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When the coronavirus pandemic first took hold, retail was faced with new levels of uncertainty and an overall struggle to maintain conversations with consumers as physical stores were closed. For many retailers, who had already adopted digital strategies, the path forward was clearer, though for others the disruption has caused ever-growing obstacles.

Still, the crisis has provided a spotlight for digital solutions that can help brands and retailers grow, and even thrive in today’s increasingly digital world. “Brands need to be aware that digital is creating more opportunities than ever to form a deeper relationship with their consumers and streamline operations, both of which are critical to win in today’s marketplace,” said Drake Watten, managing director and partner at Boston Consulting Group. “[Brands] need to know that change — not tech or AI — is typically the hardest barrier to overcome when building digital capabilities.”

Here, Watten talks to WWD about how brands and retailers can overcome organizational barriers in place that are making it difficult for brands to transform digital infrastructures and come out stronger in the “new normal.”

WWD: How has coronavirus made it more important for brands to strengthen their digital infrastructure?

Drake Watten: The coronavirus has put a spotlight on the need for more real-time external demand signals, versus time-lagged historical transaction data, digitized supply chains to optimize inventory flows, and digital product creation to respond faster to changing consumer preferences.

 

Drake Watten, BCG

Drake Watten, managing director and partner at Boston Consulting Group.  Courtesy Image.

WWD: What are the organizational barriers in place that are making it difficult for brands to transform their digital infrastructure?

D.W.: There are many organizational barriers that prevent fashion companies from implementing and scaling digital capabilities, such as structure, incentives, funding models, talent, and even culture. Structure and incentives are typically too aligned by channel, which is just not how consumers shop anymore. Talent is hard to recruit and retain outside of the key tech city hubs. The funding model for tech investments is typically too focused on managing costs versus driving ROI. And, culture can also be a barrier, especially when the organization is very rooted in selling to third-party retailers and/or in brick-and-mortar stores.

WWD: How do you advise companies who are working toward a more digital future?

D.W.: It starts at the top with aligning the ceo leadership team to a digital aspiration, grounded in the reality of what is feasible in terms of capital investment and consumer digital demand. We then make decisions on which digital capabilities should be built in-house to drive competitive advantage versus outsourced to drive efficiencies. For the in-house digital capabilities, we advise organizations to build in an integrated way across advanced analytics, technology tools and people/processes (versus in silos), and to set up a continuous improvement platform.

WWD: How are some companies mixing art and science to create business models that use data-driven decision making, while still employing thousands of people for final production selections & consumer interactions?

D.W.: Even companies that built their business on algorithms and data-driven decisions across all parts of the value chain — distribution and logistics optimization, demand forecasting, inventory management, product design, product recommendations, etc. — still employ stylists to add the human element to the final product selection and consumer interactions. We’re increasingly seeing companies do a great job of balancing art and science by leveraging their stylists to feed and improve the analytical engine so that it is continuously being refined.

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