Digitalization in Retail​


Why do retailers need digitalization?

The unexpected events of the past year have meant the retail sector has suddenly found itself faced with trading restrictions, departing customers and supply issues.  As bankruptcies began to hit even the biggest of the high street names, retailers have rushed to adopt new strategies to maintain, and potentially increase, their market share. Arguably, those who are best placed to succeed are those already taking steps towards digitizing their operations.

Fully integrated systems

Here we’re not talking about improving the online shopping experience, we’re looking at how digitalization is important in retail to boost sales, improve efficiency and reduce overheads.   

We are all now well aware that “data is the new oil”. Companies know that systematic and comprehensive data collection is essential to business development. However, many companies waste the opportunities that analytics can provide. Often, although they have efficient data collection methods, they then store it in a silo where it becomes inaccessible and, essentially, worthless. Having an integrated digitized system means that data collection can be utilized to lead to tangible outcomes. The data is synchronised across platforms as a means to indicate trends, influence consumer decisions and inform marketing and purchasing strategies. Point of sale data collection is crucial to understanding trends and for managing pricing policies and stock control. POS analytics also indicate profit margins and customer counts for each outlet.  

Digitization has a significant impact on increasing the efficiency of supply chain operations from logistics to back-office operations. Particularly, during the pandemic period, supply chain issues have beset many retailers, resulting in empty shelves and lost revenue. A fully integrated system ensures a smooth stock flow and more effective and streamlined procedures. Repetitive and redundant systems are eliminated and personnel requirements are reduced.

Cost optimization is another key concern for retailers during this difficult period. Companies are seeking innovative and meaningful solutions to reduce overheads and increase profit margins. Implementing a digitized system results in reduced operational costs and increased agility. Automated systems facilitate adaptive retailing and ensure optimum sales pricing and improved buying strategies.

Digitalization and Tech and Mobile Phone Retail

Field audit is one of the main areas where digitization is important for tech and mobile phone retailers. Field visits for audit are costly and time consuming, and logistically it’s impossible to conduct a field audit on more than a quarter yearly basis. As a result, stock flow is affected and operational issues can remain unresolved for far too long. A further problem is that store audits can have inaccuracies and rely on a subjective analysis.   

Digitized field audit can be conducted much more frequently, for example once every four weeks. It is also more efficient as it supplies a rapid and objective analysis of the product  pricing and placement and compares this to criteria held in the database. The data collected is automatically updated on to the system to ensure the availability of a complete history for each retailer.

An automated field audit can also monitor the operation of in-store merchandising equipment, making sure that it is functioning correctly and being implemented by the store staff. Digitalization can also monitor promotional staff performance. For example, to ensure that they are using the correct promotional materials and that their conduct is according to company standards and terms and conditions.  

By integrating GPS as a data collection tool, data can be stored according to location, thus simplifying the collection process. Retail staff at each location can easily upload information on the sales environment and visual images of merchandising activity. This data is automatically collated and analysed to facilitate the automatic production of audit reports for each retail point.  

Digitalization and Food Retail

The arrival of Amazon Go was a clear signal to food retailers that changes in operational strategies were long overdue. Customers have become accustomed to the convenience of online shopping for their groceries.  They are no longer prepared to waste time waiting in queues and are beginning to demand in-store cashless payment systems. It’s clear that food retailers will need to implement digitization  across all key in-store operations in the not too distant future, in order to improve cost optimization and sales.   

The level of competition and sheer numbers of brands in the market mean that merchandising is particularly important in the food retail industry. Digitalization can dramatically improve the efficiency and effectiveness of in-store product promotion. Data collection can inform the placement of visual merchandising and monitor its effectiveness.  

Food retailers are increasingly under pressure to reduce operational costs. Staffing needs can fluctuate dramatically, and staff management systems need to be more efficient and flexible to meet those needs. Automated systems can analyse the management and staffing of stores on a continual basis, evaluating needs against supply. In this way, adjustments can be made to the number of employees at a location and the roles they perform, thereby reducing issues of overstaffing/ understaffing.  

Digitalization and HoReCa

The hospitality industry is notoriously plagued by profitability issues. This year has seen an unprecedented number of hospitality companies go out of business and the survivors face ongoing uncertainty. HoReCa retailers recognize that they need to adjust and streamline their operations in order to stay in the market.

One of the key areas of expense for the HoReCa sector is equipment breakdown and maintenance.  When equipment is out of action, there is a significant impact on sales and revenue. Digitalization is particularly effective for monitoring and maintaining equipment, as each item can be connected into a centralised automated system. As a result, operational issues are immediately detected, and a field service engineer can be rapidly dispatched. The system automatically schedules routine maintenance of the equipment in each outlet. The databases hold clear and accurate records of the equipment which is in use at each location, and the ages and condition of these items. In this way, the maintenance procedures for all outlets in the chain are standardised, and all locations have the appropriate facilities available.  The system is able to make an automatic comparison of the equipment performance at each location, which facilitates decisions on any necessary upgrades or changes.

Digitalization and Gas Stations

Additional sales of food, beverages and other sundry items account for an impressive 60-70% of all revenue for gas stations. Digitalization is an important means for gas stations to maximise these profits and reduce operational costs.  

Merchandising is essential for gas stations to boost sales and outperform rivals. Implementation of a digitized system facilitates the monitoring and control of visual merchandising. Pricing boards and screens inside gas station stores can be updated immediately and remotely, ensuring a competitive advantage over rival companies. 

Snacks and beverages account for a significant number of gas station sales. Any malfunction of catering equipment and vending machines can be costly and result in a permanent loss of sales. Maintenance of this equipment is much easier to manage using an automated system. Each item is linked into the system so that routine checks can be carried out regularly and systematically. Faults or failures in equipment are detected and flagged automatically, and in this way repair staff can resolve issues rapidly and efficiently.  

Monitoring and managing on-site staff at gas station outlets can be challenging. Using a digitized system can ensure that staff performance is in accordance with company guidelines. Automated data collection on staff activity can ensure compliance to the company’s service standards regarding cleanliness, punctuality and customer service.

Digitized solutions

It’s clear that the challenges resulting from this pandemic period are going to be with us for some time, and retailers will need ingenuity and flexibility in order to adapt and thrive. Competition from online sales platforms, reduced foot-fall and an end to debt payment holidays will all put pressure on the sector’s profitability. Digitalization is undoubtedly one of the most important tools available to retailers as a means of  increasing sales and ensuring cost optimization.

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