European retailers are modernizing their IT capabilities to adapt to changing consumer behavior in the wake of the COVID-19 pandemic but still lag behind retailers in the U.S. and other markets, according to a new research report published today by Information Services Group (ISG) (Nasdaq: III), a leading global technology research and advisory firm.
The 2022 ISG Provider Lens™ Retail Services report for Europe and the U.K. finds companies in the region are engaging in digital transformation to support the growing use of e-commerce and demand for channel-agnostic shopping experiences. The region is still catching up with markets such as the U.S. and China, with retailers based in northern and western Europe moving more quickly than those in eastern European markets, ISG says.
“More European retailers are creating new sales channels, and we expect this trend to accelerate,” said Sunder Pillai, director, and leader, Retail and CPG, at ISG. “Service providers are helping companies create a unified shopping experience across all channels.”
The grocery, fashion, and apparel sectors are implementing new retail technologies most aggressively, the report says. Digital transformation allows them to launch popular new shopping experiences incorporating social commerce, voice commerce, curbside pickup, and home delivery. European retailers are also updating the technology in their brick-and-mortar stores, where customers have started to return, expecting new features such as cashless and checkout-free shopping.
Digital transformation and a unified customer experience require resilient supply chains, so retailers are working with service providers to integrate supply-chain systems for a free flow of information, ISG says. Europe has fewer warehouses and distribution centers than other regions, so service providers are helping retailers use stores as mini fulfillment centers for digital orders.
The growth of the digital business is also generating unprecedented amounts of localized data on customer behavior and preferences. Retailers are consolidating this information in structured data platforms that allow them to build a unique profile for each customer.
“With help from service providers, companies are ready to roll out more personalized marketing campaigns that increase loyalty,” said Jan Erik Aase, partner and global leader, ISG Provider Lens Research.
The report also examines other trends among European retailers, including cloud migration and record-setting growth in the adoption of managed services.
The 2022 ISG Provider Lens™ Retail Services report for Europe and the U.K. evaluates the capabilities of 23 providers across three quadrants: CX Transformation Services, Platform Migration Services, and Managed Services.