What are the benefits of digitalization? In just a few short months, the global health crisis linked to the spread of COVID-19 has managed to make structural changes to the way businesses, governments and citizens have made certain services available and used them, causing everyone to push the accelerator on digital transformation.
A McKinsey study showed how the current level of computer-based interactions with consumers is 3 years ahead of a trend expected by 2023, and how companies have evolved their products to be partially or fully digital 7 years ahead of schedule in order to continue to be competitive in the marketplace. Moreover, digitalization has also touched all organizational aspects of daily life, leading workers and students to carry out their tasks remotely and promoting, as a natural consequence, reduced mobility and a simultaneous increase in online purchases.
Starting from these assumptions, we tried to answer the following questions: “What impact did digitalization have in 2020? What has it taught us?” From there, we were able to outline 4 benefits of digitalization:
1. Lifeboat for at-risk sectors and a horizon-expander for consumers
Let’s start with one of the benefits of digitalization. As a result of the pandemic, many physical purchases have shifted to digital channels. This has significantly altered end-user demand and has driven the consumer preference for speed, ease of access, and convenience.
Consumers, in some cases forced to shop online, have discovered how efficient these methods are not only in terms of time (since he might otherwise find himself in a queue), but also from the point of view of the possibility of choice, which has been greatly expanded. Online offers customers access to items that he may not find otherwise due to geographical distance, business hours, or forced store closures.
Communication with one’s customers has become even more of an essential element for business survival. In fact, at a time when relationships have become more distant and less frequent, the global pandemic has pushed even the least attentive businesses to try new methods of contact such as using social channels, online chats, and messaging apps.
On the positive side, most customers have tended to recognize the benefits of these practices and plan to continue using them in the future.
According to the PwC Global Consumer Insights Survey 2020, 59% of respondents have increased their use of video chat apps, and 74% of them say they want to maintain this trend. Similarly, 58% of respondents have increased their use of both messaging and social media apps, and 91% and 86%, respectively, want to continue using these services.
The digitization of commercial channels, moreover, has allowed consumers to expand their boundaries and learn about new alternatives with even more advantageous prices, while still keeping alive that need to feel unique and the desire, heightened by the recurring lockdowns, to live a tailor-made experience that is also immersive, emotional and, at the same time, safe. It is, therefore, imperative for companies to be able to reach their customers by ensuring an experience that is reliable, fast and, in line with customer expectations. This is especially key if they want to continue to survive in a market that has become extremely competitive and characterized by a much more careful and selective decision-making process.
Digital transformation, therefore, acts as a facilitator in purchasing choices, allowing consumers to broaden their horizon of opportunities and quickly perceive the advantages deriving from them. On the other hand, it has also served as a lifeboat for guaranteeing the necessary liquidity to companies drastically affected by the shutdowns, such as the fashion or restaurant sectors, which are strongly influenced by social sharing.
According to PwC’s Global Consumer Insights Survey 2020, in Italy, the purchase of clothing and footwear fell by 65%, purchases of services and sports equipment by 57%, and that of electronic office equipment fell by 44%. Overall, on average, a 41% drop was seen within the home dining and delivery sector alone and 35% in the Health & Beauty Care products sector.
Confirming the above, the same research also shows that online purchases for all products other than food increased by 45% via mobile, 41% via PC, and 33% via tablet, while there was a 50% decrease in in-store purchases. On the other hand, as far as food products are concerned, if before COVID-19 purchases made exclusively online were 9%, now 63% of respondents say they buy more via online and 89% say they will continue to do so even after the end of the pandemic. This creates a new market trend aimed at the transition to digital. It’s no surprise that many big brands such as Granarolo have decided to open their own online e-commerce sites.
2. Stimulator of low-impact ideas
The entertainment, tourism, and events industry has suffered a major setback, with 70% of conferences cancelled due to the health emergency (source: OICE). The cancellation of many events, not only entertainment, but also cultural events, conferences, and exhibitions has a potentially negative and harmful effect on society. In fact, it is well known that the lack of such moments of shared experience and collaboration can stifle the creation and/or improvement of new ideas.
It is at this juncture that technology has come to our aid, allowing people to meet, even if only virtually through a screen. This helps promote the sharing of thoughts and ideas, even for those who could not have done so pre-pandemic due to geographical distance, time, or other reasons.
Therefore, in 2020, digital has managed to reduce the social distance, despite the actual physical distance, thanks to videoconferences, webinars, and communication tools which, in general, have made it possible to avoid losing a creative and stimulating part of the social fabric. To understand the effect that digitization has had, it is enough to think of doctors, nurses, researchers, and health workers, who, thanks to technology, have been able to share and discuss practices for dealing with this health emergency across national and generational boundaries, while including residents and reducing air emissions related to the decrease in travel. (Journal of Experimental Medicine).
A further area of application where digital technology has made it possible to continue exchanging ideas and bringing new stimuli is within corporate organizations, guaranteeing not only continuity of working activity, but also the integration of new personnel and compliance with existing HR strategies for recruitment and onboarding. In these areas, according to research by Gartner, 89% of those interviewed found themselves modifying their recruiting interview processes by moving them to virtual channels, and 75% decided to carry out onboarding online as well, giving a role of primary importance to technology, which has proven to be a necessary and effective means of including new staff in the company and promoting their development.
3. Transformer of paradigms
We come up to three benefits of digitalization. COVID-19 and its restrictions have changed people’s behavior, making them, on the one hand, much more uncertain about their future and, consequently, more careful about saving and less inclined to buy. On the other hand, it has made them less inclined to leave home, due to fear of being in crowded places, and much more willing to try digital channels than before. These cultural changes have triggered in many companies the urgent need to adapt to a new and unexpected customer base, one that is much larger than planned. No industry has found itself excluded from the change; all have had to reorganize in order to continue to provide their services, and digitizing their processes as a result.
Technology has proven to be an enabler for the transformation of business models, pushing all public and private organizations to change working and learning methods, introducing smart working practices, distance learning, and modifying sales channels, up to the conception of digital showrooms. In Italy, the company Kasanova, in Italy, has created an online service that allows the user to purchase its products by talking to a salesperson and wearing smart glasses and a camera, simulating a visit to the physical store (Casaleggio Associati, E-commerce in Italy 2020).
Moreover, digital transformation has taught us to develop service models that are much less dispersive from a bureaucratic point of view, thanks to the possibility of signing, filing, and onboarding at a distance and in “self-service” modalities To get a clearer idea, one need only think of the automotive market, which has dematerialized part of its sales chain and made customers responsible for certain phases of the purchasing process, while still guaranteeing them continuity of service, or of companies such as Esselunga, which have promoted the use of a “queue-jumping” app during the most acute phases of the epidemic.
Another field of application where digital transformation has been inserted are the functions of supply and delivery, allowing many e-commerce companies to manage the flow of incoming orders and the supply of raw materials in a more facilitated manner. To cite a few cases, think that Amazon, initially, had deliver basic necessities and that Carrefour and Leroy Merlin had to create virtual queues and make it possible for customers to order by telephone in order to be able to satisfy the needs of all of its customers (Casaleggio Associati, E-commerce in Italy 2020).
A further positive implication deriving from the greater use of technology within processes comes from the use of predictive analysis and artificial intelligence. These two elements have helped enterprises in crucial decision-making moments, allowing them to optimize supplies and customer experience. For other industries, like large scale retail, it has helped them reorganize their production and the assortment of products in a way that is flexible, timely, and adaptable.
In some fields, then, the technological push has been so disruptive that it has changed the business model in its entirety. A case in point is that of H&M, which has announced its intention to reorganize its points of sale, transforming them from simple stores into true logistics centers at the service of digital technology (for storing goods and making deliveries and returns) (Casaleggio Associati, E-commerce in Italy 2020). The Red Roof Hotel chain promoted its rooms for employees who needed to work remotely, guaranteeing customers an environment that is no longer ideal for a vacation, but perfect for working. Other examples come from the world of food, which, finding itself forced to reshape its offering, has decided either to opt for delivery and/or takeaway or, again, to convert its business into a food store, as the Subway chain has done (Forbes).
4. Architect of social distancing
The global health emergency has also made structural changes to cities to make them more functional for eradicating the virus. Cities have made such changes before, when, in response to the third pandemic in China in 1855, streets, sewers, and foundations of buildings were redesigned in order to better fight against rats (The Guardian). Today, COVID-19 is bringing about a radical change in the way spaces are conceived, making them much more open by necessity, as well as larger in size and, if possible, more technological. Here, then, technology finds itself taking on a further role, that of “architect of distancing” with the task of entering homes, buildings, and streets in order to make them safer places, thanks to tools such as automation and technologies based on voice and facial recognition.
According to the Guardian post, touchless technology could come to play a major role since 80% of infectious diseases could be transmitted by touching polluted surfaces. The digitization of physical elements, which otherwise would require the use of buttons, is, therefore, an increasingly relevant and characteristic element of the architectural footprint resulting from this epidemic. Therefore, elevators that are called via smartphone, in-person counters with artificial intelligence placed inside stores, payment methods that do not require the inclusion of a PIN, orders at restaurants and/or bars through the scanning of a QR code or, again, mobile applications to check-in, check-out, and adjust lights and temperature at hotels, will be increasingly popular.
In support of this claim, research carried out by the Electronic Transactions Association shows that, as of April, 27% of small businesses surveyed have seen an increase in payments made using smartphones or contactless cards and, in addition, according to Statista, it is estimated that around 11 million US households will have scanned a QR code in 2020.
In conclusion, we can say we had a lot of benefits of digitalization. During the past year, digital has taught us that:
- Having overcome the inertia to the initial change, the consumer rewards online purchasing for its expanded choice and efficient functionality, exacerbating his desire to have a personalized Customer Experience to feel unique and not isolated. For companies, therefore, it is imperative not only to try to stay up to date with the evolution of demand, but also to be able to communicate with the customer, making him feel important and close if they want to be able to compete in a highly competitive and digitized market.
- Not only it is possible to collaborate and learn at a distance, this decentralization can also be a strong point when it comes to attracting new consumers, talent or, simply, whenever there is an opportunity to be able to share one’s knowledge in order to stimulate new ideas and engage with people who would otherwise not be able to participate. Technology is, therefore, a high form of preservation of the creative social fabric, able to connect more people while reducing pollution of the surrounding environment.
- Changing one’s business model is not only possible, but it can also be a great opportunity for those who are able to make decisions based on predictive analytics, on the one hand, and discover and convert possible bottlenecks into strategic strengths, on the other.
- Technology can come to our aid when it comes to building safer environments and/or health care processes with necessarily fewer opportunities for contact.
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