Digital Natives Versus Digital Migrators: Does It Matter Where You Start?
Not having the experience of interacting with customers face-to-face can also be an issue for digital-born companies—especially for those looking to complement their digital business with physical stores. These companies are then faced with the same challenges that traditional retailers have been dealing with all along, such as how to ensure that the right product is available in-store, how to handle customer service, and, perhaps most importantly, how to provide an in-store experience that is consistent with the ones customers have had digitally.
TRADITIONAL RETAILERS
Because digital-born companies are generally newer than traditional retailers, many of their internal systems are better geared toward success in today’s market. Traditional retailers may be struggling with legacy systems that lack the nimbleness and agility of the ones digital-born enterprises have in place. Furthermore, these legacy systems might not be equipped for personalization and omnichannel distribution, both of which are essential for optimizing customer engagement.
In addition to the burden of cumbersome internal systems, traditional retailers may also be struggling with governance structures that significantly slow or hinder the decision-making process. According to McQuivey, this procedural element is traditional retailers’ “biggest liability,” and he says that many of these companies “have a governance structure that assumes that the CFO is going to oversee the budget, and that operations is going to oversee facilities, and that marketing is going to oversee messaging, and those processes were very effective in the ’70s, ’80s, and ’90s…so it’s really hard to change them.” He also adds that often the people running the company grew up with those rules and have internalized them, which makes it difficult to convince these executives that they need to alter company processes to make them more agile.
As digital-born retailers are looking to bolster their e-commerce business with brick-and-mortar stores, traditional retailers need to ensure that their existing stores are complementing their e-commerce business. According to Klein, though many traditional retailers are experiencing success with their e-commerce platforms, e-commerce accounts for only 10 to 30 percent of their overall business. Thus, because they’ve already invested in the footprint of physical stores, they need to make a significant effort to make changes to those stores to provide customers with a seamless shopping experience.
“The easiest thing to do to try to change both the processes and the culture of these existing companies is to push them to become extremely customer-centric, and in this way, they’re actually mimicking the digital start-ups,” McQuivey says. “The start-ups started up with a very laserlike focus on their end user, their end customer. Most large companies believe that they are focused on the customer, but they’re really not—if you ask them how their decisions are made, what their metrics are, how they determine promotions and determine organizational structure, it’s procedural, it’s internal, it’s focused on what do we do well and how can we do it better. It won’t cause you to change anything about yourself.”
McQuivey suggests that traditional retailers need to become “customer obsessed” and alter their internal processes accordingly: “If you really take that to heart, it means you change your metrics, you change how you recognize and reward performance inside the organization. It would change how you green-light new initiatives—it would be less about whether the CFO likes it, and more about whether you have some evidence that your customers are going to like it. It would change who you partner with, because suddenly you’d realize that the best way to serve a particular customer would be to partner with this other company that you maybe would have never partnered with before.” He adds that focusing on the customer can be a “powerful external locus for change.”
Shelley Bransten, senior vice president of retail and consumer products industry solutions at Salesforce.com, says that it is essential for traditional retailers to equip their store associates with the same mobile tools that their customers are using, so that employees are at least on a par with the customer in terms of accessing information about a brand and its products. She suggests that retailers think of their sales associates as customers themselves and “supercharge” them with information access so they can interact meaningfully with customers.
SUCCESS
Yet despite facing different challenges, the end goals for both digital-born companies and traditional retailers are quite similar, regardless of the steps they take to get there. “In the consumer’s mind, they don’t think of digital-born versus physical retailing; they just think of a brand where they want to buy their things and have it easy for them, so that a brand knows them and helps them save time and money,” Bransten says. She adds that businesses need to take the friction out of the customer experience, saying that “if a retailer knows me on my mobile phone and they make it super-simple across all of these different channels, they give me access to value faster.”