New RSM Data Shows Middle Market Retailers Are Committed to Digital Transformation, But Still Figuring Out the How
Retailers leading the charge in digital transformation prioritize investment to stay competitive
RSM US LLP – the nation’s leading provider of audit, tax and consulting services to the middle market – today announced select retail results from its Digital Transformation Survey that assesses organizations’ approaches to digital transformation in various industries. The retail data reveals middle market retailers must properly invest in comprehensive digital transformation strategies to step – and stay – ahead of the competition.
Digital Transformation: A Universal Priority
Digital transformation has become a priority for the entire C-suite at middle market retailers, reflecting the importance of digital transformation across an entire retail organization. A majority of CEOs take ownership for leading strategy (53%), trailed by CFOs and CIOs (31% and 14% respectively).
However, whereas CEOs often take authority for digital transformation strategy, implementation still “lives” with technology-related leaders, with CTOs assuming the most responsibility for execution (72%). CIOs and Chief Digital Officers (CDOs) also play critical roles in implementation, assuming 68% and 64% of responsibility respectively. This trend is expected to grow, with 89% of CEOs and 83% of CIOs, CDOs and CTOs anticipating their roles expanding and in this field. Conversely, only 53% of CFOs see an expansion in digital transformation responsibility, highlighting a potential risk in today’s competitive markets.
“It’s reassuring to see the role of digital transformation becoming less siloed and more prevalent across functional areas among middle market retailers,” said Chris Shaker, partner and consumer products senior analyst with RSM US LLP. “But the shrinking role of the CFO combined with the fact that more than 75% of retailers are concerned with their ability to achieve their goals is something companies should be weary of. Middle market retailers should ensure that they have a well thought out and documented digital roadmap that they can execute on, rather than taking a project by project approach to their digital transformation.”
Keys for Successful Digital Transformation
Underscoring the importance of properly allocating resources to digital fluency, the retailers that are outpacing their competition when it comes to digital transformation attribute their success to a focus on adequate levels of investment and three other critical areas: hiring suitable talent, strategic alignment and a fully-trained digital workforce.
Of those surveyed, 28% of middle market retailers believe they are leading their competitors when it comes to digital transformation. Topping the list of reasons for success is sufficient levels of investment (49%), followed by the ability to attract and hire the right talent (39%), alignment between digital strategy and business vision (36%), and a fully trained workforce with digital capabilities (32%).
“The findings in this year’s survey all point to an urgency to increase investment to meet digital transformation objectives,” said John Nicolopoulos, retail and restaurant sector leader with RSM US LLP. “Retailers who reported appropriate levels of investment appear confident in their decisions while those that fail to adjust investments to keep pace risk falling behind as digital transformation increases in importance across the retail landscape.”
Gap Between Budgets and Goals
All respondents (100%) say that digital investment has stayed the same or increased over the past three years, and 98% reported digital investments are their most important, or among their most important, strategic priorities. These numbers underscore the growing necessity for digital investments to remain competitive in a digital-first world.
However, while some middle market retailers have experienced progress in digital transformation, executives remain hesitant in their companies’ ability to achieve digital goals. In fact, according to the report, most retail executives (81%) are extremely or significantly concerned about their companies’ ability to reach digital goals.
Where Executives are Putting their Digital Transformation Dollars to Work
In terms of what digital investments middle market retailers are prioritizing, the near-term focus is on customer-facing technologies. Aligning with the growing popularity of 5G, 50% of executives reported 5G technology as extremely important. Following 5G, mobile technologies (46%), e-commerce platforms (46%), business intelligence (44%) and digital marketing (44%) ranked highest among retail executives.
Surveyed executives reported a frictionless customer experience (38%), new differentiated markets (28%), improved data storage (27%) and improved customer relationships (27%) as the top benefits experienced from digital investment, highlighting the augmented focus on customers in the retail industry.
Despite the short-term focus on customer-facing technologies, executives are recognizing the importance of and difficulties with integrating technologies and processes across their organizations. The top three business processes where respondents cite a great need for integration include order fulfillment (38%), profiling customer information (37%) and in-store pick-up (37%).
About the 2019 Digital Transformation Survey
The RSM Digital Transformation Survey represents perspectives of chief executive officers (CEOs), chief financial officers (CFOs) and chief information officers (CIOs) from middle market companies (those with annual revenues between $50 million and $4 billion). The survey assesses organizations’ approaches to digital transformation to support companies in benchmarking digital transformation initiatives and opportunities to embrace innovation effectively. The study surveyed senior leaders across five key industries, including banking, food and beverage, health care, manufacturing and industrial products, and retail.
These are select results related to middle market retailers. The full survey will be available later in 2020.
About RSM US LLP
RSM’s purpose is to deliver the power of being understood to our clients, colleagues and communities through world-class audit, tax and consulting services focused on middle market businesses. The clients we serve are the engine of global commerce and economic growth, and we are focused on developing leading professionals and services to meet their evolving needs in today’s ever-changing business environment.
RSM US LLP is the U.S. member of RSM International, a global network of independent audit, tax and consulting firms with more than 41,000 people in 116 countries. For more information, visit rsmus.com, like us on Facebook, follow us on Twitter and/or connect with us on LinkedIn.