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Author's profile photo Valeria Vinclair

Digitalization in Retail: Challenges & Solutions for the Retail of the Future

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Note. Image made on Canva. Background image by Itegrity AG. (https://www.itegrity.ch/digitalisierung-im-dritten-sektor-3-herausforderungen-und-wie-unternehmen-sie-loesen/)

Retail and wholesale are two of the sectors most affected by digitalization. What challenges do companies in the sector face and what untapped potential is hidden in the digital transformation for small and medium-sized retail companies? 

Challenge #1: New customer requirements

The position of the customer has changed through digitalization. For modern consumers, all-round availability is a matter of course. They have 24/7 access to the world’s goods and services via their smartphones. Retail companies need to communicate with their customers across channels in order to retain their loyalty. 

Neither business nor private customers want to wait today when they have made a purchase decision. Systems with manual price requests are therefore no longer up to date. However, with an ERP system like SAP Business One, prices can also be automatically matched with customer segments and loaded in the online shop. 

At the same time, a customer service is necessary that is able to provide the customer with his individual 

requirements seriously. Here, modern start-ups are often better positioned from the outset. They have the necessary digital infrastructure to provide efficient customer service. By introducing an ERP system, you dovetail your CRM with all other business areas. In customer service, all important data is thus available to the employees across all areas. 

Challenge #2: Online necessary

of retail companies sell their products both online and via traditional bricks-and-mortar retail. Only ¼ still sell exclusively stationary. Companies that rely on online retail generate between 30 and 50 percent of their sales with this channel. The importance of this channel will continue to grow in the future. 

Companies face challenges in adopting digital sales channels:

Setting up an online shop is not the end of the story. The new channels must be integrated into the existing processes from purchasing to logistics to customer support. The same applies at the level of the digital infrastructure. If the new channels are not integrated into the existing ERP system, this leads to high manual effort, efficient processes and a poor customer experience. 

Many companies shy away from the effort of an ERP implementation. But SAP forums are filled with the success stories of small and midsize companies that have taken the plunge and digitally restructured their business – see for yourself. 

Challenge #3: Digital platforms on the rise

Digital platforms are not only revolutionizing the retail sector, but increasingly also the B2B sector. They offer customers a great market overview, allow the comparability of offers in terms of price and performance and a central channel for the procurement of operating resources. 

Many companies initially benefit from digital platforms: They generate additional revenue at relatively low investment costs. But the platforms are a double-edged sword: as their size grows, the platforms make use of their market power. The example of Amazon shows this. After years of acting only as an intermediary, Amazon is now selling more and more of its own products, forcing former sellers off the platform. 

This results in 2 challenges for retailers: 

  • On the one hand, companies need to be present on the platforms in order to defend their market shares
  • On the other hand, they must maintain independence and build their own channels

This challenge requires an efficient infrastructure for the presence on different digital channels. Through marketing automation and a unified business software, retailers create the basis for sustainable customer relationships and effective multi-channel marketing. 

Digitisation in retail: exploiting opportunities

Even though digitization is reshaping the entire industry, most companies do not see themselves as pioneers. According to a Bitkom study, only about ¼ of the companies see themselves in a leading role. But it is precisely in a timely transformation that an opportunity lies. Those who succeed in establishing strong digital communication and sales channels can strengthen their positioning and secure additional market share.

A solid digital infrastructure is the elementary prerequisite for this. An ERP system like SAP Business One helps you achieve this. 

Itegrity supports small and medium-sized enterprises on their journey into a digital future. Are you looking for a strong partner to accompany an ERP implementation? Then give us a call! You may post your comments/questions about this blog here: https://answers.sap.com/tags/2521823005136277121291.

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