Kejad Insights

Author Dennis Mambure

Understanding Retail

It is essential to understand the term retail before delving into digital innovations. Retail, when approached in a very minimalistic manner is both a process and an object. As a process,‘retail’ entails selling goods and services to a final consumer for their personal use and not for resale. As an object retail can be the outlet or a sector involved in the process of retailing. Retail sector is indeed a broad economic sector which covers various industries. The concept and philosophy are similar. 

Meaning of Innovation

Innovation is a malleable and “polysemic” concept with different scholars providing discipline oriented and discipline biased definitions. Economists, accountants, technologists and artists have their own definitions. I however favour the definition offered by the Princeton University:

“the application of new ideas to the products, processes, or other aspects of the activities of a firm that lead to increased “value.” In this conext ‘value’ means any additional benefit that accrues to the concerned firm or the customers.“

Broadly innovation can be product or process oriented, with the former relating to the introduction of a new product or a significant amendment of an existing one, while the later relates to the introduction of a new way of doing things or significant process re-engineering.Without going deeper into the subject of creativity and innovation, suffice to say Boden (2004) identifies three broad levels of innovation: combinatorial, exploratory and transformational.  

What therefore are Digital Innovations?

Digital innovations therefore are novel ways of doing things leveraging on digital technologies. The Victoria State Government defines Digital Technologies as: “electronictools, systems, devices and resources that generate store or process data. These include social media, online games and applications, multimedia, productivity applications, cloud computing, interoperable systems and mobile devices.”

What Digital Innovations have we witnessed in Zimbabwe’s Retail Sector?

A plethora of innovations have happened either within the retail sector or elsewhere but deployed within the sector. Some of the innovations include barcodes and scanning technology, payment platforms such as the Point of Sale machines, Near Field Communication enabled payments, electronic wallets, self service capabilities, in-store/in-branch banking, queue management systems, till-point weighing and scaling, and the list is endless. We need to locate the nexus between these various innovations and the concept of McDonaldization.

Unpacking McDonaldization

The concept of McDonaldization was developed by an American Sociologist, George Ritzer in 1993. He argued that McDonaldization occurs   when society, its institutions, structures, entities and organisations are designed and aligned to have attributes similar to those that are observed in fast food outlets such as McDonald’s. The most prominent attributes areefficiency, calculability, predictability and standardization, and control.

In looking at the role that Digital Innovations play in the retail sector in Zimbabwe, I will anchor my discussion on the above four McDonaldization elements. 

1. Efficiency:  Peter Drucker define efficiency as doing things right. Within the context of Ritzer’s philosophy of McDonaldization efficiency connotes management’s single purposive motivation towards completion of a task or an entire business process whether production, sales or distribution within the shortest period of time. Do Digital Innovations promote efficiency within the retail sector? Yes. The answer definitely is that on a theoretical level efficiency should be a given outcome in the context of digital innovations. Payment platforms for example in some cases have resulted in increased speeds of service, reduction in error rates, accuracy, and clear verifiable audit trails. The challenge is that despite a plethora of innovations, the retail sector is still dogged by some pockets of inefficiency. The reasons are plenty but some are to do with a)telecommunication challenges b) poor equipment C) human challenges emanating fromminimalistic training and development of the front-liners d) Hurried deployment of technologies at times driven by regulation and directives.

2. Calculability simply means that the aims and objectives of an entity are quantifiable. It borrows from the mantra that what can’t be measured, can’t be done.  Clearly digital innovations help in a greater way and lead towards achievement of quantifiable outcomes. What digital innovations have done is to be able to generate a lot of data. In a single day a retailer is able to know precisely the sales achieved by volume, by value, by product and by time. The challenge that exists is that perhaps the retails have even more data than theyrealise and the world of big data and its import to their business has not been fully comprehended. The extension of calculability should manifest in better customer service, loyalty and reward programs  as well as process re-engineering

3. Predictability and standardization – Customers need to know what they are receiving in any transaction. McDonaldization philosophy demands that there is predictability of customer experience at every point of contact with a product and service provider. Standardization demands that there is minimal variance of products and services. This borrows heavily from and leans solid on Henry Fayol’s perspective on specialization and creation of routines. Clearly digital innovations in the retail sector have to a greater extent contributed towards predictability and standardization of the service experience. The down side is that the human and personal touch may fall off if digital innovations are not appropriately handled. It is necessary in some insistences from a service person to empathize with clients, an element which is not promoted by digital innovations. Automated responses through call centers are an example that the retail sector has used to standardize responses. With the progressive emotion sensitive artificial intelligence development, some of the weaknesses of digital innovation may be addressed.

4. Control. The final element McDonaldization is control. George Ritzer argues that management and leadership should have the stamina to ensure that workers are aligned to deliver in the same manner every hour and daily. Use of robots, Artificial Intelligence and such digital innovations also have some leanings towards this element as it aims to reduce or eliminate challenges that are brought about by the variability inherent in humans.

Has Digital Innovations in the retail sector moved the needle?

This article has noted a lot of positives that have accrued to the retail sector as result of digital innovation. McDonaldization is an ambitious philosophy which even by Ritzer’s own admission has some weaknesses. However it provides a lens through which we can assess certain developments within the retail sector. It is apparent that if deployed well, digital innovations can result in improved efficiency, predictability, standardization of service, calculability as well as control. For the full benefit of digital innovations to be realized Marketing Practitioners, Service as well as retail operations team should invest in, technology, training and development, service culture as well customer education.

(c) First published in the ZimMarketer, 2017