Kevin Benedict is a TCS futurist and lecturer focused on the signals and foresight that emerge as society, geopolitics, economies, science, technology, environment, and philosophy converge.
I had the privilege today to interview Oracle's mobile and Chat Bot expert, Suhas Uliyar. In this video interview we discuss the four components of Chat Bot development, how they utilize mobility platforms, sentiment analysis, APIs, personalization, decision-trees, AI and much more. Enjoy!
***Full Disclosure: These are my personal opinions. No company is silly enough to claim them. I am a mobility and digital transformation analyst, consultant and writer. I work with and have worked with many of the companies mentioned in my articles.
In 2016, total worldwide retail sales reached $22 trillion, of which digital commerce makes up $1.9 trillion, or 8.7% of the total. While the majority of retail sales still occur in brick-and-mortar stores, overall growth is predominantly driven by digital commerce, which was expected to expand rapidly worldwide at a 23.7% growth rate in 2016, and by 2020 to represent 14.6% of total retail spending of $27 trillion. Of course, digital commerce numbers vary depending on the product category. Online sales penetration for many product types – electronics, apparel, furniture, home improvement, etc. – are significantly higher than worldwide retail sales projections, while categories such as petrol, convenience and grocery have a much lower penetration.
In the U.S., sales at department stores fell almost 6% in 2016, while online retail sales rose 11%. As a result, bricks-and-mortar retailers have been forced to re-evaluate their business performance, and many, such as Sears, Macy’s, Aeropostale, Chico’s and American Eagle, have needed to close stores. Still others – especially those who have failed to digitally transform – are going out of business altogether, including The Limited and Wet Seal. In an industry with razor-thin margins and intense competition, missing out on key growth opportunities are a ticket to irrelevancy, or worse.
Given the rapid rise in digital commerce, retailers are increasingly concerned about profitability since online sales are believed to contribute to margin erosion. In fact, some retailers fear that an over-reliance on digital technologies will dilute margins. These concerns, however, are not supported by our research. Rather, retailers with strong to very strong revenue growth, which we correlate with digital leadership, also tend to realize higher profits.
Retailers have enjoyed consistent revenue growth through their digital channels for the last several years. This growth is expected to accelerate into the foreseeable future. In fact, retailers are increasingly dependent on digital commerce growth as sales soften through traditional channels. In fact, 22% of retailers in our study said they generate 30% or more of their sales from digital channels. By 2020, 79% of retailers forecast they will receive 30% or more of their sales from digital channels, a massive 259% increase.
Nearly all retailers (98%) achieve at least some of their revenue through digital channels today; most respondents anticipate much of their future growth to be driven by digital commerce. Retailers with exceptionally strong (11%-plus) revenue growth already derive a higher percentage of their sales from digital channels, according to our research. These retailers also forecast a more bullish future than lower performing retailers. You can download the full report, "How Digital Thinking Separates Retail Leaders from Laggards" here.
Watch the 3-minute video on digital thinking in retail.
Follow Kevin Benedict on Twitter @krbenedict, or read more of his articles on digital transformation strategies here:
***Full Disclosure: These are my personal opinions. No company is silly enough to claim them. I am a mobility and digital transformation analyst, consultant and writer. I work with and have worked with many of the companies mentioned in my articles.
The military strategist Colonel John Boyd wrote that success depends on three things, 1) People, 2) Ideas, and 3) Things, in that order. People have to be trained to think and do the right things, using the right ideas (doctrines, strategies and tactics) and then utilize the best things (equipment, materials, design, etc.) that you can. In my new report, “How Digital Thinking Separates Retail Leaders from Laggards,” we focus on the differences in thinking between leaders and laggards.
Here are some of our key findings:
Digital commerce outpaces brick-and mortar. Already a significant retail driver, digital commerce is predicted to increase in importance by 68% for surveyed retailers between now and 2020. This trend has motivated many retailers to invest strategically in digital technologies.
Digital leaders outperform digital laggards. There is a correlation between companies with strong revenue growth and digital leadership, and retailers with a higher percentage of online sales. Companies that have experienced early digital commerce success are also likely to express a more positive outlook on the value of digital technologies to the overall business.
Retailers don’t know if they are winning the race. Many retailers find it difficult to evaluate their relative digital maturity and how they compare with competitors.
Digital leaders think differently about the role and value of digital technologies, including the ability of these tools to enable competitive advantage in the form of revenue growth, and positively impact work and jobs. As a result, leaders are developing more aggressive technology plans and strategies than digital laggards.
Digital technologies will transform jobs in positive ways. Digital leaders believe digital technologies will help them increase efficiency, manage people better, work faster, be more creative and innovative, make better decisions, boost freedom and flexibility, and even help them make more money by 2020.
Digital leaders believe digital technologies will have a big impact on work by 2020. Far more so than laggards, digital leaders believe work will be significantly impacted by technologies such as business analytics and artificial intelligence. They are simultaneously concerned about data security and privacy, bots, new regulations on digital businesses and hyper-connectivity of people and things.
Retailers with very strong revenue growth have different opinions than moderate growth retailers as to which skills will be needed by 2020. The biggest differences in opinions are in the areas of fabrication, verbal and written communications, and language and design skills.
What are the ideas that Colonel John Boyd spoke about? I need you to help me identify those good ideas for digital strategies by taking a short 5-minute digital strategy survey, https://goo.gl/forms/bquUpmkaYFK6QZQt2. I am giving a copy of the book, "What to Do When Machines Do Everything," to the first 50 people in North America to complete the survey.
***Full Disclosure: These are my personal opinions. No company is silly enough to claim them. I am a mobility and digital transformation analyst, consultant and writer. I work with and have worked with many of the companies mentioned in my articles.
Technologies help us deliver on a business strategy. Without a strategy, there is no rationale for deploying technologies. In addition, there is no rationale for digital transformation, unless there is a need for business transformation. If you believe this as we do, then strategy development will be a priority. Strategies, however, are developed under the guidance of a doctrine. The purpose of a doctrine is to create a high level understanding of what we we want to achieve with our strategy, and the concepts that must be employed to achieve it. An organization’s doctrine will guide strategy development, and the tactics needed to achieve a goal.
An example of a doctrine is, "We will be a fast follower, and excel at quickly manufacturing and delivering popular fashions." With this doctrine, the company can now develop strategies that align with the doctrine.
Many executives consider digital transformation important, but an IT issue. We, however, believe IT serves only one purpose – supporting the needs and strategies of the business. If the business doesn’t perceive a need, or have a business strategy that requires digital transformation, then there is no transformation role for IT to play. All of our research, however, concludes that organizations must be engaged in business and digital transformation or they will fail at winning in the Fourth Industrial Revolution.
Digital doctrines and strategies must come from the top, as they require an intimate understanding of the goals, doctrines and strategies of the organization, and the resources available to achieve them. Grassroots efforts to transform a company will fail, as they are too slow to compete against engaged, focused leaders.
Leaders must have an intimate understanding of how markets are changing, by how much, and the technologies that are supporting these changes. We all watched as advertising and sales expanded quickly from brick and mortar locations, to search engines, to online auctions, mobile retailer apps/websites, and now to online classified, online markets and sharing economy platforms. Do we fully understand consumers' path-to-purchase journeys in these evolving digital environments? Do we understand where traditional path-to-purchase journeys intersect with digital journeys? One thing we do know for certain, as a result of our research, is that consumers are altering their buying habits to take advantage of the convenience, market feedback and in-depth product information available in these mobile and digital markets. The need now is to measure how fast buying habits and shopping behaviors are changing, which is not easy. Many new behaviors and trends are outside of traditional measurements.
An additional challenge for leaders is measuring the pace of market change, and aligning resources and priorities to ensure we are changing, if not at the same pace, at least at a pace ahead of our competition. What units of measurement will capture the speed of change? What data sources will provide the data necessary for analysis, and how do we capture the data? Once we have a methodology in place for measuring the pace of market change, how do we then measure the pace of our own changes inside our organizations and in those of our competitors so we know how we are doing?
***Full Disclosure: These are my personal opinions. No company is silly enough to claim them. I am a mobility and digital transformation analyst, consultant and writer. I work with and have worked with many of the companies mentioned in my articles.
George Lucas, creator of Star Wars, once said, “You can’t do it unless you can imagine it.” In our latest research on the future state of work in the retail sector, we find many industry executives struggling to imagine where the future is leading them and their organizations, not to mention the role digital technologies will play along the way.
Traditional retailers are challenged by rapidly emerging new business models, such as Amazon Go and Facebook’s launch of its digital commerce platform, Marketplace. Moreover, pioneering companies in the sharing economy (i.e., Uber) are expanding from their initial markets into areas such as food delivery, while insurgent retailers, such as Sun Basket, are combining digital and social media platforms, mobile apps and massive volumes of new data to encroach on retailers’ territory. These nontraditional competitors are changing the rules of the retail game via disruptive strategies.
To better understand the strategies and technologies that digital transformation requires, Cognizant’s Center for the Future of Work, surveyed 500 executives from the retail industry across 18 countries, in partnership with renowned economist Nouriel Roubini. Sadly, our research shows a significant number of retailers making decisions and forming strategies based on outdated attitudes, fears and misunderstandings. Given all the hype around digital, and the available data on its increasing importance, it is surprising to see enormous and persistent differences in thinking between retail’s digital leaders and laggards.
Digital leaders tend to experience higher revenue growth, and their attitudes about digital technologies suggest they will keep their leadership position. Their perspective on how retail jobs and work will be transformed as a result of digital is also more evolved, as are their ideas on the vastly new and enhanced skills that will be needed to support tomorrow’s retail environment.
Digital laggards see an alternate reality. They place far less importance on digital technologies and their future role, and they show higher levels of fear and concern about digital overall. Our findings reveal a reluctance among laggards to digitally transform their thinking, IT infrastructures, doctrines and business strategies. If they remain on this track, their companies could find themselves in dire straits.
This report digs deeply into the differences in thinking between digital leaders and laggards, as well as between high- and low–revenue-growth retailers, and highlights strategies that can be employed to achieve and maintain digital leadership. We also delve into the role that “mental constructs” and personal attitudes play in separating retailing’s digital leaders from laggards. We explore how the thinking of digital leaders results in differentiated strategies, greater returns and improved results. We reveal the differences between leaders and laggards in their digital technology investments, and then analyze how leaders believe digital implementations should be sequenced between now and 2025. We also scrutinize the perceptions of frontline retail managers in terms of the mistakes they believe are being made by executives when it comes to digital transformation.
***Full Disclosure: These are my personal opinions. No company is silly enough to claim them. I am a mobility and digital transformation analyst, consultant and writer. I work with and have worked with many of the companies mentioned in my articles.
As part of SAP's IoT Influencer program, I had the honor of interviewing Hitachi's Rob Tiffany on Industrial IoT platforms, mobility platforms and the role of artificial intelligence at Mobile World Congress 2017.
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Kevin Benedict
Senior Analyst, Center for the Future of Work, Cognizant
***Full Disclosure: These are my personal opinions. No company is silly enough to claim them. I am a mobility and digital transformation analyst, consultant and writer. I work with and have worked with many of the companies mentioned in my articles.
Amazon knows me. Oh boy, do they know me! Our dog thinks the deliveryman is part of our family. Amazon knows what I like, and does their very best to create a wonderful and personalized experience for us by using their "system of intelligence" to provide it. Amazon Prime membership now offers movies, music and audio books in addition to other membership services all tailored to my family and me. Alexa, Amazon’s hit home bot, can be set-up to automate my home and much more to enhance convenience and comfort. All of these offerings and services are designed to improve and personalize my experiences so I will feel inclined to increase my business, loyalty and commitment to Amazon.
Airlines, on the other hand, seem determined to drive their users away in 2017. From personal experience, airlines don’t seem interested in your welfare or quality of experience, or what you like, what kind of trip your are on, or how much current and future business you can provide them. They are not using "systems of intelligence" to provide wonderful and personalized experiences. As a million-miler quickly heading toward a 2 million-miler status, my legacy airline does not seem interested in considering my short or long term business value in any of their algorithms or considerations. This seems to be a rejection of systems of intelligence.
It’s not just me whining (I swear)! I did some research on many different travel sites this week and travel experts are advising many of their readers to abandon rewards programs and airline loyalty as the value has disappeared for most travellers.
Let me provide a few examples. A couple that is traveling together on a romantic holiday must reject all upgrades (upgrades they earned) in order to stay together on a flight, or pay full price for an upgrade – that doesn’t feel right. They are now being told to pay for upgrades, even if they are potentially eligible for free ones – just for the opportunity to sit together. And if one of the couple accepts an upgrade leaving the other in the back of the plane, there goes the romance!
One airline recently dropped a level of elite status, from being considered a “real” status level (changed late in 2016). So the money and loyalty that helped them earn their status has now been devalued to nothing – that treatment doesn’t feel right.
One of the key benefits of earning status is the ability to select better and more comfortable seats, and to manage your experience at time of booking. In 2017 that is gone, and you must now pay to play. If you wait for an potential upgrade based on status, you may be placed in an uncomfortable center seat that you had no role in choosing. Your upgrade becomes the source of discomfort and inconvenience. In order to ensure you are not placed in the center seat between two overflowing travelers, you must reject automatic upgrades, and pay for any upgrades even though you are eligible for free ones. You now have less control, less predictability, less personalization and less comfort because of your elite status – that doesn’t feel right.
It is not hard, using analytics and algorithms, to estimate the lifetime value of individual customers - that is a basic function for a true system of intelligence. Many of us frequent travelers represent many hundreds of thousands or even millions of dollars, euros, etc., worth of real and potential lifetime value to an airline. To reject that data and its intelligence in their decision-making and customer service treatment – just doesn’t feel right.
In a digital age where real-time contextually relevant personalization is the gold standard of market leading customer service oriented companies, airlines have rejected it. This rejection of intelligence, I predict, will ultimately open up a competitive gap, an opportunity, for new kinds of airlines and/or service models willing to treat their customers as individuals with names, wallets, significant others, lifetime business values and butts.
***Full Disclosure: These are my personal opinions. No company is silly enough to claim them. I am a mobility and digital transformation analyst, consultant and writer. I work with and have worked with many of the companies mentioned in my articles.
