In the changing world of retail and hospitality, where should companies begin as they work to adapt to ever-changing customer needs? We recently asked a few questions about this topic to Leslie Hand, group vice president of IDC Retail Insights. Here are the highlights of our conversation.
Retail and hospitality industries are rapidly evolving. What are the challenges and opportunities in this evolution?
The future of retail and hospitality is all about the customer. Companies that rise to the challenge of providing a personalized, convenient, and valuable experience for the customer will win. The ability to reduce friction and increase responsiveness at every touch point in shopping, dining, and traveling is essential. Anticipating customer needs and seamlessly providing access to information, services, and experiences will require end-to-end digital transformation, which presents a range of challenges and opportunities.
The first step of the transformation requires the business to define what successful consumer experiences look like and define how to transform employee engagement to meet performance objectives. Three competitive threats are driving specific experience and engagement model changes: net-new business models, including ride sharing, hospitality marketplaces, and grocery delivery; pervasive online research/shopping/booking by consumers; and converged retail ecosystems and the growth of retail-owned restaurants, meal delivery, and shipping operators.
Next, you must execute on a plan to deliver improved services. Companies should focus on the outcomes and the experiences that the business model requires and enable employees to provide a seamless experience across digital and physical entities. Engaged employees will deliver the best experiences and will drive optimal business performance.
The battle for talent is a prominent issue. In this hyper-competitive space, how can retail and hospitality companies attract the right talent, reduce turnover (especially among frontline workers), and build loyalty in the workforce through employee engagement and learning opportunities?
The future of work is agile, augmented, borderless, and reconfigurable. In the future, it's estimated that as many as half of the activities performed by retail and hospitality workers could potentially be automated. The workforce will still engage customers face to face but will be supported by new technologies and data-driven insights. Workers will need to continually learn new skills to thrive in the changing world of retail and hospitality. Employers will need to provide great engagement and learning opportunities in order to retain and attract the best workforce.
To attract the right talent, reduce turnover (especially among frontline workers), and build loyalty in the workforce, retail and hospitality companies should focus on employee engagement by providing employees with the tools they need to be successful. This includes HR and other applications that are intuitive and mobile, training, and peer-to-peer mentoring programs. It’s also important to grant access to data, insights, analytics, and metrics that save time and help frontline workers get their jobs done.
Retail and hospitality companies are finding powerful ways to use machine learning and artificial intelligence (AI) to create personalized experiences, from smart retail stores to chatbots. What do retailers need to do now to get the most out of these technologies, and what are some less obvious opportunities to harness the power of machine learning and AI?
IDC expects that within five years, most retail and hospitality companies worldwide will have deployed a customer-facing smart assistant that leverages AI to drive a better customer experience. Smart assistants may be business to consumer (B2C) or business to business to consumer (B2B2C) and range from chatbots to platforms such as Alexa, Google Assistant, Bixby, Siri, and IBM's Watson Assistant. They take a myriad of forms, including smartphone applications, kiosks, smart speakers, and AI-enabled home appliances such as thermostats and refrigerators.
The workforce craves great training and smart processes. Workers are already using mobile and are comfortable with voice interactions, so there is potential to improve workflows, decision processes, and task management to improve productivity and outcomes. Companies that prioritize establishing a single version of the truth for data and then apply machine learning (a data-driven branch of artificial intelligence) will be able to improve processes with robotic process automation and execute work more efficiently with role-based workflows, alerts, and task management.
Augmented tools make it possible to bridge the talent gap with huge leaps in organizational productivity. Training, intelligent workflows, and smart assistants shorten the time and reduce the costs associated with getting new employees ready to work and keeping loyal employees engaged and productive.
Retail and hospitality companies have access to a massive amount of customer data. What must retail and hospitality companies do to ensure customers know their data is safe and will be used only to make their experiences better?
Retail and hospitality companies must assure customers that personal data not only will be protected and managed in compliance with laws but also, more importantly, will be used only to improve experiences. To accomplish this successfully, retailers will need to focus on several areas.
First, be transparent about data use practices and data protection measures. Transparency will improve trust, empathy, and loyalty. Companies should apply good data governance and best practices that will enable them to stay ahead of threats to data security and privacy.
It’s also key to implement systems that inherently protect data and privacy and benchmark them against your competitors' capabilities. This isn't an area where you can be at the middle of the pack. Leadership is required to ensure that your customers get the protection that they desire. When companies invest in data protection with the intention of putting customers first, brands are rewarded with more employee and customer loyalty.
New business models are emerging to support the growth and globalization of retail and hospitality companies. How do disparate finance and HR systems inhibit a company's ability to respond and adapt to business changes, including mergers and acquisitions, divestitures, and global expansion? Where do you see the most critical need for technology modernization?
Having a unified cloud-based solution for human capital management (HCM) and financial management enables hospitality and retail organizations to stay lean and be more agile. One source of data, a single security model, and in-memory computing make it easier to adapt to new business requirements and new regulations. Retail and hospitality companies that have an eye on global growth need to have platforms that enable precise execution regardless of an employee's language or time zone. Companies should pay special attention to investing in HCM and financial applications that unify data but provide access to actionable insight in many languages, and provide applications that incorporate the regulations necessary in the locations served but show only information necessary for each user's role. It’s also important that these applications provide the necessary security and privacy controls and are updated continually to comply with new requirements and regulations
A central view and central management of HR and financial systems enable companies to achieve many objectives, including reduced payroll costs, reduced time to fill jobs, improved adoption with intuitive self-service and mobile capabilities, and better insights that translate into improved performance metrics and streamlined, automated work practices.
As group vice president for IDC Retail Insights, Leslie Hand is responsible for the research direction for IDC Retail Insights and leads research related to the digital transformation of retail omnichannel operations. Hand works with retailers and technology providers on developing best practices and strategies, aligned with where they are and where they want to go, leveraging IDC quantitative and qualitative data sets.