Staying one step ahead of the game is how retailers thrive. Today, brick-and-mortar stores are turning their backs on the high street and embarking on a digital transformation to join the online marketplace to leverage sales.
If we push the boundaries even further, the day will come when consumers will order a file from their preferred online sports store - instead of a physical pair of sneakers - and print the trainers in the comfort of their own homes with the use of a 3D printer.
This fascinating glimpse into how digital technology is going to shape the future of our online shopping habits was provided by Dr Christoph Schroeder, Global Vice President of Retail Industry Business Unit at SAP, which marks its golden year as a global brand.
“As technology evolves, I could see a time when we could use a 3D printer for shoes or clothes in the same way we are used to doing this for spare parts in a factory,” commented Schroeder, who has worked at SAP for 15 years.
This snapshot of tomorrow’s online retail landscape was presented by Schroeder as he discussed how SAP is today working with retailers to navigate the new post-pandemic climate to optimise their online presence to survive this new landscape.
SAP is the market leader in enterprise application software, helping companies of all sizes and in all industries run at their best. 77 per cent of the world’s transaction revenue touches an SAP system. Machine learning, Internet of Things (IoT), and advanced analytics technologies to help turn customers’ businesses into intelligent enterprises. SAP’s end-to-end suite of applications and services enables their customers to operate profitably, adapt continuously, and make a difference.
“I believe one thing became very clear in the last year: digital transformation that would previously have been taken two years is now possible within a matter of weeks. Due to the pressure of economic environments, retailers don't have the time for organisational resistance,” said Schroeder, who has taken his dedication and focus as a top sportsman into his leadership role.
“Part of my role at SAP is to create a roadmap for retailers with our integrated platform to help them overcome challenges and to avoid pitfalls and prepare for the unknown,” said Schroeder, whose clients also include PVH, Luxottica, and adidas - creating the popular customer experience.
“We work with retailers on the one hand getting the short-term things fixed and then help them create an experience, as it’s no longer enough to just have a good product. It’s important you spend time with your consumer; if they spend time with you, they don't spend time with your competitor,” said Schroeder.
Digital soul creates customer centricity
Reflecting on how retail has changed during the past five years, Schroeder points out there has been a move from being product-centric to customer-centric.
“When we look back at retail a couple of years ago, it was all physical. When you look at stores, for example, they are still managed like in the pre-internet world - not much has happened since. But with the help of digitalisation, they are able to bring together data to understand the customer and really bring this kind of customer-centric philosophy to life.
“Retail has been a product centric, siloed operation with data and inventory segregated. But real-time inventory visibility allows retailers to create a consistent experience on every touchpoint. This is the ultimate goal where technology can help make that happen.
“You also need to have organisations following up on this - but how do you destroy kingdoms within organisations? Today, you might have one guy who is responsible for the retail chain, one guy who is responsible for online - but they need to work together because no matter where the sale happens it's a sale of the retailer.
“I believe this has been the biggest roadblock in the last five years to how digitisation and connectivity can be leveraged to its full extent. That leads us on to how retailers connect to the IoT and from a technology perspective, how do they bring it on one platform? From a historic perspective, retailers most likely started with bricks and mortar until they said, ‘let's create an online channel.’ So they created another silo. But eventually they need to bring that together in order to have a soul-like digital platform, as that is the soul of the whole enterprise.
“At SAP we call this the digital core, because that gives the companies an opportunity to leverage that from a solid foundation,” pointed out Schroeder, who says that retailers implementing these changes have now “started to eat” and have an advantage especially during the pandemic.
RISE with SAP
RISE with SAP is a completely new way for customers of all sizes, at any stage of their digital transformation, to move to the cloud and redesign and improve processes without high up-front investments. It will allow retailers to clean up the clutter and prepare for how they want to operate today and into the future.
RISE provides a blueprint that companies can implement at their own pace with the advantage of one contract, one responsible party for service level agreements, operations and issue handling.
The offering itself includes three elements:
The pack also includes SAP S/4HANA Cloud, an ERP system with built-in intelligent technologies, including artificial intelligence (AI), machine learning, and advanced analytics. This enables businesses to transform their processes with intelligent automation.
“Everyone wants to become an ‘Intelligent Enterprise’ and the idea is to not only provide the technology and the tools but also the solutions to help our customers,” said Schroeder.
“I would say there's a big pull towards the cloud with all the advantages as retailers can consume innovation much faster and don't have to implement it in their data center and wait. It offers much more agility and flexibility.”
Power of technology in retail
Schroeder is a believer that technology should be used as a tool to help solve problems. “I'm a strong believer and advocate of saying, first of all, we need to have a problem. And then let's find out what we can use to solve that problem, whether it be 5G, blockchain, AI, or machine learning.
“Blockchain is a good example, for creating transparency throughout the supply chain. But when we talk about the cost of a blockchain you could also argue by not creating a data pool where every player of the supply chain puts in their data, so that’s fine. But when you look at counterfeiting pharmaceuticals or luxury items, blockchain might become more interesting because this is really where it's about trust.”
Five key enablers for retailers
Schroeder outlined the five enablers to help retailers on their digital transformation.
“In retail we look at five priorities.
“Put the customer at the centre of everything you do. If it's not helping the customer, you should seriously ask yourself, why did you do that as a retailer?”
2 Connect with your customer as a segment-of-one
“Connect with your consumer on a one-on-one basis. When we look at marketing segmentation, for example, did you divide that by age, by gender, or by geography? But within those buckets, you always have different preferences but that’s still not enough today. You want a one-to-one relationship understanding such as what someone bought in the past. This is how we get a personalisation point of view.”
3 Digital supply chain
“Those companies which had the ability to be responsive to maybe leapfrog one or the other supply chains to get things delivered to where they were needed, they were really at a big advantage.
4 Redefined Store Experience
“Looking at the squat topic - as we call it - meaning a redefined store that will remain. There should always be something new from an experience perspective for the consumer, because the question is always, why should you go there? It's all about the experience. And that's why I believe the stores are an asset if they are used in the right way.”
5 New business models
“This is where you would try out new revenue streams, whether it is small or more purpose-driven retail, having services attached and having other offers that ideally increase your ‘share of shelf time’. If you spend time with me you potentially automatically also spend money with me, and that's where I believe these new business models become quite important.
SAP prides itself on being customer-centric, which is just one factor that gives it a competitive edge along with industry-leading software and an integrated platform.
“All software vendors use the term ‘standard software’, but when we say standard software at SAP we mean the industry-leading software. So when we build a solution, for example, in fashion we work together with the leading global brands to get their requirements in. I believe this gives us the competitive edge,” commented Schroeder.
He also pointed out that SAP’s integrated platform allows customers to have a retail, wholesale, manufacturing and e-commerce business all on the same platform.
“This is also something that gives us a competitive advantage because we built one integrated platform with the help of our customers to make that happen. This is a big advantage today because if a CEO from a retail company decides to go into manufacturing you can more easily plug in or turn on the required functionality.
“In former times, you would have to implement an additional and often separate software. As a prerequisite, we put our customers at the center and we only build software together with our customers.
Value of ecosystem to SAP
SAP operates an open partner strategy that involves working in a global ecosystem without preferred partners. Some of its important partners in retail and fashion include Applexus Technologies, Attune Consulting, Sovanta, Wipro and many others.
A seamless shopping experience built to engage consumers across all channels, this is what Applexus Technologies does for the retail industry. Its new technology, SimpleRetail, is powered by AI and includes features that optimise and support store operations.
Attune Consulting is a team of business-technology advisors who not only have deep solution knowledge but also understand the fashion industry extensively; enabling clients to derive benefits from technology investments faster.
Sovanta AG is regarded as an expert in creating a better user experience in the SAP environment. The company provides customers with end-to-end support – from the initial requirements to the operation of the innovative solution – and ensures that they can get everything “from a single source”. The customers benefit from a unique combination of in-depth SAP knowledge and extensive experience in the area of user experience for business applications.
“There are many niche areas where we have a lot of well-experienced partners to really fill in the spaces to make sure we have a consistent portfolio. They have a lot of innovation going on to help out our customers,” concluded Schroeder.
Top 3 quick fire questions:
Questions answered by Dr Dr Christoph Schroeder, Global Vice President of Retail Business Unit at SAP:
What do you think our shopping experience will look like in three years?
“Fast fashion brands such as H&M will have less articles in store but generate more revenue due to the bigger basket size. Stores will become more of an experience in the future and more fun as you will be able to enter the store from your couch with the use of Virtual Reality on your smartphone.”
What technology trends will take off this year?
“I could see a time when we could use a 3D printer for shoes or clothes. I would argue that it's not entirely hip anymore to own stuff. So why not subscribe or rent which would fuel sustainability. That is something that I like to see happening.”
Top 3 tips for online retailers in 2021?
“The first is to target your customer. Retailers need to be in front of their customers because if they’re not, others will be.
“The second is, a retailer has to know their value proposition and they must keep
that promise. What is your unique selling proposition? What is so great about your product and is it really trustworthy? Brands get fueled by promises which need to be kept.
“Finally, I would say classical business administration - know your market needs and design your products accordingly. Do not assume just because you have a great product it will meet current demands.”
50 years of SAP
SAP was founded 50 years ago in 1972 when Woolworth’s ruled the UK High Street, Ralph Lauren opened his first store on Rodeo Drive and Pong was the first successful video game. Despite these early days of retail and technology, five entrepreneurs in Germany (Dietmar Hopp, Hasso Plattner, Hans-Werner Hector, Klaus Tschira, and Claus Wellenreuther) had a vision for the business potential of technology.
They started the company Systemanalyse Programmentwicklung (System Analysis and Program Development), now simply known around the world as SAP. Their idea was to create standard enterprise software that integrated all business processes and enabled data processing in real time.
Fast-forward, nearly 50 years to a world battling a pandemic, forcing the closure of many iconic high street stores and other retailers turning to on-line platforms to survive - with SAP leading the digital transformation.
According to SAP, 88 per cent of consumers known as “the passionates” - a growing consumer group who make their decisions based on their principles - want their fashion brands to be more environmentally friendly.
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