Digital transformation of business and communications: Part 2
As a business owner and communications industry veteran, Jean-Pierre Lacroix, President of Shikatani Lacroix, a Toronto-based branding and design agency, has seen a massive evolution in technology and customer/employee expectations over the last two decades. In part two of this multi-part executive Q&A series I will chat with Jean-Pierre about what industries are at the forefront of digital transformation.
Doug: Do you see particular industries or areas where digital transformation has more of an impact, more of a benefit?
Jean-Pierre:That's a great question. I would say there is a balancing act happening between being disrupted and leveraging digital technology. Industries that are the most prone to being disrupted, who are vulnerable to new technologies or new business models are also the firms that need to, but not necessarily have, embrace digital more effectively.
I would say general merchandise retailers, such as Canadian Tire and Walmart, that are selling commoditized items is an industry that needs to wake up when it comes to digital technology since they are all about the transaction. They are about selling to the consumer. It's about basket size and increasing the amount of products customers buy when they visit their stores. Digital can play a really important role at reminding them about things. "Miss Consumer, you know you bought toilet paper the last time you were here. That was a month ago. You may want to replenish." Most consumers who go to a supermarket don't have a shopping list, so there's a great opportunity to drive in pull sales for stores like Walmart and Canadian Tire, but they are not there. If you go to those stores that shelf activation using digital technology is still not there. They still haven't figured out that basket size value, but the smart ones will.
Now, it's all about big screens. It's not about shelf. It's about big screens creating a lot of excitement, which is great as it reinforces the brand is relevant. However, at the end of the day in that split second purchase decision -- digital plays a very minimal role, and it shouldn't.
Doug: So, what you're talking about is a move from the large screens down to almost a personal experience at the shelf. Shelf displays can drive personalizing things and making things relevant to a particular consumer.
Jean-Pierre: I'm back to my reference to advertising. You can spend trillions of dollars building an image of the consumer, and then in the last split second the consumer switches to another brand.
To me, the model's upside down and the money needs to be spent in the store experience. It needs to be spent when the consumer is making their buying decision. Not online, not on the radio. Those are great to build brand awareness but when most consumers can be switched at the shelf level, that's where the real battleground is and that's where the money should be spent.
That's where big data plays an important role: the connection between mobile devices and all shelf communication. This is where the real battle can be won and where the smart retailers are going to invest their money. It reminds me of a little story from about four years ago. We were hired to do the reinvention of OfficeMax. Online sales had huge impact on the performance of the stores. The stores were an average 25 to 27 thousand square feet.
Our mandate was to create urban microstores, stores that were 17 to 20 thousand, even smaller than that. When we looked at digital signage, shelf signage, and we looked at the electronic ink -- sign elements -- and we costed it out. The client was very interested in having digital signage because it allowed them to change their pricing by zone, and then move very quickly at a competitive response. It was going to cost $300,000 for that in one store, so, imagine the multiple. The challenge still remains today and it is a huge nut financially for retailers to embrace digital. Those platforms today would be $100,000.
I think it's more of a mindset by retailers. To say that flyers are their most effective marketing vehicle when, really, it is their stores that are the most effective marketing vehicle. Effectively communicating to the consumer at the shelf level is going to drive more revenue and more sales for them than advertising, radio, promotions and billboards. It's just a mindset.
I think what digital has done is force organizations to rethink their business model. The business model before was "build it and they will come." What digital is providing is a platform for people to re-evaluate their business model. So, you look at Loblaws, a market leader in the supermarket category in Canada. They're smart. They're digital. They spent their money on a loyalty program that rewards behavior. Not just purchase, but behavior -- that is very smart. They're now exploring order on your phone and pickup at a drive through. They're exploring eliminating these anxiety points. I think most organizations now are being challenged through digital to re-evaluate their business model. If you're not re-evaluating your business based on digital and you're a retailer or a packaged goods company or a corporation, the odds are you're not going to be around long-term.
Image via Istock.com
Doug Bannister Doug is Chief Executive Officer and Chief Technology Officer of Omnivex Corporation. Doug founded Omnivex after 7 successful years in the LED sign software business to take advantage of the newer screen technologies. Recognizing the potential for a revolutionary signage market, Doug embarked on developing software to capitalize on the graphic potential of the emerging technology.