A recent report which analyses the impact of digital technology on business operations has identified retail as an industry in the firing line.
The report 'Digital disruption - Short fuse, big bang?', the second in its series of papers on national issues, was released by professional services firm Deloitte just this month and brings a new digital reality to attention.
Through its research, Deloitte has singled out six industries, representing about one third of the $1.4 trillion Australian economy, and predicts they will be subject to significant digital disruption (a big bang) in the near future (the short fuse).
According to Deloitte, responding to the 'length of the fuse and the size of the bang' is also set to become “a new measure of success, and failure, for business and public sector organisations across Australia as they grapple with the transformative reality of digital disruption”.
The report also attempts to explain the projected magnitude of disruption in various industry sectors with the likely timeline of this disruption and then offer practical advice to leaders on how to pull together the right strategic responses.
However, while the study suggests that digital disruption has exploded the status quo and presented unprecedented challenges, leading digital economist and Deloitte Access Economics director Dr Ric Simes said it has also created a range of opportunities for the innovative.
“As we saw in the recent company reporting season, digital innovations are transforming the economic landscape, far more profoundly than other big shifts in our economic history such as deregulation, oil shocks or mining booms,” he said.
“Digital innovations and disruptors are powerful, pervasive and have multiple indirect impacts. They reduce barriers to entry, blur category boundaries, and open doors for a new generation of entrepreneurs and smart thinkers.
“At the same time, incumbent market leaders face substantial pressures which they need to manage if they are to thrive, let alone survive.”
In particular, Simes said that leaders should consider both to minimise threats posed by digital disruption and, to maximise their organisation's digital potential.
The Deloitte report also outlines three key considerations for companies to survive the digital boom.
- Recalibrating cost structures - making changes in terms of people, supply chain and overheads to radically re-think costs and compete with digitally-powered, low-cost newcomers
- Replenishing revenue streams - building new sources of revenue across segments, geographies and business models as legacy streams dry up in the wake of digital disruption
- Reshaping corporate strategies - reconsidering assets, risk and corporate agility to position the organisation for success in the increasingly digital world.
'Digital disruption - Short fuse, big bang?' is the second paper in Deloitte's 'Building the Lucky Country - Business imperatives for a prosperous Australia', series which has been developed to prompt debate and conversations, and focus minds across business, industry associations, government and the media on the 'big picture' issues facing the Australian economy.
The first in the series, 'Where is your next worker?', focused on the country's skill shortage and was released in 2011.
To view a video summary of the 'Digital disruption - Short fuse, big bang?' report, click here.
For more information on the report's findings and how the digital era will affect fashion retail directly, pick up a copy of the Ragtrader October edition – out September 27.