In conversations centred on retail transformation, the dominant narrative is the growth of e-commerce. This narrative often overshadows the role of brick-and-mortar stores in the overall customer experience. According to McKinsey, senior executives of major North American retailers have confirmed that over the last two years, eCommerce sales grew in locations with physical stores as compared to those without – indicative of brand presence having a significant halo effect on eCommerce sales.
Infact, retailers who envision online and offline channels as symbiotic are more successful. And, it is this opportunity that Falabella, a leading Latin American retailer recognized and strategically leveraged over the past decade with investments in both digital tech and in-store. Falabella envisioned a future where stores and eCommerce are not merely channels of sales, but levers for growth. With 500+ stores across six countries and multiple lines of business, Falabella captures multiple data points that could help provide an even richer experience for its customers.
The global retailer wanted to build digital capabilities that would make customers' lives simpler and their shopping enjoyable. Such capabilities will become competitive differentiators in a crowded market. To achieve these digital goals, Falabella partnered with Thoughtworks, a leading global technology consultancy.
The journey of building a tech powerhouse is no mean task. Most retailers choose custom-off-the-shelf (COTS) products for their various needs. They create scattered capabilities through point solutions to individual problems and these products rarely offer holistic value. On the other hand, custom-building products for each use case is incredibly arduous. Thoughtworks and Falabella jointly opined (after leveraging years of experience in advancing tech maturity), that neither of the above described approaches would work for what was intended and gravitated towards platform thinking.
The recommended ‘platform approach’ would build foundational capabilities that enable scale, experimentation, speed and agility. It would leverage ecosystem assets to improve customer experience. Thoughtworks’ suggested digital platform strategy would pack the power of Falabella’s 100+ years of experience in serving millions of customers across Latin America, into its customer offerings.
Falabella and Thoughtworks built a digital retail backbone: not just for the retailer’s business goals of today but to also accelerate its presence in emerging touch points and operating models (like marketplaces) of the future – eventually opening up additional non-linear streams of revenue.
The global retailer extended the digital retail backbone beyond eCommerce as a real omnichannel platform furthering store modernization, improving customer checkout experiences and enabling innovation across Falabella’s sales channels. A future objective for the core retail backbone is to serve all store touch points across – handheld devices, traditional POS, self checkout, website, mobile apps and out-of-store experiences. Falabella’s customers will eventually have the same fantastic experience irrespective of the channel they opt.
As a customer-centric organization, Falabella is keenly aware of the risks associated with mindless digitization. Merely digitizing existing customer journeys will not result in seamless omnichannel, cross-vertical and multi-country experiences. In fact, such an approach would only carry forward existing inefficiencies. And ignoring the status quo would only make customer experiences worse. Falabella’s deep understanding of their customers and the landscape prevented such eventualities. For instance, completely eliminating paper receipts at the retailer’s stores would impede customers from claiming free parking, which was validated by scanning the paper receipts – so, this has to wait until the ‘entire’ process was digitized.
In such scenarios, the platform approach powers incremental value. Here’s how – there exists a foundation on which blocks of capabilities are set. Enterprises like Falabella can build value in smaller, quicker, more agile and effective bouts and with every new feature, there is scope to define it more precisely, develop it faster, test it more thoroughly and launch it with greater control. Therefore, recalling the paper receipt instance - platform thinking will allow the digitized parking solution to effortlessly integrate with the POS solution, thus accommodating the new process.
This approach applies to success metrics too. For instance, when working on reducing cashier intervention, the partners created a baseline by tracking how much time each transaction took. With baselines in hand, the solutions naturally became more innovative — the MPOS, a mobile point-of-sale solution allowed store staff to help customers checkout on the fly, without having to stand in a queue at a counter.
Rolling out store modernization with a platform approach ensures outcomes that are both immediate and strategic. Falabella significantly reduced their time to market for new features - be it a major overhaul, a minor enhancement or a time critical security update – the platform was ready for an enterprise-wide POS rollout in less than 24 hours. The partners also leveraged end-to-end test automation and automated first time batch data load to accelerate destiny and deployment cycles, while also reducing total cost of ownership across the board.
Looking into the future, Falabella’s digital retail backbone is an accelerator for possibilities. From streamlining the checkout journey and reducing cashier intervention to optimizing fraud checks – Falabella can enable frictionless checkout for a post-pandemic world in which customers can-pay-and-go as they please. Falabella can also nurture differentiated journeys and the ability to experiment with innovative customer experiences. For instance, gamified experiences, assisted selling, personalization at the POS etc. are all possible with the store modernization platform.
Key to such ambitious digital transformation journeys' success is scale. Without mass adoption, even the best of tech can barely achieve anything. This is why sustainable operations are incredibly important. Falabella and Thoughtworks’ investment in training and enabling support teams helps make the best use of the new products. SOPs, runbooks, playbooks etc. customized for various stakeholders and their teams helps everyone involved get used to the new way of doing things.
For Falabella, the biggest business transformation is becoming a Tech@Core enterprise. This journey empowers the retailer to build the right tech in-house, holding critical and core capabilities close to heart – a competitive advantage to face the new world with renewed rigour and sharpened tools.The pages slugged ‘Brand Connect’ are equivalent to advertisements and are not written and produced by Forbes India journalists.