By Aimee Chanthadavong

By 2025, those retailers that decide to reinvent themselves with new digital technologies today would be more than $106 million better off in sales terms than those that decide to ‘wait and see’.

A new study released by IBM based on research by the National Institute of Economic and Industry Research (NIEIR) forecasts a significant gap will open up between major Australian enterprises that are actively transforming their operations for the digital economy compared to those that are sticking to business as usual.

Unfortunately, according to Andrew Stevens, IBM Australia and New Zealand managing director, there are still a significant number of businesses that continue to adopt a ‘wait and see’ attitude with many believing there’s still time.

“Right now is the tipping point where the risk of inaction outweighs the risk of action therefore it’s a turning point of many companies’ future,” he said.

But those who continue to wait will not have the ability to catch up 2025 because they will not have the capital investment to do so by then, Peter Brain, NEIR executive director and director of research warned.

The research also showed come 2025 those leader retailers will be selling 40 per cent of their goods online as the internet continues to drive significant change and open up new sources of competition. Despite this, bricks and mortars are still expected to remain highly relevant.

“For leaders, the relationship between online and bricks and mortar will have reversed. They will see their business as an online business and their physical presence as complimentary to that online business,” Brain explained.

At the same time Stevens also continued say adopting new technologies into the business will allow retailers to create better relationships with customers.

“Customers are becoming more connected with each other, with opinion leaders, with alternative sources of supply from competitors and that is putting enormous demand on every single business,” he said.

“Secondly, consumers and employees are becoming more demanding. They’re connected and are demanding more. They want 24/7 service available to them, they want increased level of responsiveness, they want free delivery, they want very high levels of service – dramatically higher than what they’ve ever wanted before.

“Because of the need to respond, organisations are getting flatter, broader and more agile in a way that there are fewer levels of management and the chief executive is closer to the consumer.”

The survey also noted how important big data will be for retailers to gain competitive advantage to maximise clicks and transactions by better understanding their customers, operations and supply chains.

“Investment will be key to success. Not only must they get their strategy right but they will be able to spend more. They need to spend more to reconfigure what they have, build their interaction and redesign their distribution and logistic services to enhance their service to customers,” Brain said.

Phil Ruthven, IBISWorld chairman and founder, believes one sector of the retail market that is responding better to new technologies at the moment are the small to medium enterprises.

“Unlike the bigger guys who started off just purely as a bricks and mortar, SMEs have harnessed the internet from the very start of their business and have not been weighted down by any obstacles and therefore have greater freedom to move and adopt new technologies faster.”