How jewellers can succeed in the era of Digital Transformation?

Increasing internet penetration and smartphone adoption in India has led to a new world of tech-savvy customers who prefer to communicate & shop digitally. Retailers across industries are fast adopting technology and reinventing their traditional business models to stay relevant in the digital era. Although Jewellery is a special category that requires high touch-and-feel experience, retail jewellers have realized the potential of technology and are preparing themselves to succeed in the era of digital transformation.

Figure 1: Digital Transformation in Retail

Impact of Digital: Blurring the line between offline and online retail

Digital has empowered today’s customers and has influenced their preference for greater convenience. They want freedom in shopping anything, anytime, and from anywhere.

Figure 2: Change in Consumer Behavior

This change in consumer behavior is blurring the line between offline and online retail. Offline jewellers have already started to strengthen their online presence. Leading offline Jewellers such as Tanishq and Kalyan Jewellers have acquired stakes in online Jewellery retailers CaratLane and Candere respectively, to accelerate their digital journey. While pureplay online jewellers such as CaratLane and BlueStone are aggressively launching physical stores to complement their online presence.

Physical stores provide an enjoyable experience and personal relationship to customers, while online stores provide greater freedom to browse and shop.

Currently, less than 2% of Jewellery is sold online in India compared to the global average of 7%. Leading Jewellers in the US such as Signet Jewelers and Tiffany & Co. currently derive 10.9% and 7% of their respective sales through online channels. This indicates online Jewellery retail is still at a nascent stage in India and has significant potential for growth in the future.

Future belongs to Omni-channel Jewellers

Omni-channel is not just about complementing offline stores with online web stores. It is about the seamless integration of offline and online to offer a consistent experience and benefits of both worlds to the customers. A successful omni-channel model can bring superior customer experience as well as greater operational efficiency to retail Jewellers. Thus, enhancing both topline and bottom-line for the jeweller.

Digital impact on Customer Experience

Retail jewellers can leverage digital technology to influence every stage of a customer journey from discovery to browsing, trying, buying, and referring. They can showcase an entire range of Jewellery to their customers online and let them decide if they want to buy online or offline.

Figure 3: Digital impact Across Customer Journey

Digital impact on Operational Efficiency

Retail jewellers can apply digital technologies across marketing, sales, and back-end to significantly improve operational efficiencies.

Figure 4: Digital Impact on Operational Efficiency

Marketing

Online marketing helps to connect with a new generation of shoppers who prefer to engage online before making a purchase either online or offline.

The new generation customers rely more on social influencers, online reviews, and likes than on commercial advertisements. Jewellers can take the help of online influencers and online videos to communicate their brand stories more effectively. Real-time feedback monitoring & resolution can drive greater customer retention.

Social media engagement activities help build loyal followers that can be encouraged to rate products or write reviews. This would help in building brand credibility with other customers.

Retail jewellers can use real-time data, analytics, and insights to do more targeted marketing and achieve greater conversions. They can do a real-time assessment of campaign performance and quickly optimize their ad spends. These make digital & social marketing more cost-efficient than traditional offline media advertisements. Jewellers can generate a higher return on marketing investments by shifting partial marketing budget from offline to online. It is worth mentioning that Signet Jewelers, a leading jeweller in the US now spends more on digital & social marketing than on television advertising.

Sales

Digital can help jewellers expand their geographic boundaries and acquire new customers. It provides a 24×7 open sales platform and an opportunity to sell even when offline stores are closed.

In-store sales staff can showcase a larger range of virtual inventory in a tablet to their customers and convert sales without holding the same inventory in the store.

AI Chatbots can reduce the need for human dependence to resolve regular customer queries and issues. Chatbots not only reduce operational costs but also help in increasing sales by extending customer service to 24×7, reducing customer wait time, and offering personalized recommendations to online customers.

Social commerce or social media shopping is another opportunity where customers can purchase the product directly by clicking on the social media posts. This is expected to increase significantly with the increasing spending power of Generation Z.

A study reveals that omni-channel shoppers are likely to spend 2-4 times that of in-store-only shoppers and their conversion chances go up by 40% when they visit the physical stores.

Back-end

Digital applications can help streamline information flow in the back-end across inventory planning, procurement, warehousing, logistics, and internal employee communication. Real-time availability of information would result in efficient collaboration, faster and informed decision making. Thus making the organization agile and effective.

Digital Transformation Challenges

Most retail jewellers initiate their online presence by setting up an online web-store, listing Jewellery on online marketplaces, and having social media presence on Facebook and Instagram. However, they are often at a loss when it comes to seamless integration of offline and online channels and generating a return on digital investments.

Some of the common challenges faced by them during digital implementation are:

Figure 5: Digital Transformation Challenges

A Digital Strategy and Mindset is Key to Digital Success

It is not the technology but a digital strategy along with a digital mindset that would determine success during digital transformation.

Digital strategy

Retail jewellers need to build a digital strategy that aligns with their overall business goals.

Some large jewellers have adopted digital as a core part of their strategy and have created Chief Digital Officer roles to drive digital innovation across the organization. They have aligned significant budgets towards developing inhouse digital capabilities as well as budgets for digital R&D to stay ahead of new developments.

Small & Medium-sized jewellers have relatively limited budgets and resources for digital experimentation. They could follow an incremental digital integration approach and rely on a mix of external & internal expertise to start with digital initiatives that suit their organizational priorities and are relatively easy to implement.

Digital mindset

Usually, in smaller organizations, the e-commerce department involves most digital applications, while remaining departments continue to function in traditional ways. A successful digital transformation requires a digital mindset driven from the top that creates an innovative and agile culture across the organization.

Digital integration can only work when employees across channels have an omni-channel mindset and see a benefit in promoting omni-channel sales to the customers without any conflict of interest within channels. Jewellers need to build an attribution model to encourage omni-channel behavior. As a store sales might be influenced by an online website or web sales may happen using an in-store tablet, the sales team needs to be rewarded for both direct sales and influenced sales.

Conclusion

The evolving digital landscape is shaking the traditional business models of established retail jewellers. However, retail jewellers need to look at it as an opportunity to enhance customer experience and improve operational efficiencies. Omni-channel retail success would depend on the right digital strategy and digital mindset of the entire organization. Depending on their business goals and available resources, retail jewellers need to decide between a full-fledged digital transformation or an incremental digital integration journey.

Courtesy: Deepak Tulsian