There’s no doubt that retailers have been at the forefront of digital disruption for decades now, and the online retail industry has reached maturity, with 72% of all purchases in Australia occurring online.

Australia’s digital retail sector is one of the largest in the world and is continuing to grow, however, businesses are struggling to keep up with the pace of change and ever-increasing demand for digital-first, personalised experiences. It’s impacting not only their brand, but also their bottom line, with retailers losing an average of $8.5 million to uncompleted digital transformation projects every year.

IT teams are stretched

Fewer than a third (30%) of businesses claim to be able to provide connected user experiences that customers prefer, according to research from MuleSoft. This comes despite most retailers (89%) spending more than ever before on their IT budgets and creating an average of (42%) more digital transformation projects in an attempt to keep up with the rest of the industry.

Still, retailers have been falling short on their digital transformation aspirations, with more than half of all IT projects missing their deadline in the past 12 months. Retailers are also spending more money than necessary just to integrate the technology they’ve just paid for so it works as intended, with some retailers spending upwards of $3.6 million on custom integrations. IT systems become drastically less effective when they’re not integrated, being unable to freely share customer data between them to create a fully connected experience for customers.

What’s stopping integrations?

Nearly half of retail businesses (47%) find it difficult to integrate end-user experiences.The primary reasons are security concerns, an inability to keep up with the ever-growing number of IT tools, outdated IT infrastructure, and a lack of internal knowledge. All of the factors can lead to the creation of data silos, which has affected almost every business (90%) in some way when trying to develop integrated user experiences. Data silos are created when valuable customer data becomes inaccessible to the rest of a business’s IT systems, whether it’s because it’s a legacy application that was never intended to be integrated with another system or any of the other reasons listed. Whatever reasons these data silos are created, they’re costing retailers millions of dollars just to ensure the technology they’ve already invested in actually works.

Retailers are turning to APIs

Application programming interfaces, or APIs, are made to assist businesses in knocking down data silos so disparate applications, and systems can freely share data between them, even if one API was never designed to interact with anything else. These programs are the key to a mature integration strategy, and save retailers from blowing out their IT budget with costly custom integrations.

IT teams can create their own APIs for a specific purpose, but they are also infinitely reusable, so those teams can appropriate an API they’ve already developed to create a new product or user experience without developing an entirely new application from the ground up. Developers don’t even have to create bespoke APIs as they can be published and adopted by third–parties. Retailers are also leaning on the convenience of low-code and no-code tools, a recent innovation that allows staff, even those not in the IT team, to create their APIs through a UI that non-developers can use to create connected user experiences.

Savings from development costs aside, API-led experiences have also proven to be more profitable, with retailers that use APIs claiming that revenue generated from APIs and API-related implementations have generated an additional 38% more in revenue.

The retail sector is one that has been defined by thin margins, and with demand for digital services continuing to grow, businesses need to lean on technology specifically designed to help them meet this demand. As customers increasingly expect digital experiences to match and exceed their expectations, retailers adopting an API-led strategy to create unique, tailored experiences will be better placed to take on the challenges facing the sector.

Andrew Dent is chief technology officer for Japan & Asia Pacific at MuleSoft.