce sites seek to modernize business operations. According to a report from MarketsandMarkets, the global digital transformation market size was about $695.5 billion in 2023, with projections indicating a $3,144.9 billion value by 2030.

Two of the most significant digital technologies driving this market are artificial intelligence (AI) and machine learning. AI and machine learning help streamline business processes and enhance human ability in many areas, and some research suggests that up to 95% of customer interactions will be AI-driven by 2025.

In addition to AI and machine learning, other digital transformation trends in retail include:

• Augmented reality (AR)/ virtual reality (VR)
• Blockchain technology
• Cloud computing
• Internet of Things (IoT)
• Mobile applications

Companies at the Forefront of Digital Transformation in Retail

Developing a digital transformation strategy can be difficult for startups and small businesses, even some larger companies. Although every retail business is different and will have unique considerations for its initiatives, it helps to examine real-world digital transformation case studies. For a successful digital transformation, examples of companies to learn from include:

1. Walmart

The world’s largest company by revenue, Walmart is a powerhouse in the retail industry. However, in this digital era, even a company like Walmart needs to consider transformation. Walmart began before ecommerce was an option, so when companies like Amazon entered the scene, it needed to rethink its business strategy to compete.

Between 2017 and 2018, Walmart invested $11.7 billion in technology. This started in 2016 with the acquisition of the ecommerce platform Jet.com. Walmart increased its tech talent by nearly 4,000 between 2018 and 2019. These efforts didn’t go unrewarded; Walmart’s online sales grew by 97% during the COVID-19 pandemic, a time when other brands struggled.

Walmart also shows how digital transformation is important for differentiation. Grocery pickup and delivery services, as well as supply chain optimization, are behind the growth in online sales. A unique digital solution the company employs is shelf scanning robots, which enhance inventory management and forecasting.

2. IKEA

The iconic Swedish furniture company IKEA has been around for decades, and part of its success in recent years has to do with digital transformation. IKEA’s focus is improving the shopping experience, which it accomplishes through a customer-centric business model.

2017 was a big year for IKEA’s digital transformation efforts. It created an app called IKEA Place, which uses augmented reality to help customers envision how furniture may look in their spaces to make more informed purchases. That same year, the company also acquired the website TaskRabbit. Under the IKEA brand, this website became a place for customers to find help with delivery/shipping and furniture assembly.

Another key innovation is an AI-powered chatbot that offers 24/7 customer service for answering questions and managing complaints. Ultimately, the strategies IKEA has implemented all support a better user experience, boosting customer satisfaction.

3. LEGO

Toy brands are often susceptible to becoming fads, but not LEGO. Part of LEGO’s staying power has to do with digital transformation. The first of these efforts began in the late 1990s when the brand expanded into the video game market. Today, LEGO has continued making video games, which often affect the sales of their block sets.

LEGO also proves the importance of customer engagement. The company launched a website where customers can share their ideas for block sets. Those ideas that garner the most support give LEGO engineers inspiration for new products. What’s more, this website helps LEGO obtain customer loyalty, which is becoming more difficult as consumers become more informed buyers.

LEGO also explores innovative solutions adjacent to its offerings. For example, the company filed a patent application to begin offering 3D printing. This increases customer access to an innovative solution, further driving customer engagement and loyalty.

4. Nike

A personalized shopping experience is one of today’s consumers most significant expectations — 70% of consumers according to some research. One household brand that understood and responded to this demand is Nike. It started when Nike realized it was getting behind in the ecommerce space. The company changed its business model to reflect a digital-first, direct-to-consumer mindset.

Mobile apps are the key to Nike’s success with digital transformation. In 2010, the brand launched the Nike+ app for online shopping. This app not only boosted customer experience but provided Nike with a convenient way to collect customer data.

Another app, called SNKRS, focuses solely on Nike’s footwear products. This app is the perfect example of bridging customer experience with data analytics. One of the functions of the SNKRS app is an AR-powered tool called “Nike Fit”, which takes a scan of a customer’s leg to determine the ideal shoe size. This enables customers to make more informed purchases and gives Nike the data it needs to innovate footwear according to customer needs and preferences.

While it may seem mobile applications are a simple technology, don’t underestimate their impact. The Nike+ app and SNKRS app both helped Nike increase its online sales by 60% in 2020.

5. Starbucks

When many people think about coffee, they think about Starbucks. This stands to reason — the restaurant chain has thousands of locations across dozens of countries. So, how does digital transformation affect a company as large as Starbucks?

Starbucks’ digital transformation goes back to 2008 when the U.S. faced economic uncertainty. A growing number of restaurant chains made competition stiffer, and Starbucks saw a way to evolve and differentiate by looking toward the smartphone. By 2015, Starbucks developed a digital innovation that shook up the entire coffee market — mobile order and pay (MOP).

The MOP feature allowed customers to place orders in advance from their mobile devices and pick them up at the Starbucks location, avoiding waiting in long lines. Starbucks improved MOP further during the COVID-19 pandemic by designating several locations for pickup only. This helped meet the demand for contactless transactions.

Starbucks also realizes how digital transformation can help make sense of big data. By investing in AI and data analytics tools, the company has gleaned more insights into customer behaviors and demands, which has enhanced data-driven decision-making and ecommerce sales.

6. Audi

The automotive industry has a reputation for being analog, but Audi changed this narrative with a unique innovation. In 2012, the car brand switched up its approach to showrooms with Audi City.

Traditionally, when car brands host showrooms, the customers come to them. Audi City brings the showroom to the customers, in city centers where they live and work. It’s a digital and portable showroom that doesn’t require as many physical cars, making it easier to host showrooms where space is limited.

Interactive screens allow visitors to customize car models with different features and colors and then project a full-size rendering of the vehicle onto the showroom wall. They can inspect this image from every angle and even look inside the car to understand how the engine works. What’s more, customers gain real-time insights into prices and availability for an even greater experience.

Those in the automotive industry should take note of Audi’s successful digital transformation efforts. The company attributes a 60% increase in sales to Audi City, not to mention the savings from not needing to accommodate so many cars in showrooms.

Engage in Digital Transformation With MarcomCentral

From the perspective of many retail businesses, digital transformation isn’t just a consideration but a necessity. 88% of senior retail leaders think digital transformation is critical, and 77% of retail businesses believe digital transformation is key for survival.

Wherever you are along your digital transformation journey, take inspiration from these case studies. In addition to following these examples of digital transformation, a great first step is to improve marketing efforts, which have a direct impact on sales. At MarcomCentral, we offer an on-demand marketing platform that centralizes brand asset management, simplifies customization, and ensures brands stay compliant with industry standards.

Contact us today to learn more about MarcomCentral or to request a demo.