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Study on influence of digital technology on retail sector
17
Jan '13
As e-commerce, mobile, and social media place an increasing role in all aspects of customers’ experiences with retailers, Shop.org is launching a multi-part initiative to engage the industry in examining how retailers are integrating all things “digital” into their business structures.  

Kicking off this initiative is an in-depth study, “Organizational Structure for the Future of Retail: The Digital Effect.” Sponsored by DataStax and undertaken with research partner Okamura Consulting, the study provides a snapshot of challenges and approaches by retailers in managing the influence of digital on their businesses.

“No longer confined to specific segments of the retail organization, ‘digital’ permeate every aspect of a retailer’s business – from marketing and merchandising to IT, finance and store operations.  This study reveals a picture of modern retailing in the making,” said Shop.org Executive Director Vicki Cantrell. “At the nexus of digital retailing, Shop.org is uniquely qualified to explore how multichannel retailers can and must adapt their organizational structures to leverage technologies, processes and skill sets to successfully compete. In an age when the customer truly is king, the good news is that traditional organizational silos are coming apart, even if there is much work ahead.”

This study draws upon interviews with 40 retail executives, including heads of e-commerce, CIOs, CMOs, HR leads, and CEOs.  Key insights from the study include:

There is no single path or best practice in retail organization design. While e-commerce clearly cannot live as a separate entity anymore, the key to the right organizational structure depends also on the maturity of the e-commerce business and the readiness to integrate digital skills and teams into the full business.

Currently, semi-integrated organizational structures tend to predominate. However, the key for a semi-integrated organizational structure to succeed is for senior leadership to transform processes and internal partnerships. The rise of the “digitally fluent” CEO in the future will further bolster success with this structure.

At present, integrated merchant teams are the norm, though the study found that they come with the risk of under-allocation of resources to e-commerce.

By contrast, marketing organizations tend to be either semi-integrated or highly integrated. While this set up benefits marketing coordination and a consistent brand voice across customer touch points, companies will still need to strike a good balance between store and e-commerce marketing.

“As retailers roll out an expanding array of cross channels, the right metrics will drive capital decisions and most importantly motivate the diverse workforce characteristic of modern retailing,” said Jim Okamura, Managing Partner, Okamura Consulting.

In the coming months, Shop.org will release additional resources about Organizational Structure issues, including a self-analysis tool for companies to examine their own organizational structure and needs, as well as a set of retailer case studies on the subject.

About the study

The Shop.org/Okamura Consulting Organizational Structure for the Future report surveyed 40 executives ranging from CEOs, CMOs, CIOs, heads of e-commerce, and top level human resource executives, and was conducted via phone interviews during the months of October and November 2012.

Click here to download the study.

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