COVID-19 driven digital transformation in retail business

Xiangming Tao|PhD Student (4th Year)| Royal Holloway School of Business and Management

The virtues of digital transformation have been promoted by the popular business press and academic articles, particularly in the pursuit of strategic renewal (Warner and Wäger, 2019). The massive scale of Covid-19 outbreak and lockdown policy have further demonstrated the significance of digital transformation for organisations to rapidly respond to the disruptive world and remain sustainable (Agostino, Arnaboldi, & Lema, 2020). Two recent surveys of 153 CXOs in China conducted by International Data Corporation (IDC) have highlighted the value of digital transformation during the Covid-19 pandemic. Organisations are thus encouraged to turn the crisis into an opportunity to accelerate the transformation (IDC, 2020).

The Covid-19 pandemic has widely challenged business models. This is especially true for retail businesses, which are particularly vulnerable to Covid-19 disruptions (Bartik et al., 2020). Many businesses have to make hard decisions on whether to close their physical stores and whether to digitally innovate even further. For instance, established in 1993, the renowned British fashion and furnishing label Cath Kidson, has permanently closed all its UK stores and becomes an online-only retailer. As Melinda Paraie, the CEO of Cath Kidson, said: “Despite our very best efforts, against the backdrop of Covid-19, we were unable to secure a solvent sale of the business which would have allowed us to avoid administration and carry on trading in our current form” (Butler, 2020). Although undergoing a massive transformation may be the only way for survival, some retail businesses have taken the pandemic as an opportunity to drive their digital transformation, for example:

  • Doing more online. John Lewis and its sister company Waitrose are rebalancing their platforms towards more online shopping and interactive content. For example, John Lewis is exploring digital services such as wellbeing, craft and cookery services during the pandemic (Coker, 2020). Waitrose has provided a dedicated advice section on its website, such as recipes and advice for self-isolating consumers.
  • Data analytics-driven approach. During the Covid-19 outbreak, the Canadian healthy-lifestyle brand Viva Naturals saw a surging interest in wellness and health supplements based on the analytics services provided by Alibaba’s B2C e-commerce platform Tmall (Wang, 2020). Through embedding analysis, data, and reasoning into the decision-making process, this brand has launched content-marketing campaigns such as blog posts and sales initiatives to meet consumer demand.
  • Livestreaming sales. To ease the adverse effects of coronavirus, China’s leading department-store chain Intime primarily adopted livestreaming as a way to promote products and attract new consumers. Since the pandemic, the organization has claimed that more than 5000 sales associates from Intime’s physical stores have used livestreaming on Taobao Live from morning to midnight with an average of 200 livestreaming sessions a day (Li, 2020).
Intime’s sales associates livestream at work.

Adopting digital methods or not is no longer a question for the retail sector but a necessity (Hagberg, Sundström, & Nicklas, 2016), especially given the Covid-19 pandemic. For the incumbent retail businesses, digital technologies will fundamentally transform their business models. For the digitally agile retail businesses, small adaptations or increased efforts have been enhanced to accelerate the transforming process. Although the challenge varies across businesses, the Covid-19 pandemic appears to be the catalyst that has pushed this transformation over the finish line.

Reference:

Agostino, D., Arnaboldi, M., & Lema, M. D. (2020). New development: COVID-19 as an accelerator of digital transformation in public service delivery. Public Money & Management, https://doi.org/10.1080/09540962.2020.1764206.

Bartik, A. W., Bertrand, M., Cullen, Z. B., Glaeser, E. L., Luca, M., & Stanton, C. T. (2020). How are small businesses adjusting to covid-19? early evidence from a survey (No. w26989). National Bureau of Economic Research, https://doi.org/10.3386/w26989.

Butler, S. (2020). Cath Kidston to close all 60 UK stores with loss of 900 jobs. Retrieved from The Guardian.com at https://www.theguardian.com/business/2020/apr/21/cath-kidston-to-close-all-60-uk-stores-with-loss-of-900-jobs.

Coker, J. (2020). Covid-19: John Lewis explores digital services to tackle loneliness during self isolation. Retrieved from Essential Retail at https://www.essentialretail.com/news/john-lewis-coronavirus-vulnerable-1/.

International Data Corporation. (2020). CXO surveys: IT and digital transformation show growing value as the covid-19 epidemic taks its toll. Retrieved from https://www.idc.com/getdoc.jsp?containerId=prCHE46116820.

Hagberg, J., Sundström, M., & Nicklas, E. Z. (2016). The digitalization of retailing: an exploratory framework. International Journal of Retail & Distribution Management, 44(7), 694-712.

Li, C. (2020). How Chineses department-store chain intime survived Covid-19, online and offline. Retrieved from https://www.alizila.com/chinese-department-store-intime-covid-19/.

Wang., J. (2020). How brands have embraced digital transformation during covid-19. Retrieved from https://www.alizila.com/how-brands-have-embraced-digital-transformation-during-covid-19/.

Warner, K. S., & Wäger, M. (2019). Building dynamic capabilities for digital transformation: An ongoing process of strategic renewal. Long Range Planning, 52(3), 326-349.

Photo credit: Cecilia Li on alizila.com

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