Business leaders in Asia Pacific’s retail sector are showing urgency in embracing the 4th Industrial Revolution, where 76% of them believe that they need to transform to a digital business to enable future growth and yet only 37% said that they have a full digital strategy in place today. These are some of the key findings of the Microsoft Asia Digital Transformation Survey[1] to understand how business leaders in the retail sector are embracing the digital era.
The Microsoft Asia Digital Transformation Study surveyed 1,494 business leaders from Asia Pacific working in organisations with more than 250 employees from 13 Asia Pacific markets: Australia, China, Hong Kong, Indonesia, India, Japan, Korea, Malaysia, New Zealand, Philippines, Singapore, Taiwan and Thailand. All respondents were pre-qualified as being involved in shaping their organisations’ digital strategy. Among them, 320 were from the retail sector.
Technology is changing the face of retail today. Traditional retailers now need to embrace digital transformation to thrive in today’s digital-first environment, by ensuring an online to offline experience. At the same time, e-commerce players are tapping on cutting-edge technologies including advanced data analytics, artificial intelligence and others to transform the retail journey. Coupled with the emergence of millennial spenders, fragile global economic climate, and the rise of mobile devices, the retail industry is at the edge of a digital revolution, and business leaders need to transform or risk being disrupted.
Even as majority of business leaders are aware of the urgent need to transform digitally to address the changing business climate, the study found that the transformation journey for most retail organisations in Asia Pacific is still at its infancy. In fact, only 37% of business leaders indicated that they have a full digital transformation strategy in place, and 43% are in progress with specific digital transformation initiatives for selected parts of their business. Among them, 20% still have very limited or no strategy in place.
[Infographic: Is Asia’s Retail Industry Ready for Digital Disruption?]
Andrés Ortola, Director of the Enterprise and Partners Group, Microsoft Singapore, said: “The Microsoft Asia Digital Transformation Study has shown that Asia Pacific’s retail sector has started to act on the need for digital transformation to address the challenges and opportunities of the 4th Industrial Revolution in the region. However, these organisations are not acting fast enough in capitalising the value of latent data to better meet the needs of customers. We urge all business leaders in this space to digitally transform themselves amidst changing demands externally and internally, in order to stay relevant.
“At Microsoft, we believe this involves transformation in four key pillars – empowering employees, engaging customers, optimising operations and transform with new products, services or business models, and data and the cloud are key enablers of these.”
Clear Priorities for Digital Transformation but True Transformation Lacking
Microsoft has defined what it means to transform in four key pillars:
- Engage customers: Consumers are savvier than ever before, with access to data ensuring they are often educated on a product or service before engaging. Retail organisations today need to reimagine the customer journey that deepens customer engagement, retention and loyalty. This means delivering relevant offers by engaging clients in a natural, highly-personal and innovative ways throughout the journey.
- Empower employees: As the retail scene undergoes a fundamental shift due to digitisation, it is now crucial to empower a high-quality and committed digital workforce to work and collaborate as a team anywhere, on any device, with modern productivity tools that provide seamless access to data. With the right tools, employees will be able to access expertise and resources at a moment’s notice to create value for customers. This will enable retailers to innovate faster, deliver exceptional customer experiences while ensuring compliance requirements are met.
- Optimise operations: The retail industry is one of the most fastest moving sector, with multiple assets and processes that require tracking and maintenance. Technology disruptors such as Artificial Intelligence and IoT are accelerating the potential for businesses to optimise their operations. Organisations can gain breakthrough insight into risk and operational models with advanced analytics solutions and act on real-time intelligence and ultimately benefit from increased productivity, cost savings while deepening customer relations across channels.
- Transform products & business models: To succeed in a competitive environment, organisations in the sector must continually deliver new products and services and find new ways to delight customers. The opportunity to embed software and technology directly into products and services is evolving how organisations deliver value, enabling new business models, and disrupting established markets. Retailers should foster a culture of retail innovation and better manage new product development processes to better align with strategic priorities.
The Study shows how business leaders in the retail sector are prioritising their digital transformation strategies:
Said Ortola: “Customer insights is the new currency for retail organisations, and 78% of business leaders agreed that new data insights would lead to new revenue streams. However, it is concerning to see that while there is widespread acknowledgement on the need to transform, they are doing so incrementally. With constant pressure from newer and more agile players in Asia Pacific, the transformation of products and new revenue models provides the greatest opportunity for organisations to truly lead rather than be disrupted. Leaders need to rethink business models, find new data insights which lead to new revenue streams. And they need to do this by embracing a different way of bringing together people, data, and processes, which create value in a new digital business.”
Emerging Technologies in Demand
Cloud computing and the decreasing cost of devices have made it more affordable for organisations to transform digitally, according to 80% of retail business leaders surveyed. Majority also (80%) regarded cloud computing as essential in their digital transformation strategy.
In the next 12 to 18 months, business leaders in Asia Pacific’s retail sector are interested to explore a range of emerging technologies to accelerate and achieve digital transformation. The top technologies identified by business leaders as being relevant to them are:
- Artificial intelligence: Intelligent machines or software that are able to learn and perform tasks independently. Examples include robots, chatbots and self-driving cars;
- Internet of Things (IoT): Network of sensors embedded into devices that can collect data or be remotely controlled. Examples include smart buildings, cars and home devices;
- Wearable technologies: Advanced computing and electronic technologies that are embedded into clothing, devices or bodies. Examples include smart watches and fitness trackers;
- Virtual/ augmented/ mixed reality: Technologies enabling the merging of real and virtual worlds into new and immersive experiences. Examples include Microsoft HoloLens, Oculus Rift, and 3D video gaming;
- Quantum computing: Next-generation computers using different computation systems to solve data equations much faster than traditional computers.
Ortola added: “Emerging technologies, specifically, cloud, analytics and new capabilities like AI and IoT will give organisations new capability to transform. But real transformation only happens when they bring their people along with them. Equipping employees with the right tools to enable them to be part of solution to be more responsive, data driven and customer centric are also key.”
Barriers to Digital Transformation in Asia Pacific
While there is no doubt that digital transformation will bring significant benefits for both businesses and employees, the path to digital transformation has been slow, given that only 37% have a full digital strategy in place.
According to business leaders in the study, the top barriers to digital transformation faced by Asia Pacific’s retail industry are, in order of priority:
Increasing security threats in today’s digital economies is real and cannot be ignored. There is a continued perception among business leaders that the cloud is less secure. However, they may be less privy to the advances being made in the cloud on security and privacy and need more exposure on how, with the current threat environment, it will be safer being in the cloud than relying on tradition forms of IT. In fact, a recent Microsoft Asia Pacific survey of 1,200 IT leaders [2] conducted in September 2016 found that 87% believe that in the longer term, the cloud will be safer.
“People don’t use technology that they don’t trust. This is a golden rule that applies to organisations and individuals alike as we live in a mobile-first and cloud-first world. Ensuring security, privacy, and compliance are key to enabling retail organisations to carry out digital transformation with confidence. As such, protecting sensitive data requires a new and integrated approach, all of which we have invested in significantly,” said Ortola.
Microsoft’s mission is to empower every person and every organisation on the planet to achieve more – building technology so that others can innovate, build their own technology, and create solutions that make things happen. Microsoft is uniquely able to enable businesses of all sises to get from where it is today, to where it needs to be as digital business through its flexible technology solutions, integrated offerings and our investment in being the most trustworthy with investments in security, privacy and control, compliance, and transparency.
To find out more about how Microsoft is enabling digital transformation for retailers, visit https://enterprise.microsoft.com/en-us/industries/retail-and-consumer-goods/
[1] The Microsoft Asia Digital Transformation Study was conducted between October to November 2016 involving 1,494 business leaders in 13 Asia Pacific markets. The 13 markets include Australia, China, Hong Kong, Indonesia, India, Japan, Korea, Malaysia, New Zealand, the Philippines, Singapore, Taiwan and Thailand. All respondents were pre-qualified as being involved in shaping their organisations’ digital strategy, and are working in firms with more than 250 employees.
[2] Microsoft Asia Pacific survey of 1,200 IT leaders across 12 markets to understand how they are evolving their IT infrastructure strategies to meet the needs of a digital business. Read more here: https://news.microsoft.com/apac/2016/11/24/microsoft-survey-it-leaders-in-asia-are-prioritizing-hybrid-cloud-to-transform-it/