How COVID-19 Has Accelerated Digital Transformation

One effect of the pandemic that has hit the world in 2020 & 2021 is an increased reliance on digital channels, in terms of communication, work, commerce and more.

This had led to some companies speeding up their digital transformation plans and projects to react to changing customer behaviour.

In this article, we’ll look at how the pandemic has affected attitudes to digital transformation, and some of the businesses which have had to adapt quickly.

Why rapid adoption of digital has been necessary

Digital transformation is nothing new, and most companies, to a greater or lesser extent, have been increasing their use of digital, from traditionally offline companies moving into ecommerce, or greater adoption of digital technology to improve processes and productivity within organisations.

The Covid-19 pandemic produced a lot of rapid changes, one of which was the need to conduct transactions and interactions more safely, often at a distance.

As McKinsey stats show, digital interactions with customers – sales, customer services and more – have increased rapidly this year. The majority of all customer interactions globally are now digital.

This may include the use of Zoom meetings for employees working from home, the adoption of technology for customer service interactions and, of course, the increased use of ecommerce for retailers.

These changes has been forced to some extent by lockdowns and other restrictions which meant premises were closed, but also the need to reach those customers who needed to shield, or felt uneasy visiting stores.

Customers turned to ecommerce in massive numbers. Ecommerce stats from Statista show that ecommerce accounted for more than 30% of all UK retail sales in May and June 2020.

Ecommerce as a percentage of UK retail sales: May 2019 to July 2020.


The consequences of falling behind with digital

Some companies have suffered more than others during the pandemic. By this I mean businesses which have been slow to adopt digital channels to market and sell to their customer base.

The pandemic has had a negative effect on many companies, and certain sectors (fashion for example) struggled more than others. However, those with strong ecommerce channels were more likely to maintain revenues during lockdown, or at least offset some of their losses from physical outlets.

LVMH, the group behind many famous luxury brands such as Guerlain and Christian Dior is one such example.

LVMH products have traditionally been sold through boutiques and department stores, and the group (in common with other luxury companies) have been relatively slow to adopt digital channels.

The growth of online channels, both for marketing and sales, and the changing buying preferences of customers (younger demographics in particular) made the arguments for digital hard to resist.

The appointment of a Chief Digital Officer in 2015 signalled the beginning of the group’s digital transformation, a process which is still underway when the pandemic struck.

The forced closure of stores earlier this year led to a decline of 27% in group revenue, only partly offset by ecommerce sales (LVMH didn’t provide any numbers on online revenue).

Primark, a retailer which doesn’t sell direct online, reportedly lost £650m per month in during lockdown, so perhaps it will finally be convinced to sell online.


The acceleration of digital transformation in 2020

One major consequence of Covid has been that companies have had a glimpse of a possible future when physical retail sales are much lower, and how they would be able to cope.

This has naturally led to existing transformation programmes to be speeded up, or for new ones to be put in place.

There’s been a massive growth in the digitisation of products in just half a year or so. From 35% globally in December 2019 to 55% in July 2020 according to McKinsey.

McKinsey estimates that companies have accelerated the digitisation of supply chains and customer interactions by three to four years, and their portfolios of digital products by an astonishing seven years.

Perhaps this acceleration of digital transformation will show how easy it is if only companies have the agility and impetus to make rapid decisions, though one possible flip side is that this acceleration of activity takes away the room to experiment or to plan projects with more precision.

It may be that some of these accelerated projects will need to be adapted when time allows, but I think it also proves beyond any doubt the case for digital transformation.

Credits :

Graham Charlton is a content specialist. He’s been involved in ecommerce and digital marketing for more than a decade, having previously worked for for Econsultancy. ClickZ, Search Engine Watch and Sale

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