Note: The retail sector is just emerging from the backdrop of intense pandemic-induced digitization, only to find itself in an environment with many more external pressures – from the tech talent shortage to outstanding technical debt and supply chain pressures. Here, Neil Holden, Chief Information Officer, Halfords, reflects on the lessons Halfords has learned even before the pandemic and offers some best practice advice to CIOs and CTOs as they plan and execute digitization strategies in the current retail industry landscape.
From my position as a retail group CIO, the demand for digital services in the sector has increased exponentially, and I’m talking prior to the impact of the pandemic. What the pandemic did do, was shorten IT planning horizons almost by half – tech projects that might have initially been specified for six months may have needed to take place in three months. This led to retail CIOs, CTOs and IT teams working to shorter timelines than ever before, but the ripple effect is still being felt across the sector.
Retail Pressure Points
As things have returned to a new normal, there are a number of pressure points and challenges facing retailers that are still looking to digitize their front and back-office operations. Here is the list:
- Tech talent shortage – a lack of in-house technology experts, can hold back most digitization initiatives. Deloitte, for example, has recently highlighted the software engineering shortage, where stats show more than 90% of IT leaders plan to expand their modern software engineering and cloud environments, yet 80% say inadequate employee skills are holding them back.
- Tech talent retention – on the flip side of a shortage of new employees, there is an increased focus on already available in-house skills and retaining current staff. This means retail leaders and CTOs need to look at making current staff feel gratified and rewarded, while even offering them opportunities to train, upskill and cross-skill in new areas to keep them in their organization.
- Guaranteeing consistency – then there are the overwhelming demands for a consistent customer experience, regardless of their retail channel of choice. This means harmonizing in-store and online experiences for an extremely discerning customer base.
- Technical debt – Legacy systems, often using older hardware and software do not lend themselves to the flexibility and consistency required for modern retail. This means balancing investment in new solutions vs. rationalizing or customizing what may already be in place.
- Supply chain pressures – Then there are the global factors that can be out of the control of even the best-laid retail digitization plans. Hardware availability can cause project delays and budget inflations – for example, lead times are growing for critical network equipment including routers and SD-WAN equipment.
Consider this assessment from EY: “Physical and digital retailing will not be an either-or choice”. Given this, it’s hardly surprising that the EY Reimagining Industry Futures 2022 study confirms how external factors have spurred the pace of digital transformation in retail. Seventy-five percent say the COVID-19 pandemic has accelerated their digital transformation plans. As retail activity continues to ramp back up and net out between the digital and physical worlds, there are clearly still a lot of obstacles to navigate for industry technology projects.
Halfords has walked the walk and its tech talks the talk
In my time at Halfords, the focus has been on delivering the technology to support the business strategy to evolve into a consumer and B2B services-focused business, with a greater emphasis on motoring and motoring services. A key part of this involved bridging Halfords’s physical assets - now over 400 stores, 656 garages, 253 consumer vans, 440 commercial vans and nine warehouses - and the digital elements into one end-to-end, consistent customer experience.
We already had a data lake, the perfect launchpad for a new approach to service delivery
Operational and technological integration forms a key part of this strategy – at the group level across retail, garage and mobile – to provide a de-siloed and holistic view from a centralized data lake. The Halfords web platform plays a critical role in this strategy, replacing different sites for various parts of the business and consolidating them down to a single user experience. With people cautious about leaving their homes in the early days of the pandemic, we saw online sales figures jump from 20% to 80% of the total overnight.
On the mobile and garage management side, the company built its own end-to-end service platform, Avayler, which tracks the skills level of a technician, work hours and the work is undertaken. The platform currently manages more than 70,000 services per week. The Halfords Mobile Expert van operation, which has a 4.8/5 Trustpilot rating, has seen a 70% increase in job productivity and more than a 200% increase in utilization since it started using the platform, demonstrating the potential for greater customer satisfaction.
Five keys that unlock the power of CIOs and for CTO strategy
I have found that there are five key strands for retail CIOs, CTOs, and other tech leaders to keep in mind for their digital strategies.
1. Empower your workforce
Given the talent shortage, this is even more important than pre-pandemic. In-store employees and mobile technicians alike are used to easy-to-operate apps and services in their everyday lives. Any retail digitization strategy should reflect these expectations.
This means designing and choosing the right devices, apps and portals that deliver the right information and the right services to the employee in question – allowing them to execute their task and log information quickly and effectively. Pass on this ease of service to your workforce, and the benefit will also be passed downstream to customers.
2. Have the customer at the heart
This is easy to say, but harder to achieve from a technology perspective. This applies not just to the result of digital transformation programs, but during design and implementation as well.
Customers still need to access your products and services throughout the course of a digitization strategy, so this needs to be factored into planning, testing and roll-out. There also needs to be no disconnect between colleagues and customers when it comes to using the technology deployed.
3. Understand your data
It is all fine to implement smart devices across stores and service operations, but retailers – huge group organizations – are missing a trick if they don’t harness data from all channels. Disparate pockets of data can lead to inaccurate analysis and that could mean leaving revenue on the table and less optimal tech performance for employees and customers.
This is where deploying in the cloud can help with data collection, analysis, and action – giving retailers a single picture of the truth, governance, ownership, and control over every data stream across operations.
4. Go modular
Gone are the days of big monolithic retail implementations. APIs, microservices and modularization are the way to go for modern cloud-based retail software implementations. This means retailers can select what solutions make sense for their business goals, keep implementation times down, but also make sure they are keeping that digital thread of data at the core of their business operations.
The Avayler platform, for example, is split into a suite of software products that can be deployed for mobile service, or in-store/garage processes, depending on the needs of the retail organization.
5. Automate and adopt new tech
The advantage of this modular approach is the ability to quickly introduce new technologies and processes across the organization into the future. Manual processes or legacy technology is exceedingly difficult to adapt and even more difficult to automate.
Again here, cloud-based deployments can be easily enhanced with additional functionalities such as artificial intelligence. Again, our Avayler solution is an example here, where dynamic job/technician scheduling or dynamic pricing can be overlayed on top of existing systems to increase efficiency and profitability from every customer interaction.
Tightened collaboration with tech vendors in the retail ecosystem
The same EY report I cited earlier found 63% of the retail respondents say that the pandemic has driven a closer collaboration between their organization and technology providers. The report concludes “However, if they are to get to where they need to be at the required pace, it is simply not possible to recruit or train the right talent fast enough. They will have to find alternative ways to get the needed skills — and collaboration is the only feasible option.”
It is inevitable that the path to retail digitization will involve more integrations and collaborations with technology vendors. Perhaps the role of the Chief Information Officer should now be renamed, Chief Integration Officer? Thoughts?