Digital transformation matters to modern business more than ever before. The smart integration of even smarter tech into all aspects of a business – be it operational or experiential – is increasingly seen as an inevitable component of all ambitious business plans.
The statistics speak for themselves. The global digital transformation market is projected to grow from $469.8 billion in 2020 to $1,009.8 billion by 2025, at a compound annual growth rate (CAGR) of 16.5% during this period.
The sentiment is clear – digital transformation is no longer a “nice to have.” It’s an essential aspect of business success. And not just big business – to give just one example, 46% of small businesses are already using BI tools to get an edge on the competition.
In this guide, we’ll explore some of how the Major Appliance sector is being impacted by advances (and the associated growing expectations) connected to the rise of digital transformation.
Digital Transformation: The Accelerating Impact of Covid-19
Let’s start by examining the general state of play. It’s impossible to talk about digital transformation without first considering the huge impact that the pandemic has had on its recent advance and acceleration. Although this impact was certainly felt within the major appliance sector (so heavily dependent upon complex supply chains), the uptick in digital transformation for businesses of all shapes and sizes during Covid was unprecedented.
At the start of 2020, 67% of US CEOs expressed concerns about migrating all of their business to the cloud – but soon, necessity would sweep in to remove all remaining hesitation. As a result, the leap forward in terms of the progression of digital transformation was described by President and CEO of Thomson Reuters Corp, Steve Hasker, as looking like “three to four years of progress in just three to four months, in terms of acceptance of what the new world needs to look like.”
The meteoric rise is comparable to the acceleration of ecommerce in the same time frame, which was said to have lept forward by 5 years as a result of the conditions imposed by the pandemic. Perhaps unsurprisingly, the main area of impact lies at the intersection of these two advances – the creation of a seamless digital customer experience, with 75% of CEOs interviewed also agreeing that this had been accelerated by a matter of months or years.
Why was this impact so significant? Because customers were also being forced to adapt alongside the businesses they supported. When it came to digital transformation, all barriers and blockers were down – consumers and colleagues alike were being asked to adapt, try new methods, and adopt new (digital) habits.
The major appliance sector felt this impact keenly, thanks to a sharp rise in demand that coincided perfectly with the need for digital transformation – on both the consumer and supplier side of the equation. As a result, buyers and brands broke new ground together – setting the stage for a digitally transformed future.
Let’s explore some of the key areas where digital transformation is aiding, improving, and opening up opportunities for the major appliance sector.
1. Supply Chains
For all the chaos and tragedy that the pandemic ushered in, it also served as an eye-opening opportunity for reflection for many. The alarming rapidity with which many supply chains came crashing down was an eye-opening (and alarming) reality check for many. With the fragility of supply chains fully exposed (and no doubt exacerbated by panic buying once the rumor of shortages spread) our dependence on this complex and precarious system was well and truly highlighted.
Supply chains within the large appliance sector were already being pushed to the limit, thanks to the growth of the smart appliance sector (carrying with it component scarcity, shorter appliance lifespans, and complex legacy support requirements.) When global shipping contracted, pushing up prices and delivery times, the dependency of the sector upon certain economies (namely major exporter China) was fully exposed.
Whether created or exaggerated by the pandemic, supply chain issues are still being felt throughout the major appliances sector. Most significantly, the global semiconductor shortage and tin surge, post-pandemic, continue to pose problems.
Digital transformation can apply the guiding hand of AI to future “shockproof” supply chains. Intelligent procurement and AI-powered supply chain data management with intelligent automation and analytics have the potential to highlight opportunities, at the same time as mitigating the risk businesses feel increasingly exposed to in a fluctuating and crisis-prone global environment.
2. Inventory Management
All business depends upon supply and demand – but with the storage and shipping of bulky, easily damaged major appliances having such an impact on profitability and margins, inventory management is especially important for the major appliances sector.
In the wake of the pandemic, many major appliance retailers are still struggling to rebalance their inventory – with backorders, more costly shipping, and the continuing impact of disruption in the early manufacturing stages of the supply chain.
Selling larger, heavier items, more prone to damage, and with more logistical hassle and cost associated with returns, inventory in the major appliances space needs to be very effectively handled and managed. With the dawn of digital transformation, the need for a “pile it high” approach to inventory management is well and truly over. GE Appliances is a great example of a business taking giant strides here.
“In our old world” says Mark Shirkness, vice president of distribution, “we stacked product high and blasted it out in truckload or LTL quantities to our retail partners, or overnighted it to the contractor channel.” Today, thanks to a fully redesigned network, processes, and technology stack, they have a digitally transformed system that ensures they can meet scaling sales with a scaling distribution.
Learn more about the revolutionary impact of digital transformation on GE Appliances here. From AI-informed distribution to network rationalization, digital transformation represents a much-needed response to the challenge of modern multi-channel fulfillment. Allowing digital technology to facilitate the smoother, smarter passing of appliances from warehouse to last-mile delivery can be achieved by (as GE Appliances describe) “creating a digital thread, or the electronic genealogy of a product, that accelerates responsiveness.”
3. Product Launches
So many forms of traditionally “IRL” interaction moved online during the pandemic, and industry events were certainly not spared from this necessity. Within the competitive and fast-paced major appliance sector, new plans needed to be made – and quickly. New product lines might be on adjusted timelines, but launches still needed to be planned and delivered.
It quickly became apparent that digital product launches would need to become the new normal – and in reality, for an industry as reliant on international import and export, this evolution of product launches and new line announcements didn’t feel wildly out of place – helping showcase products on a truly global platform.
The pandemic represented something of a paradox in terms of opportunities for product launches – traditional routes needed to be abandoned, but there were still some advantages, including the opportunity to double down on brand control, the chance to get truly creative with innovative digital experiences and a chance to double-down on a strategic approach, rather than following a tired, templated formula.
Trade shows and conferences – a mainstay of the major appliance scene – were also canceled. As the world opened its doors again, many big players like Samsung were notably slow to return to the trade show circuit.
What are the takeaways when it comes to the digital transformation of product launches and demos? Ultimately – future contingency is key. Now that the “unthinkable” has happened (and could conceivably happen again) creative, digital launch strategies have never been more important. The industry is now much more receptive to this approach, and expectations will have shifted.
4. Internal Operations
Although, as this guide aims to highlight, digital transformation can be applied to so many aspects of business, is perhaps most commonly associated with internal operations. The opportunities that digital transformation holds for internal operational efficiency are truly staggering. It will come as no surprise to learn that 40% of executives reported that the top benefit of digital transformation was operational efficiency.
What does digital transformation of internal operations look like in practice? Commonly, we’ll see AI-assisted (or even VR-assisted) processes to boost worker productivity. At GE Appliances, for example, warehouse operators who want to qualify for that highly skilled work train and then demonstrate their ability in a VR simulator that screens them for specific qualities, helping them be assigned to the most appropriate roles.
Another big benefit is the reduction of siloed data. Digital transformation helps to boost connectivity and integration of various systems, meaning better accessibility of data (and as a result, more applicable insight to inform business decisions.) Digital transformation can also help businesses achieve better leverage of IoT and mobile technologies, again, all contributing to a better connected and cohesive working environment that optimizes efficiency.
Again, the pandemic poured gasoline on the growth of digital transformation when it comes to internal operations. Major appliance sector businesses at all stages of the supply chain had to face (and solve) huge logistical challenges when it came to their day-to-day operations. The need to future proof internal modes of collaboration and communication – especially teleworking and cloud-based software – is ongoing. For a sector with supply chains as complex as major appliances, collaboration and communication should work both internally and externally, amongst channel partners, suppliers, distributors, and retailers.
5. Demand Forecasting
By increasing necessity, demand forecasting will play in the huge future of the major appliance sector. The significant shortages of many major manufacturing components, coupled with increasing demand for these supplies from other competing sectors, means that there’s never been a more important time to understand and predict fluctuations in demand within the sector.
The impact of the pandemic is still being felt and things are a long way from being “back to normal” – there’s a distinct advantage to be gained from being able to predict future demand with a greater degree of accuracy (this plays alongside inventory management, of course.)
Digital transformation can help unlock big data and the insight it holds. As the major appliance industry expands to encompass an ever-growing range of channels, access to data is increasing in parallel. Machine Learning and AI play a central role in demand forecasting, and increasingly those operating within the consumer products and retail space. Demand-Driven Predictive Forecasting (DDPF) is proving popular as demand is monitored in real-time to shape an appropriate response.
DDPF is said to boost forecast accuracy by 30% to 35%, reduce inventory by 20% to 25% and increase revenue by 3% to 5%. Of course in the case of major appliances, accurate prediction is only half the battle – retailers also need to ensure that their hard-pressed supply chain can flex to meet this accurately predicted demand.
6. Effective PIM
As this guide has so far uncovered, one of the most important and impactful aspects of digital transformation for the major appliance sector is the ability to take confident, effective control of data – getting this rich seam of opportunity working at its maximum potential. While operational data is important, without a solid understanding and easy command of product data, those working at all stages of the major appliances supply chain will struggle to see the true impact of digital transformation.
Product data provides the bridge between all stages of the supply chain but is especially important when it comes to laying the foundations for exemplary customer experience, and optimized digital conversions. Without close control of product data (dubbed the “electronic genealogy” of a product by GE Appliances) supply cannot be met with the demand that meets modern consumer expectations.
Product Information Management (PIM) does more than simply help describe and convey the attributes of various products – it also prepares a business for rapid response and adaptation to opportunity – i.e. to emerging sales channels, or a need to switch to digital-only showrooms during the pandemic. Those retailers with a digitally transformed PIM system in place can quickly launch new products or populate new sales channels, with insightful, consistent product information, with little manual input and a much higher level of accuracy.
Intelligent, digital PIM solutions can also help improve customer service and bolster brand trust, making it easy to ensure that all channels accurately reflect the latest information for a specific product, including detail such as fluctuations in waiting times for delivery, or any changes made to the specifications of established models – particularly useful for the major appliance sector.
Additionally, with more information freely available to customers, many will be able to find answers to their questions independently. This removes barriers to purchase, and as the major appliance sector starts to sell to digitally native, younger generations, who are starting to graduate to homeownership, this kind of “self-service” interaction is increasingly preferred.
For those operating a RevOps sales model, where product, sales, and marketing teams are closely connected, a digital PIM solution ensures easy collaboration and facilitates clear communication. No more chasing answers or specs – every team member can quickly access the product information they need to tee up a conversion or help a customer make a purchase decision.
Digital transformation of PIM is already highly advantageous to any business operating within the major appliances sector, but its impact and importance is only set to scale with the rise of smart appliances. As these complex products rise in popularity, we can expect to see two challenges: firstly, a higher purchase frequency (as models are quickly superseded by advancing technology and replaced) leading to increased demand (and hence the pressure on customer service teams.) Secondly, a need to convey a greater amount of product information – new features, compatibility, the ability to integrate with other smart devices… The need for easy, accurate, and impactful management of product information has never been higher.
7. Digital Catalogs / Digital Showroom
Ecommerce is booming and the way that we shop has become truly digitized. While the average shopper on the street might not be conscious of the fact that they’ve happily embraced an omnichannel approach to their shopping strategy, you’ll be hard-pressed to find a modern consumer who doesn’t check multiple online sales channels for the best price or compare brands online before heading to a physical store.
At the sales end of the spectrum, when it comes to major appliances, the focus has traditionally been on in-person showroom experiences. But while 92% of large appliance purchases are made offline, the online space is thought to influence almost half of all appliance sales. When stores closed during the pandemic, and all trade moved online, the focus was instantly shifted – and while confidence in shopping in-store is now returning, the potential that digital catalogs and showroom experiences hold (for both consumers and retailers alike) was glimpsed during the pandemic, is a genie that cannot be put back inside its bottle.
The rise of digital showrooms (also known as virtual showrooms) holds great promise for B2B appliance sales, as well as the B2C space. According to McKinsey research, around 70% – 80% of B2B decision makers prefer remote human interactions or digital self-service. Similarly, 70% of U.S. consumers think self-service technologies that reduce the need to interact with retail staff improve the retail shopping experience.
At this point, we’ve largely seen the booming apparel sector making the best creative use of the digital showroom experience – but there is so much potential on the table when it comes to the major appliance sector. With the endless potential for product demonstrations and discovery, digital showrooms can also help improve the sustainability of a business (increasingly important to demonstrate) by reducing the impact caused by physical tradeshows or stores.
8. Customer Support
Finally, let’s consider the impact of digital transformation on customer support. We’ve already seen the benefit that access to improved product information through a wide range of well-maintained digital channels can offer. The major appliance sector must remain mindful of the fact that, although our capacity to provide a wider range of assistance is increasing, so too are the expectations of customers when it comes to the omnichannel shopping experience.
What does this mean before, during, and after the sales process for large appliances? At the top of the funnel, the discovery and consideration stage customers are looking for easy side-by-side product comparison, reassurance about compatibility, and potentially even advanced information about likely wait times or delays – all of which may influence their purchase decision as they narrow down their selection.
As previously mentioned, access to “self-service” product information can go a long way to helping here – but a commitment to ensuring ongoing access to the very latest information is essential. Letting the customer solve their problems is preferable (for them, and your own support team’s ticket backlog) but it can – and will – backfire if product information is not meticulously maintained and monitored.
Similarly, digital transformation is offering some real opportunities for improvement in the area of post-sales support. The Chris Dunn consultancy gives a great overview of the way that contact strategies are evolving to meet the modern expectations of omnichannel shoppers. Instead of processing the customer through an ineffective “one size fits all” approach, informed by limited data, new digital strategies build upon multi-channel touchpoints, where a brand’s digital presence is nurtured for impact beyond a single sale, laying the foundations for a future of more personalized relationship building.
For the major appliance sector, which often has to allow for a complicated after-sales support strategy (factoring in everything from installation, spare part replacements, and ongoing maintenance) this holds great potential. In an age where we know brand loyalty is being tested (as price and availability become key decision-making factors,) a digitally transformed approach to customer service and engagement allows for much greater advocacy.
Additionally, a move towards the “open all hours” culture that ecommerce encourages has necessitated the accelerated development of “always-on” communication channels. Unsurprisingly, when major appliances fail or need urgent replacement, customers do not appreciate a business dictating when and how they may get in touch to seek help! Increased access to digital tools such as “click to call” buttons, AI chatbots, and live chat functionality are all helping to close the gap here.
Finally, it’s worth remembering that the benefits improved digital support brings to B2C consumers are equally applicable to the B2B market. With major appliance supply chains under ever-increasing pressure, easier communication, resolutions, and collaborative problem-solving promise to help improve and strengthen relationships between product manufacturers, retailers, and channel partners alike.
Are you ready for the Digital Transformation of the Major Appliance Sector?
Following a challenging couple of years, the major appliances sector has seen a real revolution – adapting to logistical problems, global crises, component shortages, and huge fluctuations in supply and demand. The digital transformation that this struggle has accelerated has – without a doubt – produced an industry that’s more resilient, capable, and better prepared for the future.
In an increasingly competitive world of large appliance sales (and with the ever-increasing pressure coming from external factors beyond the control of manufacturers, brands, and retailers) every advantage should be taken to keep ahead of the game and be prepared for the twists and turns of the market. As digital transformation becomes the norm, those who’ve failed to adapt will quickly start to experience the impact.
The statistics being reported by major appliance businesses that have already taken the plunge and committed to true digital transformation are more than encouraging. ApplianceCo’s recent transformation generated $30M savings in the first year of implementation, driving a 1-3% increase in their margin. The transformation is expected to generate $200 million in the next five years, coming from savings and revenue across the company’s customer, supply chain, and manufacturing capabilities.
After the disruption of the last few years, from pandemics to international conflicts and grounded shipping containers, it’s impossible to predict what challenges might be coming down the line to great the major appliance sector. One thing is for certain though, those businesses who have doubled down on digital transformation will be the best prepared to weather the storms, reacting to remerge with the clearest competitive advantage.
