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How much innovation is there in the Italian retail industry?

NewsFromThePlatform | December 1st, 2016

Not much, but rapidly growing – according to the Observatory for Digital Innovation in Retail, promoted by the Politecnico School of Management in Milan.

If the absolute numbers of the Italian retail industry’s investment in technology are small – only 1% of turnover is dedicated to innovation – its growth is considered interesting – from 15% of total annual investment in 2015 to 17% in 2016. And although 65% of the top Italian retailers (i.e. the first 300 retailers by revenue, present in Italy with physical stores) detect the absence of a clear digital innovation strategy, among these, 3 out of 4 are working to outline one.

In terms of digital innovation, something is already happening: in the course of 2016, 93% of top retailers has implemented back end innovation and 80% has developed front-end digital processes to support customer experience. As for omnichannel, 88% of retailers uses digital channels to support pre-sale or post-sale stages (compared to 80% in 2015 and 65% in 2014), 65% has an eCommerce website (compared to 61% in 2015), 10% is only available online and 1% only on mobile.

Big companies, however, are not the only ones that have launched technological initiatives: small and medium sized retailers are well aware of the importance of digital innovation, which is a priority for two out of three of those surveyed. However, high cost and lack of expertise hamper less structured players: 6 out of 10 are present on the web, but only 15% have an eCommerce website. Again, however, the research shows clear signs of development: indeed, among the small retailers who sell online, eCommerce revenues grew by 10% and are worth between 1 and 5% of turnover.

Among the challenges that the Italian retail system will have to face in the coming years in terms of digital innovation, some crucial ones are the ability to recruit and retain customers, improve customer experience, integrate brick and mortar stores with eCommerce websites. “To win in this economy, companies must digitise or become irrelevant,” said to WIRED Kevin Kimber, Managing Director of Cloud and member of the executive board at SAP, the European multinational for software production. And the Italian retail industry seems to have finally understood this: Italian retail brands have begun to embrace change, revolutionize business processes and industry models, build a better customer experience through innovative products and services.