Middle Market Retailers Experiencing Growth Through Digital Transformation
In an environment of high-profile bankruptcies and shutdowns over the past few years, middle market retailers are outperforming the industry as a whole, primarily through implementing digital transformation throughout their companies. New research from the National Center for the Middle Market (NCMM) finds that business behemoths like Amazon are not the only retailers benefiting from digitally-driven change; the fastest-growing middle market retailers are investing in the latest technologies in an effort to increase efficiencies, boost sales, and enhance the customer experience both online and in their stores.
Middle Market Retail: How Digital Transformation Is Fueling Growth, a Special Report by NCMM also shows that in an industry known for its low-wage workforce, having the right digitally capable talent across the organization is vital. While minimum wages have been rising, few middle market retailers are concerned those costs will negatively impact their business. In fact, nearly 40 percent of top-performing specialty goods retailers, those selling items such as clothing, jewelry and electronics, claim an increase in the minimum wage will be good for their company. No matter the type of retailer, employers are willing to pay competitive wages and benefits to attract and keep the right people so that they can position themselves to win in the digitally-transformed retail environment.
"The shift toward digitization is having a profound effect on all aspects of business including the skills required of their workforce," said NCMM Managing Director Doug Farren. "With a continued trend toward omnichannel experiences and anytime/anywhere product, having the right technology will continue to be critical for operations, inventory management, and customer satisfaction. In addition, our research shows that the fastest growing middle market retailers are not giving up on their brick-and-mortar stores, but instead, are investing in making them more relevant by using technology to create unique in-store experiences for their customers."
The report shows their efforts are working. Nine out of ten retailers say the impact of technological transformation has been good for business, with more than half claiming it has been exceedingly positive. The proof is in the numbers: middle market retailers who adopt and effectively harness digitalization posted revenue growth of 10.5 percent over the past year, while overall U.S. retail growth was only 3.6 percent.
The report is based on results of a survey conducted by NCMM in collaboration with CBUS Retail, a Columbus-based business association, focused on promoting retail expertise in central Ohio, The Ohio State University Fisher College of Business faculty and its partners, that polled 400 financial decision makers from middle market retail companies including fast moving consumer goods, specialty goods and food service businesses. The survey was fielded in October 2018.
"It has been great partnering with The Ohio State University National Center for The Middle Market on this project," said Steve Morris, founder of CBUS Retail. "The study provides great insights on how middle market retailers are transforming their businesses by investing in and capitalizing on digital opportunities to engage their customers."
The research finds that while middle market businesses are embracing technology, they face challenges in doing so. Almost half of companies say that keeping up with technological change is difficult and 65 percent report that they only adopt enough technology to keep pace with their competitors. Digital transformation is also creating new competitors; while it levels the playing field so middle market retailers can better compete with larger businesses, it does the same for smaller companies, resulting in increased competition for the middle market.
About the National Center for the Middle Market (NCMM)
The National Center for the Middle Market is a collaboration between The Ohio State University's Fisher College of Business, SunTrust Banks, Cisco Systems, Inc., and Grant Thornton LLP. It exists for a single purpose: to ensure that the vitality and robustness of Middle Market companies are fully realized as fundamental to our nation's economic outlook and prosperity. The Center is the leading source of knowledge, leadership, and innovative research on the middle market economy, providing critical data analysis, insights, and perspectives for companies, policymakers, and other key stakeholders, to help accelerate growth, increase competitiveness and create jobs in this sector.
Housed at The Ohio State University's Fisher College of Business, the National Center for the Middle Market is the first center of its kind in the nation. The Center enthusiastically serves middle market firms, students, academic researchers, policy makers, the media and other key stakeholders with interests in the health and well-being of the middle market. The Center is fully committed to funding and distributing the most credible open-sourced research, dynamically creating new knowledge, providing programs that drive value for middle market companies, and offering a well-informed outlook on the health and future of the middle market via the Middle Market Indicator.
About CBUS Retail
CBUS Retail is a non-profit association, focused on promoting Columbus, Ohio as the global retail capital for talent, collaboration and innovation. The member organization is comprised of an extraordinary group of retailers and retail service providers who meet regularly to connect, educate, collaborate and promote the retail industry. Our year-round programming includes a monthly senior executive retail advisor forum, bi-monthly "One Degree of Retail" networking events, an executive roundtable series, our annual conference featuring over 120 local and national thought leaders, and a collaborative partnership with local universities to leverage research and promote retail careers to future talent.