Introduction
Digitization is at the core of modern operations and is also actively penetrating the retail industry. In particular, modern companies are using new technologies to create a more customer-centered and personalized system, as well as optimize activities for a more sustainable business. The Warehouse Group is currently actively adopting digitalization to increase online sales, develop the Click & Collect system, and improve customer service. Additionally, the company is transforming its supply chains through automation and artificial intelligence to adapt to the changes in New Zealand and the global retail industry.
Digitalisation and Adaptation
Digitalization in the context of the Warehouse Group is primarily about adapting to changing customer behavior patterns. To maintain a competitive advantage, companies, especially in the context of the COVID-19 pandemic, need to focus on expanding online store access and making operations more sustainable. In particular, the organization strives to “use data-driven insights to improve customer experiences and we align these insights with our design cues and market trends for product range and assortment planning” (The Warehouse Group, 2021 p. 37). This need for transformation has resulted in some of the key aspects of the company that have been digitized.
Digitalization is primarily transforming the shopping experience, as well as the organization’s interactions with suppliers and employees. The Warehouse Group launched a “new mobile-first Group eCommerce platform in March 2021, after completing the transition of The Warehouse website and mobile app” (The Warehouse Group, 2021, p. 37). The Market is currently the fastest-growing marketplace in New Zealand with 147,000 customer growth in FY21 (The Warehouse Group, 2021, p. 23). Moreover, combined with an extended loyalty system, the organization collects personalized data to deliver a better customer experience (Foxcroft, 2019). It also reported that the Warehouse Stationery and the Warehouse are already using Commerce Cloud, an artificial intelligence system that provides more accurate online search results to reduce search times and increase conversions (The Warehouse Group transforms, n.d). It is reported that online sales are currently over 11% of all brands in the organization, which largely reflects purchasing behavior (The Warehouse Group, 2021, p. 11). Significantly, the company is leveraging the Warehouse Group to leverage digitalization to streamline customer interactions with physical stores, enabling the company to effectively adapt to the economic environment of COVID-19.
In particular, the organization is actively moving to the Click & Collect system, which provides the most convenient shopping experience. The expertise and effort “have enabled the business to open and shut stores and move to Click & Collect almost overnight during the first wave of COVID-19 alert level changes” (The Warehouse Group, 2021, p. 9). In particular, the use of the service grew 21.1% year-on-year (The Warehouse Group, 2021, p. 9). The company also focused on improving employee interaction for Click & Collect by “a new picking and order location app” (The Warehouse Group, 2021, p. 19). The digitalization of the company’s core operations has also affected innovation in the supply chain.
In particular, the transition to increased online sales and the Click & Collect system means transformed fulfillment expectations. Digitalization in supply chains is motivated by the need for “increased efficiency, sustainability and customer satisfaction” (Lawrence, 2020, para. 3). The Warehouse Group has expanded its data science team and implemented automation technologies, and currently, the organization is introducing a new warehouse management system (Lawrence, 2020). These measures allow the organization to better track transactions and orders, plan them and make decisions based on data received in real-time, as well as develop shorter and more efficient routes. Additionally, the creation of the omnichannel retail network stimulates working on sustainable supply chains initiatives including “direct store deliveries, hybrid / electric trucks…, as well as shipping container optimization” (Sustainable supply chains, 2019, para. 10). Omnichannel retail presents a challenge for efficient and sustainable supply chain management, which requires additional innovation and digitalization from the organization.
An important aspect of digitalization for the Warehouse Group is the transition to an agile business model. This model allows the company to create a flexible system that helps to make effective decisions based on risk assessment and transform operations for changes in the environment. In particular, the agile framework allows the Warehouse Group to build higher-performing teams that focus on specific customer needs (The Warehouse Gropu, 2021). The adoption of the agile model allowed the company, in particular, one of the first retailers in New Zealand to focus on personalization, through the ability “to push ideas forward and make mistakes” (McEleny, 2020, para. 4). The Agile framework enables an organization to build more customer experience-focused teams and allocate resources more efficiently, which is key to transformation.
Future Insight
Areas of emerging and disruptive technologies have significantly impacted the global retail industry. Drones are used to deliver products from physical stores; blockchain helps in protecting the customer experience, optimizing supply chains, and processing payment (Koetsier, 2021; Deloitte, 2018). The big data is actively utilized to enhance the shopping experience through personalization, which is also used by the Warehouse Group. Augmented and virtual reality in retailers’ apps can be used to immersively try on products or tell the story of a product, which stimulates customers’ interest (Galaria, 2020). 3D printing is currently not so massively developed, but in the future, it can expand the possibilities of customization, reduce the number of supply chains, as well as the amount of waste, which is important for sustainability (Diamandis, 2019). Artificial intelligence influences personalization, which is also applied by the Warehouse Group, improves customer assistance and support, and helps create contactless shopping (Abbasi, 2020). Automation, which is also introduced by the organization, helps in storing management and planning, optimizing fulfillment (Automation in retail, 2019). Internet of things is applied in the development of Click & Collect systems through scanning systems and smart shelves (Internet of things, n.d). Non-digital technology in the modern world can not significantly affect the industry, since all operations are based on data, transactions, and automation.
The main driver of social change that has influenced the industry is the pursuit of sustainable operations. In particular, the Warehouse Gropu notes: “Our goal is to accelerate the transition to a zero-carbon future by embedding sustainability in every aspect of our business” (The Warehouse Gropu, 2021, p. 49). Climate change has an impact on consumers, employees, and investors. For many institutions, climate change is associated with new working conditions and employee safety, as well as the risk of disrupting supply chains (Deloitte, 2021). According to the study, about 40% of millennials say that they value the impact of a brand on the environment in their relationship with it (Deloitte, 2021, p. 20). More than 40% of employees also claim that a company’s refusal to implement sustainable practices can lead to changing job or negative attitudes (Deloitte, 2021, p. 20). Many CEOs also note the pressure from shareholders and investors regarding environmental agendas and sustainable practices (Deloitte, 2021). Thus, sustainability and changing societal attitudes towards climate change issues play an important role in the development of modern companies.
Contemporary Organisational Ecosystems
The adoption of the agile business model contributed to changes in structure, decision-making, and hierarchy of the Warehouse Group. This practice includes empowerment of teams and expansion from decision-making power (Agility in the time of COVID-19, 2020). It is noted that the agile structure implies the development of “cross-functional, autonomous agile teams” (Strategy&, 2020, p. 4). This largely eliminates the hierarchical structure, replacing it with collaboration between business units. The decision-making process of an organization is based on an agile framework combined with traditional risk assessment (The Warehouse Group, 2021). Additionally, the Warehouse Group actively integrates Māori culture into the decision-making process (The Warehouse Group, 2021). The focus of stakeholders on the social and environmental agenda forces the organization to consider the needs of the community and “to deliver sustainable value and positive change” (The Warehouse Group, 2021, p. 29). The main focus of innovation for creating a sustainable business is infrastructural and technological transformation. In particular, the company is focusing its efforts on creating an omnichannel network and customer-centered ecosystem.
The Warehouse Group’s main focus is currently building sustainable operations, which also includes the achievement of the Sustainable Development Goals. In particular, the organization promotes the “health, safety and wellbeing (HSW) systems, practices, and processes” (The Warehouse Group, 2021, p. 41). Additionally, the Warehouse Group invested over $ 1 million in 2021 to support gender equality and close the pay gap in its store support offices (The Warehouse Group, 2021, p. 41). These initiatives highlight the organization’s commitment to supporting the Sustainable Development Goals and actively developing to achieve them (The 17 goals, n.d). Building the omnichannel network and maintaining sustainable goals has allowed the company to adapt to change and weather the economic downturn (Abaño, 2018). The ability to transform its operations for changing environmental conditions is a major success for the Warehouse Group.
Human Potential for the Digital Economy
Changes in the industry and operations of the Warehouse Group are identifying the need for big data and artificial intelligence skills in retail. These factors are justified by the need for automation management in warehouses, improvement of the Click & Collect system, as well as the creation of algorithms for personalization of online stores and applications (The Warehouse Group, 2021). Moreover, the transition to an agile model implies the need for more developed creativity, leadership, and critical thinking skills (Deloitte, 2020). These skills are necessary for the most effective implementation of the technical aspects of digitalization and correct risk assessment. Industry professionals actively seek to improve working conditions for retaining and retraining employees. The Warehouse Group, in particular, has implemented an online training platform, Store Leadership Programmes, and NZ Future Skills Fund to help its employees adapt to new conditions (The Warehouse Group, 2021). These initiatives are aimed at attracting new talent and developing the existing workforce to maintain a competitive advantage.
Conclusion and Evaluation
The case of the Warehouse Group illustrates that digitalization is key to effectively transforming a company into new market conditions. In particular, the use of new technologies to improve customer experience, as well as optimization of supply chains for better fulfillment process, plays a critical role in creating a sustainable business. It is also important that the basis of transformation is human resources, namely, their unique skills, not only technical but also communicative. In modern terms, it is important for organizations to focus specifically on the needs of customers, employees, and investors in order to maintain a competitive advantage. Digitalization provides companies with the tools to better analyze and meet the needs of stakeholders.
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