How digital transformation is impacting consumer, retail sectors

Defining value in digital transformation strategies is considered crucial.

Whilst over half of consumer and retail executives reported improved profitability from digital transformations, not every tech investment has delivered the expected returns, according to KPMG global tech report 2023: Consumer & retail sector insights.

Out of 420 consumer and retail executives surveyed, 57% reported profitability or performance improvements from digital transformation projects over the past two years. Additionally, 23% said that their digital transformation investments exceeded expectations in enhancing customer engagement.

Despite these successes, the report said that the consumer and retail sectors are more likely than the cross-sector average to report that their tech investments have not boosted profitability or performance levels.

“Just because you have tech, doesn’t mean you’re going to get value,” said Sam Ganga, national consulting leader, consumer and retail at KPMG in the US.“You can be tech-rich but value-poor.” 

The report noted that companies are facing heightened pressure to adapt in an era where consumer expectations are rapidly evolving to demand convenience, seamless commerce, personalised experiences, and adherence to stringent ESG standards.

Ganga stressed the need to define value in digital transformation strategies. He said that leaders should look beyond financial metrics and consider factors such as employee well-being, ESG requirements, and supply chain risks when evaluating the impact of technology investments.

Moreover, organisations must also monitor and manage their tech debt effectively to maximise value. Whilst 65% of consumer and retail executives are aware of the productivity impact and financial costs of tech debt, the sector lags behind the average across all sectors surveyed (70%).

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About 58% of consumer and retail executives reported that digital transformation initiatives have exceeded expectations in increasing employee productivity.

Martin Sokalski, consumer and retail technology leader at KPMG in the US, also pointed out that retail staff often struggle with complex ecosystems and legacy tech debt, leading to burnout and reduced focus on value-generating activities.

Additionally, data volume and complexity are viewed as significant challenges for consumer and retail executives, impacting innovation efforts. Puneet Mansukhani, partner and co-lead consumer and retail at KPMG in India, stressed the need for organizations to understand their data needs to generate valuable insights effectively.