Digital Transformation Success Stories from Retail Industry: Target and Walmart
Before we start, we should define what exactly is a digital transformation; digital transformation is the integration of digital technology to remake a process more efficient or effective by fundamentally changing how you conduct business and deliver value to customers.
The rise of the internet has forced companies to undergo drastic changes and have an online presence. Even though this transformation promises improved customer satisfaction, higher profits and more innovation through increased collaboration, it is not easy to make. So, it helps to visualize the process with some success stories.
What Target did can be summarized with their CEO Brian Cornell’s words: “Creating a more inspiring and connected shopping experience, re-imagining our supply chain and fulfillment capabilities, by positioning our stores at the heart of our network.”
First they started developing their own customer software. This decision helped the company allign inventory availability with customer demands. After that they started using Beacon Technologies to track customer’s indoor location, send out personalized recommendations and timely alerts about nearby deals to keep their users engaged while in the store. The technology also allowed the shoppers to easily track down their shopping list items using in-store navigation.
Data and analytics have always been one of Target’s core values and their 25% sales growth in the digital channel in each of the past four years shows that it pays off. Even though digital still corresponds to a small portion of their total sales, 4.3% in Q2 2017 and 8.2% in Q4 2017, its success can be observed from the numbers.
Walmart’s digital investments are proven to be more fruitful than Target’s with their 50% increased sales year on year and their 60% stock price increase. Walmart achieved this success by heavily investing in digital technologies, their tech division launched several innovative products like Walmart mobile apps, a Facebook app that provides tailored gift suggestions called Shopycat and a subscription based gourmet food delivery called Goodies.
They also partnered with Microsoft to further amplify their digital innovation abilities and are currently focused on the development of cloud services. This 5 year deal looks like the beginning of a successful transformation story.