10 companies leading the digital transformation in retail (2023)

The rise of online shopping has pushed the retail sector into a state of crisis. More than 11,000 stores are expected to close in 2018, up from 9,000 in 2017, according to Cushman & WakefieldMessage.

"Today, retailers are being forced to innovate," said Brendan Witcher, vice president and principal analyst at Forrester. “The challenge is where is the line between a good retailer and a good innovator? Too many companies take their eyes off the ball and the basics of what they need to focus on innovation.”

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Virtually every retail company now has a digital strategy, Witcher said. The remaining challenges for transformation lie in softer elements: culture, organization and skills shortages, he added. “Technology implementation is easy compared to the change management challenges of moving from a traditional retailer to a digitally-led retailer,” said Witcher.

VER:IT leaders' guide to achieving digital transformation(Tech Pro survey)

There's no shortage of companies investing in technology to attract and retain customers, said Brian Solis, senior analyst at Altimeter and author of the report.Key trends in retail innovation. For many, however, "innovation" really means "iteration," Solis said, meaning that instead of doing new things that create new value, they're doing the same things but more efficiently.

"Investments in mobile, cloud or things like augmented reality or new payment systems are improving the customer experience, but I think retail is really struggling right now to understand tomorrow's customer," Solis said. "I've seen some of the greatest innovation on that front when companies are really trying to understand, 'What don't we know?'"

Retail also tends to lag other industries when it comes to digital initiatives because projects need to be operational before most companies come on board, said Ananda Chakravarty, senior analyst at Forrester.

"Because retail is so dependent on margins, there are few dollars available for things like R&D and general innovation," Chakravarty said. “You know you're competing with companies like Amazon, whose multi-billion dollar budgets are dedicated solely to innovation and research and development. It's not being ignored - it's more like, 'How much can we get out of this without sacrificing our day-to-day work? '"

Despite the challenges, several retailers have embraced the changing landscape and are pushing ahead with digital projects that use technologies such as artificial intelligence (AI), augmented reality (AR) and the Internet of Things (IoT) to radically transform their stores and create new ones win customers. Here are 10 companies leading digital transformation in retail.

VER:Digital Transformation: A Guide for CXOs(Tech Pro survey)

1. Sephora

beauty dealerSephoraleveraged digital ventures to not only survive but thrive in today's retail economy and lead as theNO. 1beauty retailers in the world. The company has used technology to offer customers a range of exclusive deals on its mobile app as well as in-store, I reported for ZDNet's sister site.TechRepublic.

While other cosmetics companies rely heavily on department store sales, Sephora offers customers a range of technology options that allow them to personalize their shopping experience by virtually trying on makeup using AR, matching their skin tone with an AI-assisted foundation, and trying one on Scent via the touchscreen and scented air.

"Sephora is diversifying its approach to digital transformation, focusing on areas where other companies are struggling," Solis said at the time. "Specifically, the company studied digital consumers to understand their needs, beauty and social aspirations, their feelings and purchasing and more, and then internally adapted models, processes and resources to compete with purpose."

2. Lowes

HeimwerkerketteLowesstarted rolling out Virtual 3D in its stores with AR and Virtual Reality (VR) testing.holospacein 2014, where customers can design a room on the computer and then visit it in VR. The company then launched theLowes Visionapps andLook in your spaceFeature that uses AR to help customers imagine what the store's products would look like in their own home. OShop-NavigationThe app helps customers navigate to the products they need in store.

All of these apps aim to solve a common customer problem: how will you know if something looks good in your space?

"It makes a lot of sense for a do-it-yourself business and other types of spaces as well," Chakravarty said. "There are some niche markets for that."

3. Domestic Deposit

"Heimdepotis doing a fantastic job with its omnichannel capabilities," Witcher said of successfully driving its online sales growth through its brick-and-mortar stores.

Home Depot's approach allows customers to buy products online and choose to have them delivered to their home or to a local store for pickup. An online order and in-store delivery option can deliver the products to customers the next day within a two-hour delivery window. You can also buy products online and return them in store.

Like Lowe's, Home Depot has introduced wayfinding to its app to help customers more easily navigate the store's aisles and find what they're looking for. The company reported revenue of $23.9 billion in the fourth quarter of 2017, up 7.5% year over year.

4. Walmart

In someWalmartIn stores, bossa nova robots move around the store, scanning the shelves and notifying managers of stock levels in real time. Providing at-a-glance information about how products are performing in stores and across multiple locations can help the retailer create a predictive inventory model and keep prices competitive.ZDNet reports.

"These are powerful tools that they use for things like inventory management, and they can do that in an automated manner without involving the sales reps or in-store employees, giving them more time to actually interact with customers," Chakravarty said.

5. Lollipops and Lollipops

Confectionery and giftware retailerslollipops and popsIt may be small compared to others on this list, but it has a powerful digital project in the works, Chakravarty said. The company recently introducedmobica, a facial recognition loyalty program developed by Intel. Customers who sign up for the program can enter a store and a camera will recognize their face and send that information to an app on the store clerk's tablet. With this data, the member can access the person's taste profile, allergies and other information and offer personalized product recommendations through AI-assisted analysis.

6. Hook

grocery chainHookusedChecking in storeto customize purchases for customers, Chakravarty said. The company now uses predictive behavior modeling to customize promotions and pricing tailored to its Plus Card members, which has resulted in a growing digital customer base. As of the first quarter of 2017, growth in mobile visits has outpaced overall digital growth, the company said. Kroger also recently debuted hisKlicklisteService that allows customers to order groceries online and pick them up in store.

7. Fables

fablesuses a digital tool called Omnicart to identify new customers and create a more personalized experience for them, Witcher said. The tool allows store associates to scan the products that a shopper tries on in a fitting room on an iPad. If the buyer is a Fabletics member and the retailer has saved their email address, the clothes will automatically be added to their online shopping cart.

After the shopper tries on the clothes, she gives feedback to the fitting room attendant on the iPad. If they "dislike" or complete an in-store purchase, the item will be removed from their online shopping cart. Otherwise it stays there in case they want to buy it later.

Customers who shop at Fabletics across multiple channels like these are 3.2X more profitable to the company than customers who shop through only one channel.accordinglythe president of the company.

8. Macys

Em 2016,Macysbegan launching an RFID initiative to track all items in its stores and fulfillment centers. When the company expanded RFID into its fashion departments, its sales volume grew by more than 200 percentsome estimates-- not surprising as inventory accuracy can increase item availability, leading to higher sales.

"It reduces in-store shrinkage and waste and improves employees' ability to track specific products and inventory," Chakravarty said. "It's a powerful tool."

9. Best Buy

best buyhas worked with partner 3C Interactive to develop a growing communications protocol calledadvanced communication servicesThis can enhance simple text messages with product images, in-store pickup cards, and other purchase details. This creates a more seamless interaction between in-store and online communication.

"They're finding different ways to engage with the customer on mobile," Chakravarty said.

10. Neiman Marcus

department storeNeiman Markusestablished an innovation lab in Dallas, TX in 2012 to test new technologies. The shop has already startedmemory mirror- Huge video screens and cameras that allow shoppers to view clothing in 360 degrees and compare clothing options side-by-side - in some locations.

The retailer also launched theSnap-Find-Shopvisual search feature in its app that allows customers to take a picture of a shoe, bag or piece of clothing and use AI to find a similar style across the store's product range.

These and other projects aim to alleviate customer pain points and make the shopping experience easier and more fun. "It's almost like Innovation as a Service, where they take on challenges and also look for new opportunities where they can make a difference," Solis said.

also see

• Digital Transformation: A Guide for IT Pros (Free PDF)(TechRepublic)
• Eight hurdles to overcome on your journey to digital transformation(ZDNet)
• How to create a vision for the digital transformation in your company(TechRepublic)
• What's Really Holding Today's CIO From Digital Transformation?(ZDNet)
• 6 Questions C-Suite Must Answer to Achieve Digital Transformation(TechRepublic)